The New World Oil Order  

Posted by Big Gav

Hugo Chavez has been in the news a lot lately, with his plan to sell Venezuelan oil for a fixed US$50 per barrel, and to have their enormous extra heavy oil reserves recognised for OPEC quota purposes. I'm not sure betting against Warren Buffett and all the other US$ bears is a good idea (why sell good energy for dodgy paper), but its an interesting move anyway. Exactly how much realisable oil is really in these reserves is a matter of debate of course (many observers cite an EROEI of 3 for this sort of hydrocarbon, which is ominous from a global warming point of view). Venezuela also seems to be steadily moving towards nationalising the oilfields (which may be the ultimate sin Chavez could commit - the history of third world leaders who nationalise oil fields isn't a pretty one).

Venezuelan president Hugo Chávez is poised to launch a bid to transform the global politics of oil by seeking a deal with consumer countries which would lock in a price of $50 a barrel.

A long-term agreement at that price could allow Venezuela to count its huge deposits of heavy crude as part of its official reserves, which Caracas says would give it more oil than Saudi Arabia.

"We have the largest oil reserves in the world, we have oil for 200 years." Mr Chávez told the BBC's Newsnight programme in an interview to be broadcast tonight. "$50 a barrel - that's a fair price, not a high price."

...

Venezuela's oil minister Raphael Ramirez told Newsnight in a separate interview that his country plans to ask Opec to formally recognise the uprating of its reserves to 312bn barrels (compared to Saudi Arabia's 262bn) when Mr Chávez hosts a gathering of Opec delegates in Caracas next month.

Venezuela's ambitious strategy to boost its standing in the global pecking order of oil producers by increasing the extent of its officially recognised reserves is likely to face opposition. Some countries will oppose the idea of a fixed price for the global oil market at well below existing levels. Others are unlikely to be happy with any diminution of their influence over world oil prices in favour of Venezuela.

Greg Palast has an interview with Chavez on the BBC, with the accompanying article entitled "The New World Oil Order" which obviously I'm going to find irresistable...
If you thought high oil prices were just a blip think again. In an exclusive interview with Greg Palast for BBC Newsnight the Venezuelan President Hugo Chavez has ruled out any return to the era of cheap oil.

US Department of Energy analyses seen by Newsnight show that at $50 a barrel Venezuela - not Saudi Arabia - will have the biggest oil reserves in OPEC. Venezuela has vast deposits of extra heavy oil in the Orinoco. Traditionally these have not been counted because at $20 a barrel they were too expensive to exploit - but at $50 a barrel melting them into liquid petroleum becomes extremely profitable.

The US DoE report shows that at today's prices Venezuela's oil reserves are bigger than those of the entire Middle East including Saudi Arabia, the Gulf states, Iran and Iraq. The US DoE also identifies Canada as another future oil superpower. Venezuela's deposits alone could extend the oil age for another 100 years.

The US DoE estimates that Chavez controls 1.3 trillion barrels of oil - more than the entire declared oil reserves of the rest of the planet. Hugo Chavez told Newsnight's Greg Palast that "Venezuela has the largest oil reserves in the world. In the future Venezuela won't have any more oil - but that's in the 22nd century. Venezuela has oil for 200 years." Chavez will ask the OPEC meeting in June to formally accept that Venezuela's reserves are now bigger than Saudi Arabia's.

Chavez's increased muscle will not go down well in Washington. In 2002 the Bush administration welcomed an attempted coup against Chavez. He told Newsnight that the Americans had organised it in an attempt to get hold of Venezuela's oil.

Ironically by invading Iraq George Bush has boosted oil prices and effectively transferred billions of dollars from American consumers to Chavez.

Bush's generous donation of American money to Venezuela has me wondering, and not for the first time, if he will unwittingly become known as the father of american (and by that I mean both continents) socialism - something only a particularly stupid "conservative" could manage.
Earlier this year US Defense Secretary Donald Rumsfeld compared Chavez to Hitler - because he was elected democratically - and last year the influential American evangelist Pat Robertson called for his assassination. Robertson later apologized and said that he did not "necessarily" have to be killed so long as he was kidnapped by American special forces.

Chavez told Newsnight that he was still concerned that George Bush had not learnt the lessons of Iraq and would order an invasion to try to secure Venezuela's oil. "I pray this will not happen because US soldiers will bite the dust and so will we, Venezuelans". He warned that any such attempt would lead to a prolonged guerilla war and an end to oil production. "The US people should know there will be no oil for anyone".

Chavez does not accept Tony Blair's criticism of him for lining up with Fidel Castro. He told Newsnight "if someone is sleeping together it is Bush and Blair. They share the same bed."

Petroleum Review has Chris Skrebowski's latest depletion update (via SPO [pdf]) - the model doesn't seem to show a huge amount of new capacity coming from Venezuela or Canada.



The Oil Drum has a post quoting a report in the UK's Telegraph saying that British officials think a US attack on Iran is inevitable. Hans Blix says that Iran is at least 5 years away from having the bomb (of course, he couldn't find any weapons of mass destruction in Iraq before the invasion - so what does he know...).
The Government is to hold secret talks with defence chiefs tomorrow to discuss possible military strikes against Iran.

