Energy Wars

A "culture of substance abuse and promiscuity" existed in the federal agency that handles royalty payments from oil companies, including sexual encounters between government employees and industry representatives, according to a memorandum released today. The Interior Department's Inspector General, who has been investigating the U.S. Minerals Management Service's Royalty-In-Kind program, said government employees who were supposed to be regulating the oil companies were engaging in drug use and having sex with industry contacts.

The Huffington Post has an interesting post on the main problem facing the Democrats in the upcoming US elections - the conservative media (and the usual vote rigging tactics being put into play once again)

The world is spending $300 billion every year to subsidize fossil fuels that pollute the air, wreck the climate ... and run the world's economy. So what if we, as taxpayers, stopped spending $300 billion on coal, oil and natural gas, and started spending it instead on wind, sun and water?

The Bush Administration Falters in a Geopolitical Chess Match --- Many Western analysts have chosen to interpret the recent fighting in the Caucasus as the onset of a new Cold War, with a small pro-Western democracy bravely resisting a brutal reincarnation of Stalin's jack-booted Soviet Union. Others have viewed it a throwback to the age-old ethnic politics of southeastern Europe, with assorted minorities using contemporary border disputes to settle ancient scores. Neither of these explanations is accurate.

by Julian Darley There are at least two invisible things that tend to be ferociously difficult to understand. One is relations among humans and the other is energy. Especially when the former want more of the latter. And for some reason, understandable perhaps but also unfortunate, we are mostly loathe to try to comprehend where our energy comes from. Thus there is a kind of 'energy secret': we cannot see energy and we don't seem to be very good at understanding it, even though without it there is no life here or anywhere else in the universe.

As last week began, Hurricane Gustav was threatening to tear up a substantial portion of the US's oil production and refining capacity in the Gulf as well as devastating New Orleans. However, Cuba, cooler water and the hurricane steering currents intervened so that within hours it became apparent that Gustav was going to be a more benign hurricane than those of three years ago. At the last minute, Gustav turned west, thus sparing New Orleans from substantial damage, but instead managing to tear up most of Louisiana's power grid. With this news, the oil markets focused on the demand destruction that was likely to ensue from sagging world economic activity.

Richard Heinberg, Post Carbon Institute ... There is a veritable cottage industry of economists and statisticians (including Daniel Yergin, Bjorn Lomborg, Peter Huber, and Michael Lynch) who tirelessly implore their readers not to panic over oil prices because The Market will always come to the rescue. As easy conventional oil depletes, tar sands, oil shale, and biofuels become more economic to produce. Even coal-to-liquids becomes feasible on a large scale. And, as everyone knows, there is an endless amount of coal.

Brazil will use revenue from newly discovered offshore oil fields to eradicate poverty, President Luiz Inacio Lula da Silva has vowed. In a TV address, President Lula said Brazil would not squander the money but invest in technology and education.

With oil prices off nearly 30 percent from their highs of almost $150 a barrel, OPEC oil ministers are considering what was unthinkable just a few weeks ago - cutting back output to prop up the price of crude. No one is predicting much of a cutback - if any at all. Still, such a move would not even have been thought of with oil prices setting record after record back in July.

I read about a leaked copy of the US-Iraqi agreement a few days ago when a radio station in Iraq mentioned some of its details, then it was mentioned in some Arab newspapers like Al-Qabas and Al-Sharq Al-Awsat. A couple of days ago, one Iraqi website (linked to an Iraqi armed resistance group) published the leaked draft on their web page for less than a couple of days before their website went offline. (Thankfully, I downloaded the 21 pages agreement and saved them before their server went down)

A former colleague of the US Vice-President, Dick Cheney, has pleaded guilty to funnelling millions of dollars in bribes to win lucrative contracts in Nigeria for Halliburton, during the period in the Nineties when Mr Cheney ran the giant oil and gas services company. Albert Stanley, who was appointed by Mr Cheney as chief executive of Halliburton's subsidiary KBR, admitted using a north London lawyer to channel payments to Nigerian officials as part of a bribery scheme that landed some $6bn of work in the country over a decade.

