Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
So, on top of those factors already distorting Hubert's' nice bell shaped geologic production curve, now add in sovereign trade agreements. China of course has been the most visible and most important due to it's determined, planned growth. They have been trading American dollars for oil in long term government to government deals around the world since the '90s. From Russia to Brazil & Venezuela and even making deals closer to home here in Canada and the GOM. In addition to making deals, China is buying oil companies too, they own a stake in the French company Total and even tried to buy Unocal, they won the bidding in fact but US regulators wouldn't sign off.
I don't have a clue how much oil China has agreements to purchase, maybe it's a large amount or maybe it's not. But as the German report also allegedly pointed out, peak oil could very possibly bring about a move toward (or return to) command economies. China is the perfect poster child for why it will be advantageous and probably inevitable, for governments to become directly involved in securing supplies, both internally and externally.
So, while the US bought it's own PR and went on a binge, then came too and started staring at it's navel pondering why the 30 year campaign for Total Capitalism via financial deregulation wound up with markets not only not regulating themselves but very nearly causing a total failure of the economy, China has taken in our dirty laundry - and our dollars - and used them to buy up reserves of dwindling resource right from under our nose.
And all the while we are borrowing even more money to wage the last war and stand up puppet governments who'll play along as if they are democratic and we are just another oil customer. As we stagger blindly ahead, vowing to not negotiate a way of life that is arguably already gone, China sells us what we ask for and uses our money to position themselves for the coming change.
Kind of like Jujutsu..
Naw, on second thought it's more like rolling a drunk.
EIA, China, Oil
Time 10/'04: China's Quest for Oil
CSM 2/'09: China, taking advantage of global recession, goes on a buying spree
Newsweek 5/'10: China Races to Secure Middle East Oil Deals
Most peak oil forecasts seem to assume a "Free Market" where supply can satisfy demand regardless of political boundaries, all that matters is how much is produced, how much is desired and what is the ability to pay. Most forecasts then do not account for what is the obvious fly in the ointment, national self interest.
The constraints of growing consumption in export land and bi-lateral production agreements are making producers much less free to simply sell to the highest bidder. State owned oil already accounts for 75% of oil production and with a majority of oil reserves found in countries ranked by Transparency International as "most corrupt" the potential for further nationalization is high. Out of 180 countries ranked, Iraq is number 176, Venezuela 162, Nigeria 130, and that number is probably going to increase.
Earlier this year the King of the Kingdom said KSA needs to leave some oil in the ground for future generations - that's the Export Land Idea of constraint. China entering an agreement with Iraq to develop the Rumalla oil field is the Bi-Lateral constraint. Russia revoked Shell's environmental permit forcing it to give up half it's percentage and giving Gazprom majority ownership - that's the nationalization constraint. Nationalization of course, allows countries the ability to proceed to either keep all their oil for their own use or to make bi-lateral agreements with other, friendly, countries.
I read that states already own most of the oil on land and the international oil companies (IOCs)have been pushed into the deep oceans - but the BP spill now gives the countries that want to use it a good excuse to make exploration and production even more expensive for those companies and of course less so for the national company. The IOCs still have the edge in technology and downstream infrastructure.
At what point along the spectrum of decline will the "free market" aspect of oil production effectively end?
At what point will the importing countries, "liberal democracy" or not, be forced to nationalize their energy infrastructure? Or will they only levi tariffs, windfall profits taxes and other trade barriers?
http://www.wikinvest.com/concept/Oil's_ ... Turbulence
http://www.reuters.com/article/idUSTRE6651ZI20100706
http://en.wikipedia.org/wiki/National_I ... il_Company
http://online.wsj.com/article/SB1000142 ... 90852.html
http://www.cfr.org/publication/12089/ve ... onomy.html
C8 wrote:So what does this all mean for PO? I
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
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