A high-level meeting will take place in the Ministry of Defence at which senior defence chiefs and government officials will consider the consequences of an attack on Iran.

It is believed that an American-led attack, designed to destroy Iran's ability to develop a nuclear bomb, is "inevitable" if Teheran's leaders fail to comply with United Nations demands to freeze their uranium enrichment programme.

The Karavans blog (which same of you may already read) now has an associated web site. I've also embedded the Karavans Newsfeed into the sidebar.

Apparently the vile Pat Robertson (William Gibson's description, and he's always an accurate observer) has begun preaching peak oil end times theology to his mindless followers.
Over at the Oil Drum comments, by way of Matt, we hear that Pat Robertson is talking up Peak Oil on his vile television brainwashing operation.

I consider this a very ominous development. Any business into which Pat Robertson sticks his filthy nose becomes infected with the rotting stench of covert psy-ops, carried out in the name of Jesus. And now he’s glomming on to Peak Oil, just months after calling for the assassination of Hugo Chavez, as if no one would notice.

I find this extremely upsetting. Clearly the call has been made to mobilize all those values voters, those “Christian soldiers” who believe in the most unChristian doctrines ever dreamed up, to respond to Peak Oil. Is it because the appointed-figurehead Bush is losing poll ratings so dramatically? Is it because the neocons’ efforts to seize control of Iraqi oil have gone so badly awry? Is it because their brazenly stupid interpretation of Leo Strauss’ “noble lie” idea is , predictably, caving in on them?

Whatever the reason, what this heralds is the injection of fundamentalist Christian politics into preparations efforts. The spectre of collapse is quite bad enough without having to also deal with the self-appointed judges of eternal salvation trying to use collapse as an excuse to wipe out every last vestige of culture, science, and the arts, so that nothing survives except fundamentalist Christian theology. Pat Robertson’s efforts to get his sheeple up to speed with regard to Peak Oil means we can look forward to the culture wars spilling over into peoples’ efforts to prepare; we can look forward to them seizing control of local resources because they are, of course, the “chosen ones.” Pat Robertson and his ilk are not interested in helping anyone, in saving anyone, or in doing anything constructive. What they want is raw, unadulterated power, even the power over peoples’ very thoughts, and they will use Peak Oil to further their own unholy agenda with no moral or spiritual parameters whatever.

If the Antichrist of Christian apocalypse mythology ever were to come, he would surely come with a bible in one hand and an American flag in other, and all the fundamentalist Christians will line up behind him without ever stopping to consider that their actions are the mostly profoundly unChristian, unloving, evil deeds the world has ever seen. They would never stop to consider that Jesus was a friend to ordinary people, and that his pronouncements of judgment were leveled solely against the religious fundamentalists of his day.

Also at Adaptation, a post on They Rule "a Flash-based mapping system that lets you track interlocking directorates of the biggest companies in the world" - maybe Mobjectvist should consult this while trying to join the dots. Mobjectivist also has a post on Fossil Fools day, including a link to a Vonnegut piece advocating a cold turkey approach to reducing our dependence on oil.

Past Peak has a post noting that civilian deaths in Iraq have surged in recent months. John Robb (also a believer in "The Salvador option" theory it seems) notes "The Window of Controlled Chaos Slams Shut". He seems to think the mysterious Zarqawi was behind the Samarra mosque bombing (which I find fairly laughable) but its an interesting post nevertheless.
Back in 2004, I wrote a brief on how the US, unable to contain the growth of Iraq's open source insurgency, was planning to use loyalist paramilitaries (the Latin American solution) to contain it (this is analysis I repeated a year later in the New York Times):
The establishment of... loyalist paramilitaries in Iraq would quickly put the insurgency on the defensive. Over the next year, their activities will likely result in a level of "controlled chaos" sufficient to allow the US to withdraw its forces. Additionally, these militias could operate while the government maintains a fig leaf of democracy.

This is exactly what happened. However, I ended the brief with this caveat on the consequences of this choice:
* Institutionalized corruption. These militias would likely involve themselves in illegal activities. A government abetted franchise for their counter-insurgency activities would require inaction in regards to their criminal actions.
* Human rights abuses. These militias will operate within the same rule set used by the guerrillas they are fighting. This means assassinations, hostage taking, etc.
* Long term instability. While the militias will be able to put a lid on the growth of the insurgency, they will likely be unable to eradicate it. This means that Iraq will be stable enough for the US to leave but will suffer long-term instability.

...

Here's a likely scenario for how this will play out: deeper entrenchment within US bases (to limit casualties) and pledges of neutrality (Rumsfeld) will prove hollow. Ongoing ethnic slaughter will force US intervention to curtail the militias. Inevitably, this will increase tensions with the militias and quickly spin out of control. Military and police units sent to confront the militias will melt down (again), due to conflicting loyalties. Several large battles with militias will drive up US casualties sharply. Supply lines to US bases from Kuwait will be cut. Protesters will march on US bases to demand a withdrawal. Oil production via the south will be cut (again), bringing Iraqi oil exports to a halt

MonkeyGrinder has a tribute to Iraqi blogger Riverbend, along with an interesting set of graphs. I'll note that I hopped on the bandwagon within weeks of MG's unveiling of the first Peak Energy franchise (unwittingly claim jumping on the same name) - and its been an interesting ride so far.