Every Wall Street forecast of where oil prices are headed next - up or down - seems to be based solely on the degree of "demand destruction" that can be expected. But what about "supply destruction?" Whatever the level of demand destruction, if supply destruction is greater, oil prices will rise, not fall.

Environmentalists arrested at community meeting on gas flaring Journalists, community elders, woman and children were among the 25 arrested at a community forum on gas flaring at Iwherekan community, Delta state, Nigeria. The arrests were made by Nigerian soldiers this Tuesday who held the detainees for five hours before releasing them. The Iwherekan community is blighted by gas-flaring as a result of oil extraction by Shell.

As the U.S. election campaign kicks into overdrive, Canadian politicians and oil executives are stepping up lobbying efforts to make sure whoever controls the White House keeps purchasing notoriously dirty oil from the Alberta tar sands. Executives from Nexen energy, which has major investments in northern Alberta's heavy oil industry, and Tony Clement, chair of a Canadian cabinet committee on energy security, met with Democratic candidate Barack Obama's top energy advisor Jason Grumet late last week to cement the "energy partnership" during the Democratic National Convention in Denver, Colorado.

Up until Tuesday, oil was crashing down toward $110 a barrel as demand growth estimates have been clipped. So what happened to peak oil? Nothing happened; peak oil should still be a concern. For a larger context on peak oil, see my June post 'Peak oil: are we there yet?' From where I sit, I see oil as having played a major role in creating the downturn we are now experiencing. Basically, oil prices rose to the point where we cried uncle, reduced our consumption accordingly, and the economy suffered as a result. Before 1973, the world had never see an oil shock. But, this is the 4th such oil shock since the end of Bretton Woods in 1971 when Nixon ended the U.S. dollar peg to gold and ushered in an era of floating currencies. Methinks I see a connection.

Washington will seek to boost alliances and offset Russian energy dominance when Vice President Dick Cheney visits Georgia, Azerbaijan and Ukraine next week, a White House official said. In light of rising tensions with Russia over its conflict with Georgia, Cheney's trip is part diplomatic mission, part effort to boost alternate pipeline routes that would reduce Europe's dependence on Russian oil and gas.

Summary: The bad news is that much of the good news about energy is wrong. Repeated so confidently by so many for so long, these fallacies have become a major obstacle to our preparation for peak oil. This post examines one such fallacy: that the world has massive reserves of unconventional oil, and that those will prevent peak oil. This post substantially expands to my replies in a discussion with M. Simon, lifted from the comments to "A powerful perspective on the candidates for President of the US". M. Simon posts actively on his blog, Power and Control, and at Classical Values- an influential libertarian weblog discussing politics, current affairs and pop culture (to which the Instapundit frequently links). M. Simon is an engineer, and involved in some cutting edge projects.

The agency said personnel have been evacuated from a total of 223 production platforms, equivalent to 31.1% of the 717 manned platforms in the Gulf of Mexico. Most of the major producers, including the two largest - Royal Dutch Shell PLC (RDSA) and BP PLC (BP) have announced a total halt to offshore operations ahead of Gustav's arrival in the region. Others, including Chevron Corp. (CVX), have partially cut production linked to platforms shut down by other producers.

In the vast interior of rural México, awareness of an approaching energy and economic tsunami is below even Alert Azul, the first stage of a hurricane watch. For those who read the newspapers or follow television there is no shortage of news about the usual political scuffling between Presidente Felipe Calderón Hinojosa and opposition party leader José Ramiro López Obrador concerning Cantarell oil field's breathtaking 14% annual decline rate. People just don't seem to register it as anything other than the usual politics that goes on in México City, a world away from their lives planting corn, grinding steel, or serving tourists with poolside Margaritas.

Peak oil theory states that oil will have a beginning, middle, and an end of production, and at some point it will reach a level of maximum output. It is estimated that approximately half of all oil...