Just cos you’re paranoid….

I made mention last week of the wee scandal involving NSA and MI6 snooping on us all, sort of Big Brother is watching you…even when you pop sort of stuff.

Of course both the internet companies and the government have been very quick to deny everything. We’re not spying on you says William Hague, and we don’t allow backdoor access to the NSA say’s Google and Facebook. Could we see some evidence to prove that?well actually no that’s classified! :no: I’m presuming nobody in the NSA has ever read Kafka!

Meanwhile, Edward Snowden, aka the-guy-least-likely-to-qualify-for-life-insurance has been banned from entering the UK. Not officially of course, no the government apparently sent an e-mail out to the airlines not let him board any flights, failing to remember what it was they had a beef with him over (i.e. that e-mails aren’t secure!).

Now, I would be on the fence as to whether or not Edward Snowden was telling the truth or just another in a long line of “conspiracy” hoaxers, but the reaction of governments, much like their reaction to wikileaks a few years back, sort of seems to back up his story.

I mean if he was a dirty low down hoaxer, surely the UK government would want him in the UK (so that they could arrest him). However, it seems they don’t want him here likely for fear he’ll be “terminated with extreme prejudice” (and I ain’t talking the sort of prejudice in the Daily Mail…much worse than that!) by certain fellows from the CIA in Heathrow and that might kind of look bad, much like the death of Gareth Williams (you know, the guy who, if the government is to be believed, wiped his flat clean of finger prints, removed all incriminating or dangerous items from his house, put the heating on full blast in summer and then sealed himself in a duffel bag in his own bath!) a couple of years ago.

And Speaking of Conspiracy Theorists…
Meanwhile, with the Bilderberger group meeting in….Watford (hardly the sort of place you expect world dominating super-villains to hang out, then again, there is a recession on!) drew many conspiracy theorist types to UK shores like moths to a flame, notably Alex Jones. The BBC actually had him on for an interview, during which he basically undermined much of his own argument by going batshit crazy :crazy:

Don’t get me wrong, I’ve nothing against Alex Jones, he’s sort of the modern day equivalent of a court Jester, who says the things others at court aren’t willing to say out loud. However he comes with two major character flaws:
1) He’s not as funny as a court jester, if people are laughing, they are generally laughing at him, not with him!
2) He’s nuttier than a Granola bar. I mean he makes the guys on speakers corner look vaguely sane!

But as the saying goes, just cos you’re paranoid doesn’t mean they’re not out to get you! This should be the motto these days for large chucks of the Internet!

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Do be evil

One story that seems to have broken while I was on me hols is that of Google, Amazon, Facebook and other websites getting embroiled in a controversy regarding internet snooping by the NSA and MI6. While the websites denying doing anything wrong (I’m waiting for Google to get it over and done with and change its slogan from “don’t be evil” to “we’re so evil we have a doctorate from evil medical school“), the evidence does seem to point to the fact that the NSA has been snooping on internet users via its so-called PRISM network. An organization which sounds not too far removed from the Orwellian TSA” system proposed under G. W. Bush, that was supposed to have been killed as even house Republicans immediately after 9/11 felt it went too far.

That the NSA is spying on UK and US citizens should not exactly come as a surprise. I mean what do you think the tens of thousands of people who work for this organisation do all day? What I find surprising is the how the mainstream media are acting with shock horror to this. I think anyone with a brain could have worked out its been going on for years if not decades, for as the security services are concerned the cold war (and WW2 before it) never really ended, and never will end cos that’s them on the dole if it does!

Casing point the British media got into a tizzy over the idea that the NSA was spying on UK citizens, then passing on the info to GCHQ, thus bypassing legislation designed to stop the intelligence services doing this (at least without a warrant). In essence its a snoopers charter via the back door. but this has been going on for decades via the joint NSA, MI6 “ECHELON” spy network. This “PRISM” project merely involves doing what ECHELON have been doing for decades (such as evesdropping on telephone conversations, bank details, etc.) and brings it into the 21st century of social media.