Also included - bug food.



On a Viridian note, TreeHugger reports that Herman Miller will shortly be unveiling a foray into cool LED based lighting - I'm looking forward to trying one of these babies out - hopefully they cost less than his chairs.
Herman Miller has teamed with San Francisco-based uber-designer Yves Béhar to bring the world what they think is the next generation of interior lighting. Leaf is a combination of LED technology, engineering and design; "a fusion of technology with humanity," according to Béhar. Its unusual design allows for direct or ambient light from the same source -- kind of like a bunch of LEDs on a dimmer switch. "Leaf is designed to give the user a spectrum of choices to express light's magical and sensory variations," says Béhar of the light's ability to produce warm-to-cool colors with a simple touch control. Leaf has been developed according to Herman Miller's Design for the Environment protocol, emphasizing sustainable processes, materials and recyclability; overall, Leaf's LEDs consume less than 12 watts of power, carry a lifespan of over 60,000 hours at full power, and cut energy use by 40 percent compared to compact fluorescent lights.



Wired has a report that India will be helping the US develop a hydrogen plant fueled with "clean coal".
The federal government's plan for a hydrogen fuel plant powered by clean coal received a boost when the government of India gave $10 million to the effort. The FutureGen project, which could break ground in 2012, will generate both electricity and hydrogen from coal. According to Fuel Cell Today, India will get access to technology, and some of the work on the $950 million project could be performed by Indian companies.

WorldChanging has a post on moves towards building zero net energy buildings.
Can buildings use zero net energy, be carbon neutral, and still be commercially viable? That intriguing question is being asked these days -- not by fringe green building champions, but by major multinationals. Clearly, they see net-zero buildings yielding net-positive profits.

The most recent development came last week from the World Business Council for Sustainable Development, which said it is forming an alliance of companies "to determine how buildings can be designed and constructed so that they use no energy from external power grids, are carbon neutral, and can be built and operated at fair market values."

Today's tinfoil decoration comes from the usual source - this effort looks at 2 subjects I find fascinating - who was on the right side of stock market moves after 9/11 and the Paraguay border regions. While the US base / Bolivia connection is obvious I'm still baffled by this Guarani aquifer thing.
How's this for a headline, and from Institutional Investor, even:
Mystery N.Y. Bank Allegedly Funnels $3B In Funds To Terrorists

A bank identified only as being one of the largest and most prominent in New York has been caught allegedly funneling an estimated $3 billion in profits from drug deals and other illegal activities to Mideast terrorists, The New York Post reports. Manhattan District Attorney Robert Morgenthau, the paper says, plugged the profits pipeline as part of an ongoing investigation of suspected funds flowing through local banks.

In the most recent scheme, according to The Post, the money originating from the so-called "tri-border region" of Argentina, Brazil and Paraguay, was transferred to an account at the New York bank through a money-transfer company in Uruguay and then on to accounts in the Mideast, where they were distributed over the past two years to the likes of Al-Qaeda, Hamas and Hezbollah. "I can't go out and arrest Osama bin Laden," the 84-year-old Morgenthau told The Post. "But I can try to cut off his money."

"Tri-border region" sound familiar? "Chiggerbit" notes on the RI board that it's a territory in which Sun Myung Moon has recently planted his Unification flag, acquiring the land atop the Guarani aquafer. Moon's 600,000 hectares also happens to be "an enormously strategic point in both the narcotics and arms trades," according to Paraguay's former drug czar, who adds that "the available intelligence clearly shows that the Moon sect is involved in both these enterprises." And "Starroute" adds that Khalil bin Laden, Osama's brother, has business connections in the nearby Brazilian province of Minas Gerais, "an alleged center for training terrorists."

The Post today discloses the identity of the "mystery bank." And guess who:
The Manhattan DA is pursuing a settlement with the Bank of America in a major money-laundering probe of more than $3 billion that flowed from Latin America through one of the bank's accounts to Mideast fanatics, sources said yesterday.

Sources familiar with the case - reported in yesterday's Post - revealed that DA Robert Morgenthau is close to reaching a settlement with the nation's second largest bank. The bank is not being accused of complicity with money-launderers or terrorists, but is facing possible penalties for dealing with an unlicensed money transmitter from Uruguay, sources said.

I haven't given out a "Visitor of the week" award in ages - while the occasional interesting domain appears in the logs most of these are repeat visitors (some of them I'd even class as regulars, albeit not the kind to leave comments or send emails) - however tonight "The Uranium Institute" of London passed by to read about Tim Flannery's views on nuclear power. I'll expect he'll be quoted in the pro nuclear PR blizzard in the near future...

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