Their Oil Under Their Sand

Some news items from this week: First, “Iraqi Oil Workers' Union Threatens Strike to Block New Oil Law,” Bloomberg, 26 June 2008, http://www.bloomberg.com/apps/news?pid=20601072&sid=aqw8Ov90wow8&refer=energy. This story describes another round in the continuing saga of how the West, specifically the United States, is seeking to achieve the goal for which it fought the Iraqi war: to gain control of Iraq's oil reserves so that they could be owned and exploited by Western international oil companies. The first installment of that story involved the appointment of Lewis Paul Bremer III by President Bush to oversee the management of the Iraqi economy and national resources after the removal of Saddam Hussein. As the “governor” of Iraq, Mr. Bremer issued 100 orders to the Iraqi people. These orders commanded the nearly complete privatization of of Iraq's state-owned enterprises, the allowing of up to 100 percent foreign ownership of Iraqi businesses, and the granting of full immunity from prosecution to all foreign contractors, including private security firms. (Sources: Wikipedia, http://en.wikipedia.org/wiki/Iraq_oil#After_the_Fall_of_Saddam_Hussein and http://en.wikipedia.org/wiki/Paul_Bremer)

Mr. Bremer served as “governor from May 2003 to June 2004, when he was replaced by the first of several governing bodies largely picked by overseers from the United States government. From February 2007 onward, President Bush has been pressing the Iraqi government to pass a national “oil law” which would formalize many of the policies begun by Paul Bremer. This oil law would give overwhelming control of Iraqi oil reserves and production to foreign international oil companies like Royal Dutch Shell and Exxon Mobil, on terms far more generous than those granted by any other Mideast oil-producing nation. (Source: Oil Change International website, http://priceofoil.org/wp-content/uploads/2007/05/IOLupdate052107.pdf) While this law was stalled in negotiations for over a year, it now seems very close to ratification.

Why is the Iraqi Oil Workers' Union threatening to strike if this law is implemented? Because they resent seeing their nation become yet another victim of globalism – a nation whose natural resources are extracted by foreigners who reap fantastic profits while paying slave wages to the citizens of the nation for the “privilege” of working for these foreigners. It must be especially galling to the Iraqis, whose country was invaded on a pretext, solely for the purpose of allowing the West to rape their resources.

But the funny thing is that the Iraq war and the oil law may be a mistake for another reason. One of the things that's always mentioned in mainstream media coverage of Iraq is that the country is supposed to hold “vast, untapped” oil reserves. Impressive numbers are tossed out by people who salivate whenever these numbers are mentioned – 100 billion barrels! 115 billion barrels! Who knows, maybe even 350 billion barrels!!! (Sources: “Iraq Upgrades Reserves to 350 bil. Barrels, Invites New IOC's for Pre-Qualification,” 20 May 2008, www.globalinsight.com/SDA/SDADetail12591.htm; “The Challenge of Exploiting Iraq's Oil,” BBC News, http://news.bbc.co.uk/2/hi/business/7461042.stm)

These are curious numbers, but there is historical evidence that the oil “books” may have been cooked. For many years before OPEC, the oil wealth of the Mideast was exploited by Western international companies such as Exxon Mobil, Total, and others. Geologists for these companies established field size and reserve estimates based on sound science and engineering judgment. But when OPEC was formed after many of the assets of these companies were nationalized by Mideastern governments, the OPEC ministers set a policy of allowing each OPEC member country to produce a certain monthly oil quota, with that quota being set by the reserves each member country claimed to have. This was done to prevent the price of oil from being driven down to unacceptable levels, since the sale of oil made up so much of the gross domestic product of the OPEC member countries.

The problem with this arrangement was that since the prosperity of member countries depended so heavily on the selling of their oil, they were under great pressure to inflate their reserve numbers so that they would be allowed to sell more oil (remember, this was over two decades before the present oil shortage we are now seeing). Therefore, just before the quota system was enacted, Kuwait published reserve figures of 63.9 billion barrels; Saudi Arabia published figures of 166 billion barrels, Venezuela reported 24.9 billion barrels, and Iraq claimed 43 billion barrels. But in 1985, when the quota system was in effect, Kuwait magically and mysteriously raised its stated reserves to 90 billion barrels. In 1988, Iraq raised its reserve figures to 100 billion barrels. And in 1990, Saudi Arabia raised its reserve figure to 257.5 billion barrels. No one knows whether these reserves are based on valid geological surveys or whether they are simply hot air. But the Saudis have claimed from 1990 onward that their reserves have remained at 260 billion barrels – even though they have been pumping over 9 million barrels a day ever since. Truly Saudi Arabia must be a magic land – a land not only of flying carpets, but of cars whose gas tanks never run dry, no matter how much they are driven! (Source: “Peak Oil: The Challenge, the Possible Responses,” Richard Heinberg, 24 August 2006,
http://www.holmgren.com.au/DLFiles/PDFs/HeinbergAdelaidePublic%20.pdf)

Now, if we assume that the Iraqi reserves have been overstated since 1988, and that the actual figure is somewhat less than 43 billion barrels, we can calculate how long Iraqi oil will last at present and/or desired rates of extraction. Even if we don't know the true extent of Iraqi reserves, we can formulate a pretty accurate guess, using a mathematical technique known as Hubbert linearization, which requires simply that we know the rate of extraction and the total amount of oil extracted to date. Thus it is possible to guess how much Iraqi oil will help America continue its extravagant and unsustainable lifestyle, and for how long that oil will sustain our way of life. We can then formulate a comparison: on the one hand, the total amount of recoverable Iraqi oil available to the U.S., along with the total economic value of that oil; and on the other, the total number of Iraqis killed in this present Gulf War, the total number of American soldiers killed or traumatized, the total amount of damage to Iraqi society, and the total amount spent by the U.S. on the war effort. But if even after that comparison, someone still thinks our seizure of that oil was worth the price, let that person compare the temporary benefit of enjoying stolen goods against the pain of everlasting judgment. Since I am an evangelical Christian, I believe in everlasting judgment. I do not sympathize with radical Islam; yet I believe that what was done in Iraq by the United States is wrong, and that it will have eternal consequences.

