Peak Oil: What We Know Now
By Bill Henderson
27 November, 2005
The momentous challenge facing the Bush Administration and America is the very real danger to the continuing supply of America's very lifeblood: oil.
Global oil production will peak (or has already possibly peaked) within several decades. Already, growing oil demand - from China and India especially, joining ever increasing American (20% of global demand) and other developed world usage - has created a very tight market with the price for benchmark crude oil staying above $50US. Some market analysts see US$100 oil in our immediate future and pessimists direly predict the mother of all depressions, a new dark age and even human die-off as we go over the cliff past Hubbert's Peak down the steep slopes of rapidly diminishing global oil production.
Oil at US$100 would be bad for business. This is a specter to chill an Administration trying to manage an indebted, precarious US economic hegemony based upon a very vulnerable dollar. This ominous scenario is potentially more devastating to Bush's America than a hundred 9/11s.
The Bush Administration didn't attempt regime change in Iraq just to protect America and its hegemony from the threat of WMDs and terrorism; it wasn't entirely 'a new crusade lead by geopolitical fantasists' against radical Islam and in support of America's Middle East ally Israel; it didn't try to form a coalition of the willing like in the first Gulf War just to confront Iraqi aggression.
The permanent military bases and Pentagon sized American consul offices in Iraq are being built because 60% of the world's crude comes from an increasingly hostile Middle East - this percentage of the supply of the world's most valuable commodity will increase over the next decade - and because control of Iraq is the decisive high ground for control of the Middle East..
American troops are not in Iraq for ideological reasons; this is not a replay of the domino theory in Vietnam. Whether or not the neocon dream of nation building succeeds - emulating the success of American leadership in postwar Japan and Germany - is secondary to continued American military control of the key strategic area of the most important geo-strategic area on the globe.
America has more than 800 military bases globally and awesome military imperial power. Protection of American interests, especially American business and the flow of commodities vital to America, is the US military mandate. Given globalization and the building oil supply realities, traditional Republican isolationism is not even a consideration.
After the first Gulf War, then Secretary of Defense Dick Cheney agreed with a traditional Republican foreign policy non-interventionist response to Saddam's Iraq: The US and coalition did not push into Iraq initiating regime change, occupation and nation building. They withdrew, banking upon military and multilateral containment, and continuing US economic control of oil supply (supported, of course, by a century old American military presence).
But by 1999 there was a new more pressing reality. In a speech to Institute of Petroleum in November 1999 Dick Cheney showed a keen appreciation of the building problem:
"For the world as a whole, oil companies are expected to keep finding and developing enough oil to offset our seventy one million plus barrel a day of oil depletion, but also to meet new demand. By some estimates there will be an average of two per cent annual growth in global oil demand over the years ahead along with conservatively a three per cent natural decline in production from existing reserves. That means by 2010 we will need on the order of an additional fifty million barrels a day. So where is the oil going to come from? Governments and the national oil companies are obviously controlling about ninety per cent of the assets. Oil remains fundamentally a government business. While many regions of the world offer great oil opportunities, the Middle East with two thirds of the world’s oil and the lowest cost, is still where the prize ultimately lies..."
Access to oil is the IMPORTANT problem. And it is a US government problem. At the beginning of Bush Jr's first Administration, long before 9/11, Cheney was now a leading advocate of regime change. On hindsight, Saddam's WMD threat and the war on terror were just inflated excuses: optical, political practicalities to hide the real underlying reasons for US actions.
American choice of what can only be perceived as a military grab-the-oil policy path to the coming end of oil will no doubt engender responses - unpredictable perhaps very surprising responses - from a new growing world power, China, from a still nuclear armed Russia, and from the wider world community who will become increasingly concerned about American leadership and their own position within or without the military fortress controlling access to oil.
Given the momentous problem of peak oil and the oil importance of the Middle East and their choice of the grab-the-oil policy path, the Bush Administration has little choice but to stay in Iraq, must keep building American military bases there, must continue the neocon dream of nation building in spite of the insurgency. In spite of American casualties; in spite of the building Islamic backlash. Losing Iraq, unlike retreat from Vietnam, is not an option.