US Military Warns Of Oil Shortages By 2015 With Significant Economic And Political Impact, Especially On Weak Countries, India And China

Tyler Durden's picture

A report issued by the US Joint Forces Command has a rather bleak view on US oil production, and on peak oil in general. In a foreword to the report issued by General James Mattis, he warns that "By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day." Does this mean that oil, just like in the Bush administration, is about to become a "strategic interest", which coupled with the upcoming discoveries of non-existent weapons of mass destruction, would result in some additional geopoltical tensions particularly in the middle east? With nuclear tensions between Iran and Israel already at boiling hot levels, will Uncle Sam decide to make landfall in the Persian Gulg once again? More from the General: "While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India." Well, Mr. Chanos, there's your catalyst. We just hope that the negative carry of a five year short position is palatable to your LPs.

Some additional perspectives from The Guardian:

Lionel Badal, a post-graduate student at Kings College, London, who has been researching peak oil theories, said the review by the American military moves the debate on.

"It's surprising to see that the US Army, unlike the US Department of Energy, publicly warns of major oil shortages in the near-term. Now it could be interesting to know on which study the information is based on," he said.

"The Energy Information Administration (of the department of energy) has been saying for years that Peak Oil was "decades away". In light of the report from the US Joint Forces Command, is the EIA still confident of its previous highly optimistic conclusions?"

The Joint Operating Environment report paints a bleak picture of what can happen on occasions when there is serious economic upheaval. "One should not forget that the Great Depression spawned a number of totalitarian regimes that sought economic prosperity for their nations by ruthless conquest," it points out.

Full report by the Joint Operating Environment

 

h/t Mike

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Seer's picture

Picken's plan is about the most sensible.  However, it is, as even he notes, only a stop-gap measure.

All that stated, there's still the issue of creating yet more make-work ("stimulus") when the country is hemorrhaging in debt, foreign debt.  Are we going to tell our creditors "we're going to hold off paying our existing debts so that we can remodel our kitchen"?

True, oil imports make up about 40% of our trade deficit, but it would be a long time before this amount could be scrubbed.  There's also the issue of negatively impacting exports (diverting to internal consumption).

Nowhere do we hear doing what is necessary- conservation!  And even then, conservation just means slowing down the inevitable.

ToNYC's picture

A stop-gap is the most sensible thing to do fiirst since, number one, it works right now. Secondly, until you start you can't see how much everything else starts changing as in recovery from illness when you first apply a working medicine or protocol to your dynamiic system.

Dark Helmet's picture

Scientists like Hubbert knew about peak oil in the 1950s. The math was further revised in the 1990s, and better models were done.

Today, now, in 2010, politicians and businessmen are starting to realize "hey, wait a minute, maybe the fact that our planet is finite in size means that there isn't an infinite sea of hydrocarbon under its surface?!?"

I'm starting to think that only scientists and engineers know that their ass is not a hole in the ground.

Merlin12's picture

You sayin' that engineers believe in "peak oil"?  It's the engineers who keep finding more and more oil, and better and better ways of extracting it.  If we engineers (and I are one) were that convinced that there were limits to anything, we'd still be crossing the oceans in sailing ships.  Far too many scientists on the other hand are mostly concerned with the approval of their peers, and the money that peer approval brings to the table, whether or not their theories actually hold any water.  Witness the great Global Warming Debacle.

Real Wealth's picture

by Merlin12

You sayin' that engineers believe in "peak oil"?  It's the engineers who keep finding more and more oil, and better and better ways of extracting it.

     It isn't about finding more oil, it is all about cheap oil, and that isn't being found.  Without cheap oil, people are going to start getting thrown off the lifeboat.

 

trav7777's picture

No, it is NOT.

Peak Oil is simply a PRODUCTION RATE MAXIMUM.

It has ABSOLUTELY NOTHING to do with PRICE.

Price is fixed by supply and demand.

Mad Max's picture

Are you reading your own posts?  After saying "No, it is NOT" you then go on to completely confirm what the prior poster had said.  At least, assuming you're capable of basic deductive logic.  Hmmm, fixed or increasing demand, with a limited production rate.  I'll bet that hits effective supply!  I wonder if a supply crunch in the face of constant demand could cause an increase in price?!?!

trav7777's picture

Peak oil has ABSOLUTELY NOTHING TO DO WITH PRICE.

Suppose oil demand DECLINED because people decided to stop consuming as much you know to save the whales or polar bears or something.

Peak would STILL BE THERE even if oil were $20/bbl.

Peak is NOTHING other than a maximum rate at which oil can be extracted from a well, field, nation, earth, or other arbitrary reserve.

Peak is not the end of cheap oil, it is the end of increasing production.

Mad Max's picture

Peak is not the end of cheap oil, it is the end of increasing production.

Which, in the world that most of us inhabit (though perhaps not you), automatically translates into the end of cheap oil, and that in turn has severe economic effects.