Which brings me to the second bit of news: there are two bills pending in Congress right now. One, HR 362, would authorize the President to conduct a naval blockade of Iran in order to prevent the import of refined petroleum products by Iran and to inspect all ships and cargo entering or departing Iran (Source: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=110_cong_bills&docid=f:hc362ih.txt.pdf). Senate Resolution 580 is similar, but milder in that it states that “nothing in this resolution shall be construed to authorize the use of force against Iran.” (Source: http://www.govtrack.us/congress/billtext.xpd?bill=sr110-580). These two bills are supposed to counter the threat posed by an Iranian nuclear weapons program, even though United States intelligence agencies issued a National Intelligence Estimate in December 2007 which stated that Iran halted its nuclear weapons program in 2003 in response to international pressure. Reasonable people would conclude that war with Iran is unnecessary and that therefore, the best policy in dealing with Iran is to maintain enough international pressure to persuade the Iranian government to exercise good global citizenship. But most of the decision-makers in Washington do not seem to be reasonable. Rather, they are intoxicated by the smell of oil – perhaps bazillions of barrels of vast, untapped reserves!

As far as daily life goes, it is supposed to get very hot in the Pacific Northwest this weekend (but we don't believe in global warming, now, do we? After all, James Dobson is working overtime to make sure that We Get It!) One advantage of the hot weather is that it enables environmentally friendly ways to dry clothes.

If you've never seen one of these, they are easy to construct: a few lengths of galvanized threaded pipe from Home Depot, some cement, some post-hole diggers, and a bit of cord, and you're in business. And clothespins are still widely available...

The Numbers Tell The Story, Part 1

I went shopping this weekend. Some prices at Winco (which saves costs by making customers bag their own groceries):

• Brown rice (bulk): 96 cents/pound (It was 55 cents/pound as late as February)
  
• Lentils (bulk): 88 cents/pound (Lentils were around 49 cents/pound as late as February)
  
• Sun Laundry Detergent (I can't remember the size right off, and I'm not at home now. It was the biggest plastic tub I could find of the stuff): $7.98 (Since last year, their biggest plastic tub shrank)
  
• Gillette Custom Shavers, 5-pack, disposable: $4.54

And as for gas prices...need I say anything?

Pages Of Your Book On Fire

A few news items caught my eye this week. First, Washington D.C. police chief Cathy Lanier and Mayor Adrian Fenty recently announced the launch of a program to impose “neighborhood safety zones” in the D.C. area as part of their strategy to “curb violent crime.” The “safety zones” are manned by D.C. police who seal off designated neighborhoods, establishing checkpoints at places of entry and exit into these neighborhoods, demanding proof of identification for anyone found outdoors in the neighborhoods, and arresting or removing anyone lacking a “legitimate reason” to be there. During the first week of this program, officers were sent to the safety zone checkpoints (barricades, actually) without proper training in constitutional rights, according to news accounts. The first neighborhood safety zone has been set up in the Trinidad neighborhood, whose population is primarily black. (Source: “Lanier plans to seal off rough 'hoods in latest effort to stop wave of violence,” The Examiner, 4 June 2008, http://www.examiner.com/a-1423820~Lanier_plans_to_seal_off_rough__hoods_in_latest_effort_to_stop_wave_of_violence.html)

Of course, this implies that the politicians who run D.C. believe, or want the public to believe, that those who commit crimes in their city are mainly black. This is reflective of a larger bias in the American criminal justice system, which stops, arrests, prosecutes and sentences members of minorities with far more severity than the rest of the population. In fact, minority males who commit a crime are likely to receive much stiffer sentences than non-minority males convicted of the same crime. A large part of the disparity in arrests and sentencing is due to the so-called national “war on drugs” which has been waged since the 1970's in the U.S. Though statistics show that crimes perpetrated by black and other minority persons as a percentage of the total minority population are the same or less than crimes perpetrated by whites, law enforcement is primarily targeted toward black and minority neighborhoods. As a result, as many as one in three young black males is in prison, serving a long and harsh sentence. (Sources: “Racially Disproportionate Drug Arrests,” Human Rights Watch, http://www.hrw.org/reports/2000/usa/Rcedrg00-05.htm; “The war on drugs' war on minorities,” Los Angeles Times, 24 March 2007, http://www.latimes.com/news/printedition/opinion/la-oe-huffington24mar24,1,3333535.story?coll=la-news-comment) (As an example, in 2006, teen actor Haley Joel Osment was arrested after a car crash for drug possession and driving while intoxicated. He was sentenced to three years probation, 60 hours in an alcohol rehabilitation and education program, a fine of $1500, and a minimum requirement of 26 Alcoholics Anonymous meetings over a six-month period. What do you suppose would have happened to me if I had been arrested for the same offense?)

This failure of our supposed system of equal justice is rivaled only by the failure of Federal law enforcement agencies to investigate and prosecute banks involved in steering minority families into predatory subprime mortgages. To be sure, the present mortgage meltdown has claimed a lot of victims from every background who wanted more than they could afford, and who thought they could get something for nothing. But the subprime market was targeted primarily at minorities, who were “steered” into subprime mortgages at a rate of 55 percent of black Americans versus 17 percent of whites. This took place even when the minority applicants could have qualified for a traditional mortgage with a lower interest rate. (Source: “Federal Reserve Study Finds Race Played Role In Steering Home Owners to High Interest Sub Prime Mortgage,” Gant Daily, 10 March 2008, http://www.gantdaily.com/news/11/ARTICLE/14770/2008-03-10.html)

But these items are merely signs that the oligarchs who run our society are happy to demonize, dehumanize and victimize those who are different from them. Those readers who are not from a minority background, and who are not (yet) poor should not grow smug or complacent, because they may be next in line for victimhood, as the people at the top of our economic system feed more desperately on those lower down. In his book, Reinventing Collapse, Dmitri Orlov has written a section titled “World's Jailers,” in which he describes how the American judicial system works well only for those who are rich. That system is perilous for the poor, no matter their color or ethnic background. Unfortunately, as the global energy crisis deepens and world petroleum extraction rates fall, more and more of us will become poor. More and more of us will become fair game for the rich, who will use every method to get what they want from us, even if it means using the courts to rob us of property or rights that are justly and rightly ours.

