Saudi Oil Reserves

While it might be fairly quiet in Sweet Haven, it has been pretty busy in other areas.  I haven't blogged on any new developments for the last few months as I thought that most of you that read this either are following developments on your own and are making preparations/plans/changes in your lives, or you really don't want to hear about any new developments and are happy with the 6:00 TV news version of the world.  In either event, you probably don't need me yammering in your ear.

Except, maybe one more yammer.  Or two. You know you can't eat just one.....  I came across this article yesterday and thought that it was important enough to mention again, and to drag up and review the whole peak oil concepts one more time.

As a quick review of peak oil:

• much, if not all of our prosperity and current standard of living comes from the use of huge amounts of energy, primarily from oil in total quantity, and from electricity in quality - which is also dependent on oil for much of it's production.  
• oil discovery's peaked in about 1961.  We have been using more oil, world wide, than we have found since about 1983.  You can't pump oil that you can't find.
• for more discussion about this, take 'The Crash Course'.  It might take you about an hour, and it should open your eyes.

Admittedly, this isn't much of a recap, but probably more than you have read or heard about lately.  And now to the meat of the post.  Yesterday, I came across this article:

Saudi Oil Blunder May Blow Lid Off Oil Prices

I don't know how you feel about WikiLeaks, but this information came from some of those diplomatic cables.  If you have followed or studied much about peak oil, then this doesn't come as a big surprise.  Oil reserves are calculated using probabilities that aren't usually disclosed in the news bite, and several different numbers can be given for the same field that could all be 'true'.

For example:  Bill is a geologist who discovers a geological structure that he calculates has 50 million bbls of recoverable oil in it.  He is a scientist at heart and the 50 million number has a 90% possibility of being proven.  But there are some other data that show areas that might well contain another 25 million barrels, but not so much of a sure thing - maybe 75%.  So Bills boss might well report a find of 75 million barrels.  There are probably other structures that are nearby, or possibly connected that could conceivably produce another 15 million barrels.  But the probability of that happening might be down in the 35-40% area.  But, when the company president is reporting to the shareholders, it is pretty likely that he will use the 50+25+15=90 million barrel number to show how well things are going.  All of the above estimates could be considered to be 'true' especially if the probability was reported, which it almost never is.

Also, the amount of oil that an OPEC country can sell without violating their quota is proportional to the amount of oil they hold as reserves.  Amazingly, in the 1980's, the reserves of many of the OPEC countries would increase overnight, sometimes doubling.  Since these are all sovereign countries, it is difficult if not impossible to see their data first hand, and so we must rely of educated guesses by geologists, some of whom worked in the various countries and have a fairly good idea of the recoverable oil.

I have to confess that when I first became concerned with peak oil,  I was pretty innocent about the ways that a country could use money, markets and the military to give themselves a competitive advantage.  I thought that gas would just get more expensive, more or less in a linear manner and that we would 'share the pain' with the rest of the world.  I was unaware of how central banks use money creation and destruction as weapons, and how much economic activity is affected by energy prices.  It's a complicated mix, and about the only thing that you can say at the end of the day is that the 'golden rule' prevails - those that have the gold make the rules.

Which brings us to what conclusion? My conclusions haven't changed.  I'm afraid that we are coming to a point that could be graphed as the intersection of  increasing world wide energy demand with decreasing world wide energy production.  I'm really not sure what this will look like in our every day lives, but it is the point where our collective economy will peak.  For me it is a given that we will all have to work harder, and probably be poorer.  It's hard to say where all the money will flow, and who will be in control of what, when the dust settles fifty years from now. 

Energy has been a good slave. Each day we (U.S.) use the energy equivalent of having 200 human slaves to do our work.  Loosing 10% of that amount of energy would be the same as losing the work of 6 billion people, or pretty close to all the people on the planet (300,000,000 x 200 x 0.1 = 6,000,000,000).  I just picked 10% as a loss number out of the air.  I think that world wide we will see energy consumption losses greater than 10% in the next decade, but our mileage may vary.  We live in a very powerful country, and we have a very powerful military and the reserve currency of the world.  We might be protected for some time or we may not.

In 'The Magician's Nephew' Digory and Polly come upon a bell with a sign that read: 'Make your choice, mysterious Stranger - strike the bell and bide the danger, or wonder till it drives you mad, what would have happened if you had'.  We are largely in the same situation.  Whether we know it, or believe it, we are in a new world, a world of coming energy scarcity.  And that isn't absolutely true either - it will be a world of energy scarcity if we continue to have an unchanged energy appetite. 

When our kids were in high school, and were attending Seminary they were given certain basic guidelines that if followed, would help to protect them from a lot of the problems and temptations that they might be subject to.  So when Annie and I would be giving them a drink from the deep well of our knowledge and experience, we would often touch on these same principles and they would roll their eyes a little and tell us something like: 'yeah we know!!  Say your prayers, read your scriptures, pay your tithing and go to church.....' .  Mostly we would all laugh at how easily good advice and sound principles can become a cliche, but still be true.

The sound advice that we have been given for living in these troubled times has been heard so often that it too has become a cliche, but is not less valid:

• avoid unnecessary debt like a plague (we don't have much experience with plagues - think virulent stomach flu before you use your Visa.)
• have a supply of food and water on hand (1 year food where possible) (water filters, chlorox)
• have a 1 year supply of fuel for heating and cooking where possible (solar, propane, gasoline, wood)
• strive to have as much home production as possible - garden, fruit trees, berries, bees etc.
• seek learning and new skills. Learn how to build things, how to repair things (cars) etc.

Well, that is about it.  I won't be harping on this for a while.  You can believe it or not, just don't plead surprise.