It's like someone is saying "and if a hydrogen bomb goes off above your city, you will be vaporized and die" and your response is to say "no, the only direct effect of the hydrogen bomb would be to heat your body to 10 million degrees.  Anything else is not a direct effect nor inherent in the concept."

trav7777's picture

Naw man.

Peak "cheap" oil creates the expectation of still-growing production, except at a higher price.

That is why I object to the term.  That, somehow, only the Cheap oil has peaked, but the expensive oil, yeah, we still got much more of that. 

We don't.  Oil past-peak will be less available no matter the price.  Even if we tomorrow converted all of our energy demand over to nukes and just kept pumping the oil to make more plastics and fertilizer, we'd have production declines YoY.  The oil price would obviously collapse.

cougar_w's picture

You sir must not be a very good engineer to say all that. And your assessment of scientists is drivel. Back to your Facebook.

BobPaulson's picture

How can you know how to add and not understand peak oil? No, I'm an engineer, actually I teach it, and I don't go around saying only wimps are scared by the second law of thermodynamics dude. Are you a drilling tech who calls himself an engineer, or a guy who hasn't picked up a calculator in 10 years except to do the vacation schedule for his line crew?

trav7777's picture

Engineers are finding oil at a slowing rate.  Fact.

Engineers' discoveries of oil are outstripped by demand growth by 4, 8, 12, 14:1, at an accelerating rate.  Fact.

The rate at which we can extract crude & condensate achieved a peak in 2005.  Fact.

Peak oil is about rates.  Not "more" not "cheap" not none of this confused shit that people on this thread keep babbling about because they read a yahoo article trying to explain peak oil to idiots who thought it was "running out of oil" and now these idiots think it's running out of "cheap" oil.

It's merely about a maximum rate of production and an inability to grow it past that point.  And, it has happened.

The vast majority of oil-producing nations have already peaked and are in terminal supply decline.  The time-to-peak of newer wells is *lower* than older discoveries.  IOW, the "quality" of the reserves found today is lower.  They peak sooner, and production declines faster than the old finds like Ghawar or Burgan.

Nevermind that discoveries of oil peaked in 1964.  Wells simply aren't found anymore that will produce significantly more than 500kbpd.  Peak oil is a reality and it's a painful one.

Seer's picture

I never did acquire an engineering degree, but I DID learn that there's the finite and the infinite.  Infinite is in the mind, and, to some degree, out in the universe.

I believe that it's a pretty commonly accepted view that the earth is finite.  As such, there HAS to be a finite amount of everything on it*, including oil.  And, the accessibility of oil has a point at which it is only feasible (physically and economically) to extract so much of it.  And that this total, being finite and measurable, HAS a mid point of extraction.  Denying "Peak Oil," therefore, goes against all logic.  We may quibble over when, over what affect, but anything that is measurable DOES have a mid point.

* Yes, there's incoming stuff from outerspace, but crude oil is not any of it.

And could we please drop the attempts to equate this with global warming (which is really about climate change- screw a label up and thence on everything is deemed wrong), it's a total non-sequitur.

Mr Lennon Hendrix's picture

More pluses for you!

+++++++++++++

waterdog's picture

It is not propaganda.

China is locking up Saudi oil. Get ready, oil or Jews, you can't have both.

Sometime when you get a chance, look at how much oil it takes to make 90 days of fertilizer and deliver it to your little world. If you are hording seeds for the big event, you might as well pack them up your ass. Think about this, a bag of 6-6-6 $ 110, 10-10-10 $ 185, 35-0-0  not available.

Don't like wet backs? Then plan to move up North in 2014.

Like that stupid old man keeps writing about, buy gold, silver and oil.

 

Hulk's picture

Agriculture is just the act of converting oil into food. Making and using your own compost is a great way around the high cost of fertilizer

Make sure you have worms working in your garden too, as that also helps

cougar_w's picture

Let's call it "modern mechanized agriculture" so as not to eliminate the possibility of ever feeding our children again post-peak.

Though yeah, I don't remember too much about how we did it in 1820.

Hulk's picture

Agreed. I have the advantage in that I was raised in a subsistence farming family, where the methods hadn't changed in....ever!

Compared to modern living (if it can be called living) the subsistence farmer has a much higher quality of life. The only change I would make is to place a woodstove outdoors during the very hot canning season. Will try my sun stove first though....

Seer's picture

Yes, there's a "future"in subsistance farming: anything else is not sustainable- duh!

I vote YOU the most informed then :-)  Someone with this background has my respect.

Wouldn't it be nice if canning season was during late fall and early winter?  Well, for some things yes (squash, though one can store these many months w/o canning).

Hulk's picture

I want to try drying too. My family never did dry. The canning was done in August and September Wood stove a blazing in the kitchen, don't know how my mom and grandma did it .