One of Orlov's more chilling statements is this: “If life without money is to become more normal for most people in the U.S, then it seems inevitable that the flow of humanity will become bifurcated. Those who are most helpless will find themselves on the inside (as in locked up), in institutional settings such as jails, asylums and hastily organized camps for the internally displaced...” As the global economy continues to unravel, and the U.S. economy with it, American society will become increasingly disordered, swelling the ranks of the suddenly poor and helpless. Many of these, being people who were formerly well off, will be very surprised that they are now being institutionalized.

And speaking of disordered societies, the second news item I noticed was the increasing severity of fuel price protests and strikes in Europe this week. Truckers in Spain and Portugal are striking, blockading shipping terminals, factories and large retail supply warehouses. Violent protests in Spain and Portugal have claimed at least two lives. Protests are spreading throughout Asian countries and India. A four-day truckers' strike began in Britain today.

Ostensibly the protests are about the burden placed on working class people by the high cost of fuel, which is coming on top of rising costs of food and other basic necessities. But that is only part of the story. The truth is that high and rising petroleum fuel costs are due to basic supply constraints caused by depletion of existing oil fields and the lack of new fields with sizes sufficient to satisfy global petroleum demand. We are at Peak Oil now. From here on, daily global petroleum production will decline, and there is nothing we can do about it. The well is running dry. This will lead to hardship and a forced change in the lives of almost everyone.

But hardship and forced changes are much easier to take when people honestly face the coming changes. The preparation is first and foremost a mental one, though practical details do follow afterward. So it was that England did so well during World War II under the leadership of Winston Churchill, who told the British people the truth about the world in which they found themselves, the threat they faced, and the steps they needed to take to deal with that threat. Therefore, the British faced their hardship by a heady dose of realism. There have been other times during the 20^th century in which heads of state told difficult truths to their people, and the people successfully prepared themselves for difficulty.

The last time a head of any government tried to tell his people honestly about dwindling energy supplies, that head of state was President Jimmy Carter, and his message was that we Americans would have to learn to live well on less. Unfortunately, President Carter was unpopular due to his almost losing the Cold War, but his unpopularity on that front gave Americans a convenient excuse to throw away his talk of learning to live on less. Since then, no American politician has seriously talked about making realistic preparations for the times now upon us. Rather, both American and foreign politicians and media outlets have been trained by their corporate masters to deliver a message that happy times are here to stay, and that the sensible thing to do is to spend and consume our lives away. What we are seeing in the rest of the world is simply the reaction to hard times on the part of people who have not been mentally prepared for those hard times by a strong dose of truth telling. Thankfully, there is much good information on the Internet for those who want a straight dose of the truth. Yet the worldwide protests show how few people have availed themselves of that information. What will people do when things get much worse in the U.S.?

And that leads me to the third bit of news: the Weekly Petroleum Status Report published by the Energy Information Administration (EIA) of the U.S. Department of Energy. According to the EIA, weekly petroleum inventories in the U.S. have been falling by between 3 and 9 million barrels per week for the last four weeks. According to the weekly report published on 11 June 2008, U.S. crude oil inventories stand at 302.2 million barrels. This is troubling news. First, it means that the U.S. has been unable to produce enough of its own oil or import enough oil from other countries to meet U.S. demand; therefore we are now drawing down our own stored reserves. Secondly, only a small portion of that 302.2 million barrels is actually a reserve. 270 million barrels is the minimum operating level that must be in the system of U.S. refineries and processing plants at all times. If U.S. stocks dip below 270 million barrels, then refineries have to start shutting down.

And right now, it is becoming more and more difficult to import oil from other nations, as demand throughout the world increases and supplies are exhausted. We could therefore be facing a situation within the next 6 weeks to two months in which we experience a sudden super-spike in oil prices and corresponding price increases for finished petroleum products like gasoline and diesel fuel, and we could even begin to see significant shortages in the U.S. I do not pretend to be an oil industry expert; I'm just a “peak oil junkie.” But I'd be making plans for dealing with interesting times, if I were you.

* * *

Ah, but what shall I say about this city in which I now live? There are many days where its downtown seems like a jewel, its bridges spanning its rivers like precious metal rings encircling gilded fingers. I certainly enjoy this place more than Southern California, and am happy for my job transfer, even though it's colder here and much rainier. For one thing, it's much easier to commute by bicycle here than it was there, where most drivers seemed only a hairsbreadth away from throwing murderous tantrums with their outsized, overpowered monster vehicles. There are tons of farmers' markets here, because there are still lots of farmers here, whereas most land in Southern California only grows houses and strip malls now. Public transportation is much more accessible and convenient here, whereas in Southern California, you can get to many places faster by walking than you can by bus. There are many people here practicing the healthy habits that serve to make a life collapse-proof: self-sufficiency, reducing car dependence, gardening for food, creation of local culture, and so on.

Yet is this place the sort of enduring jewel, the hard, beautiful, costly rock that can endure the testing that is about to come on all of us? Is it resilient enough? Do enough people here “get it?” Or will this city prove to be like a jewel made of rock candy in a hard rain? Such a question is only fitting at the end of a week in which WTI crude hovers above $130 a barrel.

And what shall I say about Southern California where I am from? To what shall I compare it? What image, what metaphor will suffice?

The Myth of Inadequate Investment (?)

On 31 May 2008, in the “Drum Beat” section of the Oil Drum website, a Newsweek story on escalating oil prices was featured. The story was titled, “The Coming Energy Wars.” I only read the first few paragraphs; yet I was intrigued by its tone, and by the picture at the top: a fire-lit nighttime shot of people in France protesting high fuel prices. The story spoke of the shock that rising oil prices has already caused throughout the world, and warned of the turmoil to come if oil prices rise rapidly to $200 a barrel. It seems that the reporters at Newsweek even grasped the threat such prices would pose to globalism, and to retailers such as Wal-Mart and the people who depend on such retailers for cheap imported goods.

But the thing that stood out to me was the frightened tone of the article. It's as if the Newsweek staff had actually been talking to me and I could hear the nervous quiver in their voices. For so long, the mainstream media has served up stories of sports, sex and celebrity in its bid to prevent Americans (and Canadians and Brits as well) from seriously considering the trends and events that really matter in the world. But now those events are crashing in upon us with a force and an urgency that cannot be ignored. Yet the Newsweek staff was not so frightened that it forgot its primary mission in reporting such stories: to tell enough of the truth to sell magazines and advertising, while packaging that truth in a wrapping of propaganda in order to promote the agenda of its corporate masters.