Indeed the scary thing is the involvement of private industry in all of this. the principle whistle blower behind this story was not an employee of the CIA or NSA but of a private sub-contractor, Booz Allen & Hamilton. Also, both the CIA and MI6 operate a system where by quite a number of their “expertsare allowed to work for private industry as consultants. Now while officially they are supposed to be “consulting” to help companies enhance their security. But as you can imagine, the suspicion is that they are also helping corporations friendly to certain regimes to spy either on competitors, foreign governments or on special interest groups (e.g. environmental protesters). The idea that these officers or sub contractors will come into work and not use the vast intelligence gathering tools at their finger tips to assist in such highly lucrative corporate (and highly illegal) espionage is laughably naive.

In short governments have been asleep at the wheel on this one since the end of the cold war. Yes there are some nasty evil people whom we want to keep tabs on but that doesn’t mean turning the UK and US into a state the East German Stazi would be proud of. What this incident highlights is that there is an urgent need both sides of the Atlantic to reign in and ultimately cut down to size (we are in recession, which would you rather sack a few pervy spooks or a doctors and nurses?) these intelligence agencies.

Indeed the very fact that Edward Snowden (the whistle blower) is seeking asylum in China (a country not exactly known for a lack of government snooping), should come as a serious wakeup call to us all.

The law abiding citizens have nothing to fear” gambit only works if we can be completely sure that those running these organisations are completely trustworthy and without bias. And as I’ve pointed out, this is highly doubtful. In short who watches the watchers?

Kim Jung Gone

So Kim (not so) Jung and (clearly very) il has kicked the bucket. Reports are that he had a heart attack, although my suspicion is that he simply falling over in his platform shoes, or caught his Bouffant wig in something! :>> Few will mourn his passing, even in his home country. Indeed it was interesting to see the stage managed grief with everyone standing to attention in neatly regimented rows! Sort of reminded me of the two minute hate in 1984!

Indeed the parallels to 1984 are baffling. North Korea is one of those places that it seems difficult to believe exists. if I were to write a book about North Korea and label it as fiction, it would probably be rejected on the grounds that it was too implausible and clearly a rip off of Orwell’s work! From the capital in Pyongyang the Politburo of the (don’t laugh!) Democratic People’s Republic of Korea run a hermit like like anthill, whose head of state (Kim il Sung) has been dead for 17 years, and which boasts levels of oppression that would have Joe Stalin calling for Amnesty International to do something.

While outside observers have long noted that North Korean food production is going down year on year, the party instead reports increases. People are regimented, even forced to wear uniforms depending on their role. The citizenry are split into three groups, depending on their perceived loyalty to the state. Only the most loyal group may live in the capital city, where loud speakers constantly blare out patriotic slogans and music. Every home has a radio inside the kitchen that cannot be turned off (which rattles off the usual long list of Newspeak from the ministry of truth) and can only be tuned to approved channels. The internet is also banned as well as mobile phones. Conditions are such that many escapees into South Korea have to be taken away send to special training camps, so that they can cope with the inevitably culture shock! The Beeb did a nice piece on Newsnight about life in North Korea a while ago, a video of which can be viewed here.

The Crazy Gang
If there’s one thing that sums up North Korea perfectly it’s the nickname that the Pyongyang communist party have picked up from the CIA analysts in Langley. Apparently they refer to the DPRK government as “the crazy gang” :crazy:. Or failing that they use the acronym CFC: Crippled, Fearsome, Crazy. Crippled in that North Korea is essentially destitute and forever on the bring of starvation and economic meltdown, fearsome in that they have the world’s 5th largest army and now (more than likely) nuclear weapons to boot, and Crazy in that…we’ll I don’t think I need to explain that one!

What now?
It seems likely that Kim Jong-un, Kim Jong-il’s…yong’un :)) (I’m wondering if the North Koreans know that a yong’un is an Irish expression of a kid! when I first heard his name on Irish radio I thought that they didn’t actually know his name and were taking the piss! :DD) is taking over the reigns of office. His transition to power has been on the cards for years, but its taking place a little earlier than many, both inside and outside the country, had planned. Consequently it’s questionable whether this plump twenty something can manage the running of a country like North Korea. Indeed, they don’t seem to have even had time to sort out his totalitarian dictator’s stage name yet (all dictators have a stage name, such as “il Duce” or “the Fuhrer” or “Dear Leader”…sort of like how WWF wrestlers call themselves “the Rock” or “the Hitman”). A couple of months ago his stage name was reported as being “the Young General”, yet now he’s apparently being called “the Great Successor”…I presume the “great” refers to his waistline ;D!