It was very efficient living, our water glasses were actual jelly jars, which I used to hate drinking from due to the glass thread at the top!

Once we moved to the city, I remember thinking as a fourteen year old about how wasteful city people were. It was actually quite stunning...

 

tip e. canoe's picture

waterdog, just found these cats for fertilizer:

http://www.convertedorganics.com/

look ma, no chemicals!  and again, a pot of coffee in the morning will get you a large bottle of 35-0-0 urine by sundown.

with that said, your basic premise is right on.  there is a good reason ol georgie soros is loaded up with Potash, Inc.  but think of it of this way, an oil spike causes the production costs of corn and hi-fructose corn syrup to also spike faster than you can say toots sweet.

Hulk's picture

Put this in the FWIW column, but there is a certain place in the fields where we all go to take a piss. Guess which grass the chickens like to eat???

pastured eggs anyone???

ToNYC's picture

China will bid the Saudis and other Arab OPEC'ers with Palestinan aid kicker and Israeli boycott. Lots of chessmen to play with between USTs and Gaza, East Jerusalem, apartheid.... nice kettle of fish there , hey Ollie? 

dumpster's picture

two trucks to fill  a military hummer , a ford pickup

bet who gets first dibs

the military will grab the oil long before any attempt is made to grab the gold

cougar_w's picture

Hey, you can't scare me. I'll be able to get all the gas I want for $15/gal, and I'll pay it Sparky because I'm patriotic.

Mad Max's picture

Why do I feel like a cartoon penguin is looking over my shoulder?

Seer's picture

Oh, oh!  Quick!  Turn around and look and tell us what you find! :-)

Rusty Shorts's picture

 - very bleak outlook, shortages of oil, water and food...coupled with overpopulation, a disaster in the making.

 

What the hell is the deal with China attempting to "blind" our satellites with lasers in 2006? Is this not an act of war?

hedgeless_horseman's picture

No more an act of war than the Jap.coms selling hundreds of billions of dollars of our Treasury debt via Swiss banks instead of rolling it.

dabug's picture

Maybe we were being nosy

TwoJacks's picture

don't know who JOE is but he must be selling oil at these levels

merehuman's picture

 Earth, the long way to hell

ToNYC's picture

God made Heaven; Man-made Hell.

Rusty Shorts's picture

Just read Professor Kenneth S. Deffeyes book "Beyond Oil", he's a long time geophysicist for many of the major oil companies, student of Hubbert, he predicts a 90% drop in oil production by 2020, we're about to run off a cliff.

 

 - get ready   http://www.youtube.com/watch?v=eQCKHEmIDYM&NR=1

Mr Lennon Hendrix's picture

bahaha!  That horse looked pissed!

Seer's picture

Red Green Show, one of my favorites (when I used to watch TV)!

Sure illustrates the thinking of many (and many who are actually in leadership positions!).

cougar_w's picture

Hey look everyone, an optimist!

It isn't the "90% reduction by 2020" that kills you. It's the "20% reduction by 2014" that does it. And a lot sooner

Because without "15% increase in production every year" we go into a tailspin. And by some accounts we hit 0% new net production 3 years ago.

Mad Max's picture

Yes, unfortunately.  You obviously "get it."

Mad Max's picture

And yet, threshing with a horse-powered machine is like 10,000 times easier than threshing by hand.

And I'll bet 90% of the readers can't explain what threshing is without looking it up, and probably half don't get it even after looking it up.

cougar_w's picture

I know what threshing is. And what a scythe is. And I could perform the entire harvest operation myself and grind the flour on a stone by hand and make a loaf of bread from scratch, using natural yeast.

So, that's two of us.

Now what the fuck are you and I going to do to feed all these other Nancy boys?

Hulk's picture

I used  a scythe last summer to clear weeds, used to use one quite a bit on tall red clover to feed the workhorse. Now I know what stomach muscles are needed for!

Mad Max's picture

Yup, that's two of us, and it sounds like hulk might make it too.

What am I going to do?  Hide like a hibernating chipmunk in wolf-town while the rest of the people starve, and emerge from my cave in a couple years to try and find the other productive types.  I'll have some nice forged steel in case some non-productive types made it through as well.

Only speaking metaphorically, of course.

BTW, grain grinders are affordable and durable and a lot nicer than trying to grind by hand.

cougar_w's picture

A scythe can kill, too. Just saying.

And the "grind on a rock" thing was making a point, that's all. In a pinch those as can make due, do.

Hulk's picture

Who would have ever imagined that being raised in poor Appalachia would someday, perhaps, have its advantages???

cougar_w's picture

Go straight home and sit down at the feet of your grand-sires and take notes as he/she/they tell you everything they know about life before oil. Every detail, down to how much chicken shit you can add to the garden without burning the soil.

Then write a book, as best you can.

I'm good for 20 copies.