For example, after citing “...the stranglehold OPEC imposed on the world in the 1970s,” the article lists reasons for the oil shock of 2008. While the article gives passing acknowledgment to shrinkage of estimates of reserves in oil producing countries, it also cites the usual suspects: increased demand from China and India, increasing global conflict, industry bottlenecks and falling investment. Falling investment or inadequate investment in oil field extraction are commonly cited by the mainstream media as reasons why oil extraction cannot keep up with demand. Major American and British papers and other journalistic outlets are especially quick to blame nonwhite, Third World nations for “lack of investment” when the supply of oil from those nations begins to diminish. The same “journalists” often criticize nations which nationalize their oilfields, saying as the Newsweek article does, that this “...often leads to lower output, due to the inefficiency of most state oil companies...”

This reminds me of Dmitri Orlov's analysis of the American practice of “economic development” as a means of promoting globalism. In that analysis, found in his newly published book, Reinventing Collapse, he states that the aim of US economic development policy in the Third World has historically been the extraction of a country's economic resources under terms most favorable to Western corporations and banks. The way it worked was as follows: The US and its allies, by means of the World Bank and International Monetary Fund (IMF), would extend economic assistance to the government of a “poor” Third World country in order to bring “prosperity” to that country. The government of the nation in question would usually consist of corrupt pro-Western stooges who had been placed into power through Western behind-the-scenes intervention. The economic assistance offered to the country consisted of a generous loan in order to finance the systems and machinery necessary to extract the country's resources. However, those systems and machinery were owned by American and other Western corporations, who were allowed them to reap almost all the profits of those resources, while paying a small percentage to the country's rulers as a bribe. The majority of the citizens of the country never saw a penny of those profits; however, they were saddled with paying down the debt of the original “loan.”

This is but one of many schemes which have been used by the United States and its allies to secure the natural resources of the rest of the world for Western consumption. However, over the last several years, these schemes have run into trouble, as far-flung countries with natural resources have refused to play the game of the West. Therefore, there is now a big public relations campaign in Western media, including such magazines as Newsweek, to portray the rightful owners of these resources as incompetent, unintelligent children who need Western expertise in order to properly “manage” their resources. This campaign is also being carried out by means of the mouths of pro-Western stooges in the governments of such nations as Mexico, whose president, Felipe Calderon, has been warning for months of dire consequences to the Mexican economy if the nation refuses to allow foreign investment in its national oil company, PEMEX. (Source: “Mexico's Calderon Seeks to Overhaul PEMEX,” Los Angeles Times, 9 April 2008, http://www.latimes.com/news/nationworld/world/la-fg-pemex9apr09,1,1405382.story)

In the Times story, the Mexican government states that Pemex's petroleum reserves had fallen 27% between 2002 and 2007, but seems to say that the answer is allowing international oil companies to have a stake in developing Mexico's oil wealth. No mention is made of geology or of the fact of depletion of existing fields, nor is it mentioned that when the oil production of the United States began to decline in the 1970's, the big private American oil companies were unable to stop the decline. I assert that the big private international oil companies are not saviors; rather, the aim of their PR campaign is simply to fool Third World nations into letting the internationals have the lion's share of a dwindling resource.

But such an assertion needs facts and proof to back it up. Very well. I think now of a podcast I heard a few months ago in which investment banker Matt Simmons was speaking. One thing he said was that all the talk of production shortfalls being caused by lack of investment or expertise in exporting countries with nationalized oil industries was false. He stated further that many of the nationalized oil companies have technical staff, finances and equipment that is equal if not superior to anything owned by the private internationals. Also, many of these countries depend on third-party oil service companies to undertake any technically demanding tasks that are beyond the skill of the national oil companies. These countries like the third-party service providers because they only charge a fee for their expertise and their work, and are not trying to take over ownership of any country's oil resources. According to Simmons, there is no lack of investment or expertise in the nationalized oil industries of many countries.

I base my opinion, therefore, largely on Matt Simmons, whom I regard as an expert. But his statements should be independently verifiable. So I am throwing out a challenge to anyone who reads this: do some research on the third-party oil service companies (those who provide oil extraction services but who do not own oilfields). See their expertise, who their clients are, and what their annual revenues are. Then present an analysis of the true extent of investment by the national oil companies in their own oil extraction, including money spent on securing the services of these third-party companies. Such an analysis could be published on a website such as the Oil Drum (www.theoildrum.com), where it would be subjected to an instant “peer review.” Such an analysis, if truthful and accurate, would provide a ready answer to journalists who write about a lack of expertise or investment by national oil companies. Some of the third-party companies are as follows: Schlumberger, Dresser Industries, and Fluor. A more complete Wikipedia list can be found at http://en.wikipedia.org/wiki/List_of_oilfield_service_companies. (If no one takes up my challenge within a month, I suppose I'll have to do it myself : ))

The Fraying of Globalism

Abandoned Wal-Mart, Beaver Dam, Wisconsin

Over eight months ago, I made a promise to myself that if I needed to buy any large or significant household item, I would buy it used, as part of my anti-materialist, anti-globalist, environmentally friendly personal commitment. Therefore, a couple of months ago, I bought a concrete weight set on Craigslist. While driving back to my house, I noticed a garage sale in progress, so I stopped, as I was (and still am) looking for a good, inexpensive, sturdy dining table and chairs. Unfortunately, I had found this particular garage sale too late to score a dining table, but they did have a collection of cheap paperback books which I perused before buying a few.

One of the books I bought was The Lexus and the Olive Tree (Thomas L. Friedman, Anchor Books division of Random House, Inc., April 2000). The book purports to examine the impact of globalism (the Lexus is used as a metaphor for this), and the tension between neoclassical, “free-market” economic globalism and the local economies and cultures which it supplants (the olive tree being the metaphor for these local economies and cultures). I tried skimming through it, but found myself in violent disagreement with what I perceived to be its premise: that globalism, even with its disadvantages and side effects on local living, is still a good thing, and that it should be embraced. I believe that the opposite is true: that economic globalism has stripped many local peoples and local cultures of their means of being self-sufficient, and has instead forced most of the world's people into dependence on and slavery to an economic system which actually benefits only a few rich oligarchs. And now the signs suggest that the system is breaking. (If anyone reading this thinks that I have misinterpreted the book's premise, or that the book's author is correct in his premise, feel free to comment. I have to admit that I didn't have the patience to force myself to finish the book.)