Of course we should note at this point that strictly speaking North Korea is not a communist state. They are more a Feudal Confucius monarchy that uses the language and tools of communism to maintain their grip on power. Communist governments for example, do not have hereditary rulers, nor do they turn their dead leaders into demi-god like figures or rely on fanciful creation myths such as those surrounding the Kim family. They also at least try to maintain at least the illusion that all the farm animals are equal…even when some are more equal than others!

The fear is that if Jong-un can’t hold things together that there will be a power struggle inside the country, either for the post of power behind the throne, or that he’ll be ousted and someone else put in his place. It’s this instability that has people worried, could it see a war start with the NK army pushing South and restart the Korean war? We could see the regime implode and collapse? Or could it be that (the) Jong-un could try and bring about reform to the country and turn it into an factory for cheap crap for Walmart (as the Chinese did across the border). Let’s pick these options apart and see how likely they are.

The Crazy Gang goes South
Clearly another Korean war would be the worse case scenario, but it’s also I’d argue a pretty unlike one. Why? Because while the Politburo in Pyongyang might be crazy, but I doubt that they are that stupid!

While the North Korean army might looks scary on paper, with its million soldiers (goose stepping in perfect formation), 4,000 tanks, fighter aircraft and tens of thousands of artillery pieces, most of that gear is poorly maintained and hopelessly obsolete…and I mean in any other part of the world it would be in museums! Air power will figure highly in any war and while the backbone of the South Korean Airforce are F-15’s and F-16’s, the bulk of the CPAF is MIG-21’s and MIG-23’s. What few modern planes they have (about 40 MIG-29’s although its unknown how many are in flying condition) probably lack the hardware (missiles and radar) to take on modern western jets. Fuel shortages probably mean the pilots likely lack sufficient flying hours to survive long in combat against a modern airforce. As one CIA officer commented on this topic “there’s a world of a difference between an army with 4,000 tanks if half of them don’t work”…or the regime lacks the fuel reserves to drive them all any more than a few miles!

By contrast the South Korean Army is well equipped with the latest in western weaponry, including several systems designed locally, specifically for use in a Korean theatre of operations (most notably the K1 MBT and the recently intorduced K2, rated by some as the best tank in the world). As recent conflicts have shown, third world countries with obsolete weapons cannot hope to last long against a modern well equipped western army. In the first gulf war, even in situations where the Iraqi Republican guard could engage the Americans ground forces on something approaching a level playing field (i.e. without the US airforce bombing them into the stone age), they found their T-72 and Type-69 tanks hopelessly outclassed. And that’s not even a fair comparison to the situation in Korea, as the Republican guards had some prior combat experience (Iran/Iraq war), were better equipped, no fuel shortages (chronic fuel and power shortages are a serious issue for the DPRK) and the Republican guards weren’t half starved and malnourished like the DPRK…indeed maybe that’s the solution, rather than lining their border with tanks, the South Koreans should line it with Mc Donald’s and Burger King outlets :>>. If the NK invades, they just hold a special offer, a free big mac and fries in exchange for a Kalashnikov ;D! I doubt the NK troops, used to black bread and straw, will be able to resist!

Jokes aside, in all the balance of probability is that if a war did kick off, even if the North Korean’s achieved the element of surprise (which is unlikely) and the Americans stayed neutral (which they won’t), while the North Koreans could do a lot of damage, and possibly advance some distance into the South (hence why the South Koreans don’t want to provoke a war) such success would be short lived. Inevitably once the South began to counter attack, and their airforce gained air supremacy (which would take either days or more than likely hours!) any North Korean advance would be swiftly halted. Indeed probably within a matter of a week or two (or again maybe even days or hours!) what was left of the North Korean army would be retreating back across the border in disarray with the South Korean army in hot pursuit. And I doubt the South Koreans would stop this time until they reach the Yalu River.