There are abundant signs that the globalist system is beginning to run into serious trouble. The globalized model on which most agribusiness is based is a case in point. Things got interesting recently for companies such as Mahatma Rice (owned by Riviana Foods, which in turn is owned by Ebro Puleva, S.A. http://www.riviana.com/who_we_are.html), whose business models depend on growing rice in Third World countries where land and labor is cheap, then shipping it to markets in the First World for sale at an elevated price. Recent crop failures and the escalating cost of food, coupled with a worldwide grain shortage, have induced countries such as India and the Philippines to stop exporting rice. This past winter, the Chinese government ordered a halt to coal exports because of record low temperatures and snowfall. And China may well become a net coal importer this year because of the country's generally increasing need for electric power to support its continued industrialization.

But a prime example of a globalist economic system that may get into trouble very, very soon is the big-box retail chain. This week, on the Oil Drum and Energy Bulletin websites, I found a fascinating article from the Canadian newspaper The Globe and Mail. The article, “High Oil Prices Will Hurt Trade, Report Says (http://ctv2.theglobeandmail.com/servlet/story/RTGAM.20080527.woileconomy0527/business/Business/businessBN/ctv-business),” was cited in at least one other newspaper. It described recent research on the effects of high oil prices on the global economy. The research was performed by chief economist Jeff Rubin and senior economist Benjamin Tal, of CIBC World Markets. Their conclusion was that the high and escalating price of oil was beginning to erase the price advantage enjoyed by businesses who established their manufacturing operations in Third World countries with cheap labor rates and weak environmental regulations and who shipped their finished products to the markets of the First World. A case in point: the cost of shipping a standard 40-foot container from Shanghai to the U.S. East Coast has risen from $3000 in 2000 to $8000 this year.

As the cost of transport rises due to the rising cost of oil, the wage advantage enjoyed by globalist big business is steadily eroded. Messrs Rubin and Tal note that the high cost of shipping effectively imposes a “tariff” of over 9 percent on goods imported into North America from China. This reverses the efforts of multinational corporations over the years to persuade governments of nations to remove tariffs and other legislated trade barriers. Unfortunately for the globalists, there is no way to remove this new and growing “tariff.” If the price of oil rises to $200 per barrel, the effects of trade liberalization policies will be entirely wiped out.

This has already begun to affect the Chinese steel industry, which is now facing stiff competition in North America from a revitalizing American steel industry. And the Chinese are at a double disadvantage, since they have to pay for the cost of transporting raw materials from other nations to Chinese factories, then pay again to ship finished goods to foreign markets. But steel is just the leading edge of a trend. A time will come when cheap foreign furniture, toys and produce are a thing of the past, as the cost of transport becomes an ever-larger part of the total cost of goods sold in the United States. The near future does not look good for big-box businesses such as Wal-Mart, Cost Plus, Ikea, Home Depot, Fred Meyer, Target and others which have driven local retailers out of business by buying cheaply manufactured goods in bulk from overseas factories and underselling their competition. Nor does the future look good for the poor people who have become dependent on getting cheap foriegn-made goods from these stores. These stores may not be with us very much longer.

Our lives and livelihoods are about to become a good deal more local. Even regional trade may soon begin to break down beyond a certain distance. Another fascinating article I read this week was about the breakdowns already taking place in the long-haul trucking business (“Soaring Fuel Prices Take A Withering Toll on Truckers”, New York Times, 27 May 2008, http://www.nytimes.com/2008/05/27/business/27ship.html?_r=3&oref=slogin&oref=slogin&oref=slogin). According to this article, more than 45,000 big rigs have disappeared from U.S. highways since last year. And air freight carriers are in even worse trouble.

I believe this fraying of globalism will accelerate rapidly over the next several months, rather like a hemp rope being dragged across sharp rocks. If you're an employee or holder of stock in a big-box chain, you may want to start making other arrangements. Learning to do those things that are necessary to re-build local economies is a good place to start. Start learning necessary skills that are easy to apply locally and are useful to society. And it is time now to start doing difficult things, and to get used to doing difficult things on a regular basis, so that when you are forced to do a physically difficult thing, you are not taken by surprise.

This week, where I live, the highest gasoline price I saw was $4.47 for premium unleaded at one station that I pass on my way to and from work. I have seen an almost literal explosion of bicycles on the streets, in spite of our typically rainy weather and the large number of hills. I have also seen middle-aged men commuting on skateboards (I almost took a picture of one). During my commute to work, I have noticed that the bike racks on the buses are increasingly filled to capacity, forcing cyclists like me to ride farther to get to work. Today the driver of the bus I took rode up to the bus stop on a bicycle. A co-worker, inspired by my cycle commuting example, rode into work for the first time in over a decade. He is over 60 years old and slightly overweight, and he rode on a day that turned rainy in the afternoon, and I think that dissuaded him from trying it again.

Rice is available again in the stores, though it is 10 cents per pound more expensive than it was a couple of months ago. Lentils and dry peas are also more expensive. I will be planting more vegetables this weekend. One day, I'll write a post about my gardening adventures (I'm very much a newbie at this).

P.S. If you want to see the CIBC reports referenced in the news articles cited above, here are some links: “The New Inflation,” http://research.cibcwm.com/economic_public/download/smay08.pdf; and “Will Soaring Transport Costs Reverse Globalization?”, http://research.cibcwm.com/economic_public/download/feature1.pdf.

Balaam and the Jawbone of James Dobson

As I have mentioned earlier, the global economic system known as the “official” economy is ruled by leaders who strive to trick or force as many people as possible into dependency on the system while attacking anyone who would seek to create a safety net consisting of alternative systems. Of course, this is done in order to maximize the profits realized by the rulers of the existing official system. And this is being done with desperate zeal even in the face of overwhelming signs that the system is now breaking due to resource peaks and climate change. One of the methods employed by this official system is the takeover and consolidation of ownership of every platform for public speech, as seen in the corporate hijacking of both major political parties in the United States, as well as the massive buyouts of media companies, newspapers, publishing houses and radio/TV stations by a handful of rich interests.