The time has come to push the button
I suspect that the regime in Pyongyang are well aware of this reality, indeed the very fact they went to all that trouble to develop nuclear weapons, suggests to me that they are resigned to the reality (at least in private) that their vast army is little more than a paper tiger. Of course it’s the fear of nuclear retaliation that keeps the South, or the Americans, from attacking the North (again CFC) not to mention the thousands of artillery pieces aimed at Seoul.

But what if Jong-un decides to push the button? Well first of all, he and the crazy gang have to contemplate the reality that they’d be effectively committing suicide by such an action, as the retaliation from the west (whether it comes in the form of a Trident missile or a swarm of smart bombs in the front window of his palace) will be swift and brutal. Also there’s the thorny issue of delivery. While it’s probable they North Koreans have a nuclear weapon, there’s a world of a difference between a crude first generation nuclear bomb that’s the size of a small car and one small enough to be put on the top of a missile. America’s “Fat Man” weapon for example weighted about 4 tons, well above the 1 ton payload limit of North Korea’s most advanced missile. And a missile that actually works would be an additional bonus too! The Kim’s have a big problem you see with their Dong’s, as they are small and take ages to get fuelled, erected upright and ready for action, plus they have a habit of exploding within seconds of starting off :))

Jokes aside, it would be deeply embarrassing, to say the least, if the North Koreans launched a nuclear missile at America (or Japan), only for it to blow up after it barely got off the ground and scatter radioactive waste over their own country. The only risk posed to America is that Obama laughs so hard at this he might crack a rib or something! Also the crude liquid fuelled rockets the North Koreans use take many hours to prep for launch, which leaves them vulnerable to being destroyed by air strikes before they can be fired.

Using an aircraft? More plausible, but as noted, their Air force is obsolete and its highly unlikely they could get a bomber close enough to an allied city without being shot from the sky. So short of them putting a nuke in a fishing boat and sailing it into Tokyo or San Francisco bay, it’s fairly improbable that they’ll be nuking anybody but themselves any time soon.

War is peace
Of course I’m not suggesting that the NK politburo have turned into a bunch of make-love-not-war hippies. Far from it! The constant fear of an enemy is a key crutch that the state relies on, in order to maintain control…much like America under Bush with his constant “terror alerts”. Peace is the last thing on their minds! Recent events such as the sinking of a South Korean destroyer and the shelling of a small Island, the equivalent of a trapped animals rattling the bars of its cage (the only difference being the Politburo put themselves in the cage!), will I fear continue purely for reasons of domestic politics. And if Jong-un does turn out to be little more than a puppet, then there will be a strong incentive for various factions within the politburo to regularly launch attacks to gain favour within the army and to distract the public from the regime’s failings. Of course the risk is that eventually the South Koreans will tire of such provocation and strike back. This does bring the slight risk of escalation. But given that the DPRK government knows they can always spin a crushing defeat into a major propaganda victory (like how they won the world cup against Brazil a few years ago!) its not a huge risk.

Reform
For North Korea to reform there needs to be a strong incentive to the regime to do so. Given the tight grip on power they possess, and that any loosening of the reigns could run the risk of they loosing control completely. Thus, I suspect they Politburo in Pyongyang has long concluded that this is a risky option and they’ll be unwilling to pursue such a policy. And again, the comparison with China’s economic policy isn’t accurate, as the North Koreans aren’t strictly speaking a communist country to begin with (they are actually a form of Feudalism).

The all important army would be very fearful that any reform could see an end to the Military First rule which means they would suffer…and its not the number of tanks or guns the army brass would be worried about, no it’s the Cognac bottles and good food that might stop arriving that would make them oppose such a move. Given Jong un’s relative weakness (at least in the early days) and the competing forces with DPRK, any such reform either won’t happen or will be implemented very slowly.