This takeover of public proclamation is also taking place in the Church, especially in America. I described this process on my other blog, TH in SoC, in the posts dealing with evangelicals and Money, and evangelicals and political Power. For at least three decades, and probably much longer, Christianity in America has been undergoing a re-definition – a rephrasing designed to remove the otherworldly, charitable, anti-materialist elements from it, and to equate Christianity with the mere affirmation of Republican Party goals and ideals, the worship of the free market and unrestrained capitalism, and a rabid patriotism and worship of the triumphs of American history. Under the banner of “God, guts and guns,” the Religious Right has promoted such ideals as rugged individualism, opposition to government “charity” or regulation, racial and national pride, and an ever-rising American standard of living, without regard for how achieving that standard might affect others in the world. The leaders of the evangelical Right have thus attacked anyone who has said that America – or the world at large – is facing problems caused by increasing and excessive consumption, problems which require collective rather than individual solutions, and that one viable solution to such problems is for us in the industrial West – or particularly, in America – to choose to live more simply. Such a statement is met with howls of protest about “socialism” or “subsidizing laziness”, or how the American way of life is not negotiable, or how those making suggestions for less consumption and cooperation rather than competition are “weakening America!”

And so we come to the current debates over climate change. I have to confess that I don't like reading about the latest evidence for man-made global warming, because it tends to scare the living daylights out of me. (For instance, see http://www.telegraph.co.uk/earth/main.jhtml?xml=/earth/2008/05/22/scioceans122.xml) But I am thoroughly convinced of the science behind anthropogenic global climate change, and thoroughly convinced that we need to do something yesterday to stop it. I also see the damage being done to the poor citizens of Third World countries by our Western “free market” policies, which actually guarantee freedom only for the biggest economic players, and which are making more and more Americans poor as well.

Destroying the earth and forcing people into starvation are moral issues, discussed at length in the Bible (for instance, read Exodus 22:21; Psalm 146:9; Jeremiah 22:3; Matthew 25:31-44; Luke 16:19-31, and James 5:1-6). Yet the Religious Right has chosen to define Christianity narrowly in terms of a few issues, and to condemn anyone who speaks of Biblical concerns with larger issues. The Right therefore teaches that in order to be a good Christian, one should oppose homosexuality and abortion, be patriotic, and vote Republican, regardless of Republican Party positions on any other issues. This has the convenient effect of making the Church the defender of large American/European capitalist interests, because such convictions do not threaten the business practices or bottom line of such interests.

Dr. James Dobson of Focus on the Family, and other influential figures in the American Religious Right, have set themselves up as gatekeepers of evangelical thought and policy, the arbiters of what is or is not a legitimate issue for evangelicals to be concerned about. In 2007, James Dobson, with several other prominent evangelical pastors, called on the National Evangelical Association Board to remove its president because of his attention to the issue of global warming. According to Dobson, the issue is not an appropriate focus for evangelicals, who should focus on “…the great moral issues of our time, notably the sanctity of human life, the integrity of marriage and the teaching of sexual abstinence and morality to our children. In their place has come a preoccupation with climate concerns that extend beyond the NAE’s mandate and its own statement of purpose.” (Sources: “Dobson, Others Seek Ouster of NAE Vice President,” Christianity Today, March 2007, http://www.christianitytoday.com/ct/2007/marchweb-only/109-53.0.html; Letter to National Association of Evangelicals, http://www.citizenlink.org/pdfs/NAELetterFinal.pdf). Also, Jerry Falwell claimed that the debate over global warming is a tool of Satan being used to distract churches from their primary focus of preaching the Gospel. When their statements were widely broadcast in the mainstream media there was a predictable and entirely justified backlash, and they seem to have toned down their statements since then.

But it must be asked why Dobson and his cohorts believe that Christians are doing wrong to concern themselves with more issues than just the ones set before them by the leaders of the Right. Why does Dobson believe that defending, maintaining and promoting a lifestyle of continually increasing consumption is a Christian duty? Why is it un-Christian to believe that our excessive consumption is ruining the earth, especially when there is massive evidence to prove this fact? After his letter to the National Association of Evangelicals, Mr. Dobson and his cohorts assumed a low profile, as they saw an awakening to social justice issues among more and more Biblically orthodox evangelicals. But Dobson never abandoned his agenda. Now he and his associates have come up with a new program to protect the overlords of the “official” economy from having to abandon business as usual for the sake of the common good.

In the Church Executive magazine article dated 16 May 2008 (http://www.churchexecutive.com/news.asp?N_ID=1278), there is an article titled, “Christians Launch Campaign Against Global Warming Hype.” It appears that James Dobson, along with Tony Perkins of the Family Research Council, radio host Janet Parshall, and U.S. Senator James Inhofe, have launched a national campaign to gather one million signatures for a statement that says “Christians must not believe in all the hype about global warming.” The statement is titled, “We Get It!”

According to the article, the backers of the statement seek to inform Christians about the “Biblical” perspective on the environment and the poor, while questioning the science used to prove anthropogenic global warming. One of the statement's backers, Dr. Barrett Duke, vice president of the Southern Baptist Convention's Ethics and Religious Liberty commission, asked, “How can you create policies on uncertain science? How can you say what it is that needs to be done when you don't really know and you don't really have real consensus on the state of the problem or what is causing the problem?”

But these people go beyond questioning the science behind climate change. They have seen that evangelicals – especially younger evangelicals – are increasingly becoming concerned about issues of social justice and the environment, and are abandoning the leaders of the Religious Right as irrelevant and clueless. Therefore these leaders are repackaging their message, talking about all the “harm” that will come to citizens of Third World countries if mandatory caps on carbon emissions are placed on the global economy. They issue dire warnings about premature deaths, starvation, diseases and harm to the human economy in America and abroad, if big businesses are forced to reduce CO2 emissions. Such a message strongly implies that big business and neoclassical free market capitalism controlled by Western multinationals is a good thing for all the world's people.