Revolution
A revolt against the current regime, again this seems unlikely, regardless of how badly Jong-un screws up…or the cronies who will inevitably run the country on his behalf! Control by the state in North Korea is simply too rigid for any movement to get started. In Cold war Europe for example, the seeds of revolution was the trade unions movement. Indeed interesting aside there, yes those Trotskyist’s in the unions did more to bring about the downfall of communism than the CIA, MI6, Thatcher, Reagan and the western military combined! Unfortunately, the North Koreans have already adopted policies advocated by Clarkson and Boris Johnson and banned any such unions, as we don’t want the people standing up for their rights or anything do we!

But I digress again! Unfortunately there is simply no obvious way for a revolution, peaceful or otherwise, to get going within North Korea. The only possibility is a palace coup. But that’s more likely to be just another power hungry dwarf in platform shoes or hardliners from the military, than any reformer.

Collapse and China’s syndrome
So in conclusion, North Korea will almost certainly continue its hermit like existence under Kim Jong-un, or whoever else takes over the role of Dear Leader/Emperor…when they’ve finished stuffing his father and putting him on the mantelpiece! Event if he doesn’t retain control, his replacement will follow a relatively similar line. The DPRK politburo has little to gain from either a “proper” war, a revolution or reform.

Of course the fundamental problem for them is that their regime isn’t stable in the long term. So eventually if they don’t reform, it will simply keel over and collapse. Like the euro right now, its merely a question of when and how. Indeed if it weren’t for the support of China the DPRK government would have collapsed along time ago.

China is often described as “North Korea’s only ally”. I doubt the Chinese would agree with this one! Our ally? With friends like this who needs enemies! Wikileaks have notably revealed that the Chinese regard the North Koreans as being a liability rather than an ally. No, to the Chinese, North Korea is like some sort of crazy old grandfather who they are nursing at home, who keeps going on about what he did during the war (even though they knew we was merely a shipping clerk), running over the flowers with his wheelchair or shouting racist slurs at the nice Indian couple next door.

If the Chinese could get shot of the North Koreans tomorrow, I suspect they would. Indeed in the event of a war with the South, far from the Chinese coming across the Yalu to save the country from the west I suspect the opposite would happen (the Chinese would either make clear they planned to sit on their hands and do nothing, or make the offer to the West that if they stayed South of the parallel then China would send in its own army to take care of “the crazy gang” once and for all). The only thing stopping China from turning off the life support and hold a pillow over North Korea’s face is some form of communist nostalgia among the old guard in Beijing and an unwillingness to deal with millions of refugees. But inevitably, I suspect the day will dawn where they decide they have to bite the bullet and that spells collapse for the DPRK’s. With the Chinese either accepting a soft landing and a smooth transition to democracy and reunification…or with them trying to arrange for a more pro-Beijing administration to take power!

The last Emperor
So if I were Kim Jong-un I’d stay off the lobster and cut back on the Cognac, as I doubt he’ll be getting either in the Chinese/South Korean prison where he’ll likely be seeing out the last of his days. He may well be the last emperor of his country.

Is peak oil upon us?

One interesting story that has now come out via Wikileaks is that there is some apparent disagreement by the US embassy in Riyadh as the veracity of Saudi Arabia’s outlandish oil reserve claims.
http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overstated-wikileaks
http://www.guardian.co.uk/environment/blog/2011/feb/15/oil-saudi-arabia-reserves

This has major implications for the issue of impending peak oil. What is peak oil you ask? The short answer is it’s the point at which we can no longer drill our way out of our energy problems. It doesn’t mean we’re running out of oil, there’s still plenty left, it’s just that the stuff that’s left is often in much smaller fields, in more remote locations or in the form of unconventional reserves, like tar sands and shales.
http://ngm.nationalgeographic.com/ngm/0406/feature5/index.htm

This means three things. Firstly these remaining sources are much more expensive to exploit, so the price of energy as a whole (oil in particular) will have to rise. I’ve heard many energy industry insiders talking about prices higher than $200 a barrel being a “good” or “fair” price for oil….well good and fair if you’re not the one paying out at the pump I suppose! Also note that when I talk about price I mean both in terms of financial costs but also the energy costs. A typical Middle East oil well provides us with 1-200 times more energy than we initially invest in producing oil from it. The Tar sands have energy return ratios in the order of 9 to 0.7 depending on who you ask, the 0.7 figure (from environmentalists) would mean we spend more energy in the form of natural gas, coal or nuclear power getting the oil out than we get back from the oil, i.e the tar sands could turn out to be a net energy sink rather than a source.
http://en.wikipedia.org/wiki/EROEI

Obviously, beyond a certain point these costs become too large to sustain. If the oil price soon goes south of $200 and stays there more or less permanently, consumption will inevitably fall as it will be too expensive to use oil in the quantities were currently consume it. And if we end up using, say, half the North American Gas reserves to produce oil from Tar Sands that leaves a lot less gas available for other purposes (home heating, electricity, fertiliser manufacturing) and obviously increases the costs of pretty much everything, until consumption is curbed in some way.

Secondly, there is the rise in the environmental costs from continued fossil fuel use. Nevermind the issue of climate change, most of the world’s remaining oil reserves are in remote wilderness locations like the Arctic (or the ANWR in Alaska) or in the Rainforests. The Gulf of Mexico spill is the sort of price we will have to pay for continued oil dependancy. And projects like the Tar Sands or oil/gas shale drilling are far more environmentally destructive than any previous energy projects.
http://dirtyoilsands.org/visuals
http://topdocumentaryfilms.com/gasland/

Finally, we cannot simply pump oil out of the ground at any arbitrary rate. There are a host of economic, technical and geological factors that limit how much oil you can produce from any source within any given time period. Once we are passed peak oil maintaining oil output at its current levels, nevermind increasing output will become increasingly difficult as time goes on. Eventually oil production could enter into a state of steady unending decline, which would have very serious economic consequences if it happens unexpectedly.
http://topdocumentaryfilms.com/a-crude-awakening-the-oil-crash/

Now, it should be stated that such disquiet about Saudi oil reserves isn’t anything new, people have been crying foul about the level of OPEC oil reserves for years. Most notably back in the 1980’s many OPEC countries doubled or tripled their reserves more or less over night. This wasn’t due to any new discoveries, but due to the fact OPEC at the time was contemplating new rules, which related a nations ability to export oil to its proven reserves.
http://www.theoildrum.com/story/2006/3/1/3402/63420
Thus the Saudi’s and the other OPEC countries, have a perverse incentive to over state they’re oil reserves, so it would not be entirely surprising to learn that they have done so. To what degree they have over stated reserves is the question. If its a case of 10-20% its no big deal, if its 40-60% its a case of WTF! There is, it should be noted, no auditor who goes around the OPEC states and measures their oil reserves. Its up to them to tell us how much oil they think they have and it all boils down to whether you believe them or not.

One suspicious fact is that the few of the major OPEC states have ever shown a decrease in they’re stated reserves, indeed for several years many claimed exactly the same amount (despite the fact they were producing oil and supposedly depleting these reserves). The only way this could have been accurate was if during that period they had been going out each year and finding exactly the same amount of oil that they produced and sold that year, which seems pretty unlikely. A few lean years and a decline, then a few good years and a rise, okay I can buy that, but exactly the same found as sold for several years in a row, pull the other one! In another example back in the 70’s and 80’s the Saudi’s made aggressive moves to exploit they’re offshore oil reserves, this is despite the fact they still claim large onshore reserves in their South Eastern desert region (which at the time of writing has no oil drilling projects underway). Why go after the stuff offshore if you’ve all this oil left onshore? Is it perhaps because those onshore fields simply don’t exist?

This whole topic is significant, given what was recently revealed in the IEA’s annual energy assessment reports. Go back through previous few year’s reports and do a search for the word peak oil and you’ll come up with no hits, as the IEA stuck to the mantra that peak oil was a long way off. Do it now and you get lots of them! More importantly, the IEA has been saying for years that they expect global oil production to rise from its current levels of 75-80 million barrels/day to 120m bbl/day by 2030. Their latest report slashes this forecast down to just 96 m bbl/day.