It's just too bad that the people spewing this nonsense haven't talked to such figures as Vandana Shiva, an Indian activist who is fighting to protect her people from multinational agribusiness corporations who are taking land away from poor Indian farmers. It's just too bad that James Dobson and Tony Perkins didn't check their facts by talking to some of the people at OXFAM before they opened their mouths. It's too bad that Senator Inhofe doesn't listen to Deconstructing Dinner, or that he didn't talk to Dr. James Hanson of NASA. Oh well, maybe these guys don't have links to these valuable sources of information, so here they are: http://www.oxfam.org/en/ for OXFAM; http://kootenaycoopradio.com/deconstructingdinner/ for Deconstructing Dinner; and http://www.navdanya.org/ for information on Vandana Shiva. Oh, and I have many more sources if these people need them. These sources will all tell how “wonderful” these Western multinationals have been for the people of the Third World, and for the rest of us as well.

The most amazing statement in the Church Executive article, though is this one: “Signers of the declaration said while they do acknowledge, in varying degrees, that global warming is real and humans are partly to blame for the earth’s warming, they believe that for the most part the heating of the earth is due to the natural warming and cooling cycle of the planet.” Even if it were true that global warming is due to natural climate cycles, they acknowledge that humans are partly to blame. Then they excuse themselves from any need to reduce human impacts based on their belief that the main driver of warming is natural cycles. This is as stupid as saying, “Forest fires are mostly caused by lightning. Therefore, I am not hurting anything if I play with matches in this dry meadow!”

The We Get It campaigners are taking their show on the road, having “begun a national outreach to pastors, people in the pews, African-American and Hispanic church leaders, youth, artists, homeschoolers, evangelical scientists, congressional and state policy-makers, and other Christian leaders in their effort to gather one million signatures for their declaration on the environment and poverty.” If they come to my town, I'm letting them know in advance that I won't be signing their declaration. In my opinion, Dobson, Perkins and the rest of them are like the prophet Balaam in the Book of Numbers – preachers whose message is based on who will give them the most money. Balaam was blessed with a donkey whom God used to talk some sense into him, but Dobson does not appear to be similarly blessed. It seems instead that just as the jawbone of an ass was used to kill many people in Biblical times (Judges 15:15-16, King James Version), a few jawbones are being used by the rich today to do harm.

Meanwhile, where I live, gas is solidly over $4 a gallon for all grades at several stations in the area. Even Arco is now selling unleaded premium for over $4. I was in the bike shop today getting my bike checked out and saw several people talking about commuting and high prices. The cost of commuting is on everyone's mind. “For Sale” and “For Rent” signs are starting to multiply from East Portland all the way to Lake Oswego. The City of Vallejo, California just declared bankruptcy. This week I did an informal “brown bag talk” at work during lunch on the subject of Peak Oil. Around nine or ten people showed up, and most of them stayed awake while I was talking :). I'm starting to see fewer new monster trucks on the road. Grocery prices are rising, but I now have six fava bean plants in my garden, along with 15 or 20 lentils, some garlic, a few onions, one potato plant and several sunflower sprouts. I'll be busy planting more this weekend...

Consequences of Peak Oil

I began this blog with a definition of Hubbert’s Peak, namely, the maximum rate at which a resource can be extracted and used by a technological society. I mentioned Peak Oil as the most famous example of Hubbert’s Peak, and mentioned that while we in the industrialized West have enjoyed a fantastically high standard of living compared to the rest of the world, there are signs that the party’s over.

When thinking about what it means that this party’s over, there are implications which are obvious to most people. The impact of Peak Oil on personal transportation is one such consideration. Read the news or talk to acquaintances and you’ll hear all about how gasoline is getting insanely expensive. Many people are now trying to trade in their big, expensive luxury SUV’s and monster trucks for something smaller and more economical. In fact, a large number of SUV owners have seen the value of their vehicles drop steeply within the last year, precisely because these vehicles are so expensive to operate. These owners are finding out that they owe more on their SUV’s than the vehicles are worth. (Sources: “Being ‘Upside Down’ and Other Car Loan Hazards,” National Public Radio, 1 May 2008, http://www.npr.org/templates/story/story.php?storyId=90077688; “Economic Woes Dent Luxury Market, The Detroit News, 30 April 2008, http://www.detnews.com/apps/pbcs.dll/article?AID=/20080430/OPINION03/804300309) There are also regular interviews with the man/woman on the street filling up at a gas station, and news stories about how escalating costs of driving are hitting the poor especially hard. Over the last three months, the stories have taken a more ominous turn, with headlines about how high fuel costs are affecting trucking operations and airlines.

But cheap long-distance personal transportation is only one aspect of daily life that is now being threatened by Peak Oil. There are other aspects to consider – aspects which go far beyond the obvious. Crude oil has become the mainstay of the global economy. For instance, the use of petroleum for transport extends far beyond transporting commuters, tourists and soccer children. Because petroleum used to be cheap, and because petroleum yields a large amount of energy per unit volume, engines and vehicles which are fueled by petroleum have become the basis of our global economy. Petroleum has become the basis for cheaply selling clothes made in a factory in the Third World, or food grown on an industrial agribusiness plantation, or freight delivered by air. Without cheap and reliable supplies of crude, there would be no easy way to transport goods through the 10,000+ mile supply chains from the factories of China to the outlet stores located in the United States and other wealthy nations. Now that crude oil and petroleum products are becoming painfully expensive, the cost of big-box store items is also rising, because of increased costs of transporting goods to big-box stores. Meanwhile, the big global economic players have destroyed local economies and local producers of goods, by underselling them, so that there is no safety net on which to fall back in many parts of the world.

Food production is another thing being affected by Peak Oil, since modern globalist industrialized agriculture depends on petroleum-powered machinery, as well as petrochemical-based fertilizers and herbicides. Now that diesel fuel and petrochemicals are becoming more expensive, the cost of food is also rising. Of course, this is also due to crop failures caused by global climate change, as well as the evil choice the West has made to turn food into motor fuel, but that’s the subject of another post. And petrochemicals such as plastics are also becoming more expensive as a result of dwindling supplies of oil.