This alone is cause for concern, that 120 bbl/day in 2030 figure was a reflection of what was needed to sustain our current levels of economic growth, if it’s been cut, how are we supposed to sustain such growth levels? There is you see a direct link between oil production and global trade, as so much of the transport infrastructure globally runs on oil, not to mention the fact that so many products we use from Nylon shirts, to pesticides (needed to maintain food production), plastics, pharmaceuticals, etc. are all derived from oil. Consequently we could well face a protracted slow down in global economic activity if these projections prove accurate.

And if that didn’t give energy industry people goose bumps, there was another twist. Conventional oil production (that’s the regular black stuff coming out of the ground) has been more or less flat since 2004 (with a slight peak in 2006), even though prices went through the roof back in 2007. If the OPEC countries had all the oil they claim to have, then with prices at $147 a barrel why didn’t they pump more onto the global market? While Saudi production did increase to a maximum of 10.5m bbl/day (they’re current output is 9.2m bbl/day) just prior to the recession it was a tiny rate of increase given the economic conditions and very small compared to what the Saudi’s frequently claim – that they can raise production up to 20m bbl/day and keep it there for years if necessary. If so, then why didn’t they (or the other OPEC states) increase production when oil prices recently skyrocketed? There are three possible answers:
1) They didn’t increase production because the Saudi’s and their OPEC allies want to maintain an artificial shortage in order to increase profits. If this is true then we need to think twice about getting hooked on OPEC oil in the future, as they clearly have no qualms about engaging in blatant price gouging the like of which would have Rockefeller shaking his head in disgust. This is important because If there’s one fact about oil that everyone agrees, it’s that between 60-70% of the world’s conventional oil reserves lie within the Middle East (they currently produce just 35% of the world’s oil).

2) They didn’t raise production because the valves were already fully open! 10.5m bbl/day is the most we’re ever going to get out of the Saudi’s. Once they do peak, production will decline well below this figure.

3) The Saudi’s do have some spare capacity, but not nearly as much as they claim. A figure closer to 12m bbl/day is probably closer to reality (according to many energy insiders) and they could probably only maintain this for a short period of time (months, rather than years). Obviously if this is true, the Saudis realise they need to maintain some spare capacity to deal with any future emergency (external or domestic) and hence, they aren’t going to put this spare capacity on the market any time soon, regardless of what the price does. Indeed if consumption continues to rise then eventually even this “spare” capacity will be eaten away. If they exceed peak production soon, then demand will outstrip supply all the sooner.

If you look at the graph for the IEA I’ve linked to you’ll note this big grey wedge labelled “crude oilfield yet to be developed” and another blue one labelled “…yet to be found”….here’s the punchline, the bulk of those are supposed to be in the Middle East…..indeed they are specifically meant to be held within 3 countries – Iraq, Saudi Arabia and Iran. If these wikileak speculations are correct, and we are forced to, say, subtract half of these two wedges, you will see that global oil production will likely begin to fall sometime between 2012 and 2020. Indeed if it weren’t for a recent increase in the output from “unconventional oil reserves” we would already be into the post-peak oil era. So, ya this is pretty big news….which seems to be getting scant attention from the media….. Although with all the stuff going on in Libya right now that’s probably not a big surprise.
http://www.scitechexplained.com/2010/12/finally-in-2010-iea-admits-crude-peak-oil-happened-in-2006-how-does-the-future-of-energy-look-like/

The Libya situation does however highlight another problem with peak oil – the erosion of any “swing” capacity. The world relies on several major producers of oil, such as the Saudi’s, the Russians and (increasingly) Iraq to maintain some “spare” capacity which can be brought online quickly to offset some temporary supply shortage (such as the current unrest in Libya right now). As we approach and exceed peak oil this “swing” capacity will be depleted (as we need it just to meet daily demand) and eventually disappear. This means that anytime there is a major interruption to supplies in the future (a revolution in an oil rich country for example), it will have fairly serious economic consequences (a spike in prices, queues at petrol pumps in some countries….with the odd inevitable fist fight, food prices rises, economic downturns, etc.).