Petroleum, coal and natural gas are also used to supply power for generating electricity. In the Third World especially, diesel generators are used to supply prime power for the local power grid as well as mission-critical installations like telephone switching facilities and hospitals. But world supplies of diesel fuel are now extremely tight, since diesel is also the main component of home heating oil and jet fuel, and is the main fuel source for many cars in Europe. Some sources are predicting a worldwide shortage of diesel fuel as soon as this year (“Looming Diesel Shortage Could Mean Trouble,” Mining Weekly, 9 May 2008, http://www.miningweekly.com/article.php?a_id=131856, “World Power Crunch Tightening Diesel Market,” Reuters Africa, 29 April 2008, http://africa.reuters.com/business/news/usnBAN949650.html, “The Peak Oil Crisis: Diesel,” Tom Whipple, Falls Church News-Press, 15 May 2008, http://www.fcnp.com/national_commentary/the_peak_oil_crisis_diesel_20080515.html).

A shortage or spike in the price of diesel fuel also impacts the cost of raw materials, especially those that are mined, since these are almost always mined using diesel-powered machinery. This is one reason why coal recently became very expensive – coal, an energy source to which many have looked as an alternative. Unfortunately, nations are now having increasing difficulty getting coal. This is not only due to the rising cost of extracting it, but to its increasing scarceness (Source: “Arch Coal CEO Sees Worldwide Coal Shortage,” Reuters, 7 April 2008, http://www.cnbc.com/id/23998647/; “Coal: Resources and Future Production,” Energy Watch Group, March 2007, http://www.energywatchgroup.org/fileadmin/global/pdf/EWG_Report_Coal_10-07-2007ms.pdf)

Now, just as the German government has recently commissioned studies on the availability of supply of various energy sources, the administration of President George Bush also commissioned a few studies focusing directly on the subject of Peak Oil. These studies addressed the timing, likely effects, and recommended strategies to deal with a worldwide peak in global oil production. These studies are as follows:

1. “Peaking of World Oil Production: Impacts, Mitigation and Risk Management” (also known as the Hirsch Report), Department of Energy, February 2005
2. “Energy Trends and Their Implications for U.S. Army Installations,” U.S. Army Corps of Engineers, September 2005
3. “Economic Impacts of U.S. Liquid Fuel Mitigation Options,” (DOE-NETL-2006/1237) (Hirsch Report #2), Department of Energy, July 2006
4. “Crude Oil – Uncertainty About Future Oil Supply Makes It Important to Develop A Strategy for Addressing a Peak and Decline in Oil Production” 9GAO-07-283), March 2007

Though these studies were commissioned from 2005 onward, there is anecdotal evidence that the Bush administration knew about Peak Oil much sooner. These studies all spoke of the seriousness of the threat posed by Peak Oil. The Hirsch Reports particularly warned of the massive social disruption that would likely result in the United States if the world experienced an oil production peak without having made timely preparation. And just what did our public servant and protector of the common good, our President, do with these studies? Surely he alerted the American public and frankly and openly told us what we were up against, didn’t he?

For a year and a half after the completion of the Hirsh report, it was not released by the United States government, and was only available for viewing on a high school website, whose webmaster eventually removed it. Finally a nonprofit citizen media advocacy group known as Project Censored obtained the Hirsch report and posted it for the world to see in July 2005. (Source: “Where is the Hirsch Report?”, Global Public Media, 24 July 2005, http://globalpublicmedia.com/articles/441) Only after this action did the government begin to post these studies and to speak in any public way about coming oil supply problems.

This failure of our government to warn us of an impending crisis is disturbing, though not surprising. On my blog, TH in SoC, in the post titled, “The Sins of the Right,” I wrote the following: “For most people, modern daily life is regulated by the present visible global economic system, also called the “official economy” by such agencies as the International Monetary Fund, or IMF. It is a system which was conceived and grew in the industrialized West, and the societies dominated by Western culture – Europe, the United States, and the wealthier nations of the British Commonwealth, such as Australia and New Zealand. For these nations, this system has produced a standard of living far above anything experienced by the majority of the world’s populations. The corporatist leaders and oligarchs who rule this system have been very successful in swaying governments to do their will. They have rallied political parties around them to promote and enforce policies favorable to big business. And they have recruited religious leaders to legitimize their activities and to sell their policies to the general public.

“However, there are problems with this present system. First, it is inherently unfair. It promotes the concentration of wealth in the hands of a few individuals by trickery and defrauding of the masses. It relies on unfair and unbalanced trade agreements with Third World nations – agreements which allow for the cheap extraction of raw materials and finished goods from these nations by means of slave labor, in order to sell products at profit in the markets of the First World. It allows big business to maximize profit by externalizing the true cost of doing business onto the poor, as when grossly polluting industrial plants with no environmental controls or oversight are built in poor neighborhoods or poor countries.

“Also, it is becoming increasingly apparent that this present system is unsustainable. The most obvious signs of this unsustainability are peak oil and global climate change, along with other examples of environmental destruction. And there are additional resource peaks which are now becoming apparent. The continuation of global “economic growth” at a certain percentage per year, ad infinitum, is becoming more and more obviously impossible. The “official” global economic system is breaking down bit by bit, piece by piece with each day, and is on its way to a terminal breakdown. However, while the system is still in any way functional, it is dangerous – first, because its masters seek to force as many people as possible into dependence on a breaking system, and secondly, because this system actively opposes anyone who would create a safety net of alternative systems.”

I want to focus on the last two sentences of this last paragraph. The “official” global economy is in fact beginning to break down. Peak Oil is both a sign of one such breakdown and a cause of other cascading breakdowns which will get worse as oil becomes scarcer. But the rulers of our present economic system – both the very rich, and the politicians whom they buy as their slaves – are doing their best to keep us locked into this system, utterly dependent on it, while they seek to destroy any alternatives to it.

I don’t believe the present global economic system can be reformed, nor the political system which exists to legitimize the “official” economy. Yet I believe that it is possible for ordinary people – the small, the poor, the unknowns – to begin to build local systems by which they can preserve something of value when the official system breaks. In future posts I will discuss the ways in which the masters of the official system are trying to force us into dependence on it, and I will talk about building local alternatives to the official system. I will also talk about the steps I am taking personally to build for myself a network of alternatives to the official system.

In the meantime, I leave you with a picture of some alternative transportation for this time of high gas prices. I saw this contraption while I was on my way home from work. The kid who built it told me that it's a "land luge." A pretty clever piece of engineering as long as you don’t kill yourself riding it…