Obviously I’m not saying it’s time to start panicking or anything (we should have started doing that back in 2006!), the oil isn’t running out, it’s just going to become an increasingly severe pain in the a$$ to meet our “addiction” to the stuff (as even G. W. Bush admits). And if anthropogenic climate change isn’t enough of an a reason for us to move away from fossil fuels then the consequences of peak oil are reason enough.

The real danger with peak oil you see is we won’t see it coming. The US peaked in 1971, but they didn’t work out that they’d peaked until the early 1980’s. It’s too early to say yet if 2006 was the peak in conventional oil production (as the IEA 2010 report speculated), we’d need a few more years data to be sure. Similarly, as far as the global peak in total oil production (conventional and unconventional), we’ll only know it happened probably a good decade after the event…in other words when it’s too late to do anything about it.

The 2005 Hirsch report made clear that in order to see off any economic disruption the world needed about 20 years to prepare for peak oil. Waiting until after the event would lead to “a significant period of severe economic discomfort”. So, as with climate change, a wait and see policy is simply not acceptable.
http://en.wikipedia.org/wiki/Hirsch_report

“the American way of life is not negotiable” – G.H.W. Bush

“beyond a certain point, nature doesn’t negotiate” – Richard Heinberg

Wikileaks

As you may have also heard, the wikileaks website has come out with the disclosure of secret US cables from they’re embassies around the world. It seems the US (under orders from Condi Rice and Hilary) are spying on the UN members, even the brits (the special relationship counts for naught it seems!), Gadaffi is afraid of sleeping up stairs or flying over water (probably because of the US trying to bomb him!) and he maybe shagging his Ukrainian Nurse. Also while the Gulf states are publicly criticising America for its sabre rattling against Iran it’s clear that they’ve been urging the US to go to war with Iran behind everyone’s back (and its been more a case of the US calming things down that looking for a fight). Interestingly enough China now regards North Korea as acting like a spoilt child and seems prepared to abandon Kim if he keeps waving his Dong (missiles) about and the US & South Koreas conspire to make him Il (very ill indeed)**

Also what the US gov really things of world leaders comes out. Ankel Merkel is “risk averse and rarely creative”, Berlusconi is “feckless, vain and ineffective as a world leader”, Mugabe “a crazy old man” and Medvedev “plays Robin to Putin’s Batman” (Holy toasted Chechens!). They also don’t trust Dave Cameron (“lightweight”), nor any of his Tory ministers.

Of course the US gov has been going on about how it “threatens national security”, I think that all it shows is that 90% of the time stuff is classified National Security has nothing to do with it, the spooks and politicians just want to spare themselves alot of embarrassment. While one can argue that Wikileaks and the newspapers involved should have applied some degree of self censorship to this matter, that’s sort of like expecting the fox to be responsible for the Health & Safety of the chickens. It’s the government’s job to keep classified information secure and the attacks on wikileaks amounts to shooting the messenger.

Severe pressure is being put on Wikileaks in that regard, they’ve managed to get its DNS serviced cut off, now Paypal & its bank are cutting ties, the charges against its founder. I actually suspect this will simply produce a “Streisand effect” (i.e. draw more attention to the cables). The previous leaks by wikileaks were not heavily publicised, largely because the policy of governments was to merely go “tut tut”, so the stories died a quick death in the media. By contrast the current efforts of governments is simply keeping it in the news and all but guarantees this is a story that won’t go away for sometime.

If the US government is to be believed, i.e that the release of this info will genuinely endanger lives, then how the hell did it wind up on the internet? If a bunch of wiki-freaks and geeks can get access to such sensitive information then any state with a credible intelligence service (the Russians, Chinese, Syrians or Irans for example) has most likely gotten access to these cables (and more!) sometime ago. I was under the impression that all those billions that intelligence agencies get each year, with few questions asked, was so that they can keep such data accessible to a small list of “need to know” people, stored on computers in underground vaults, which you have to go through 20 doors to get to & sit in the cone of silence while reading it(I may have watched way too much Maxwell Smart when I was a kid!). However it seems instead (according to several newspapers) that the information was stored on an open network accessible to 2.6 million people! That’s just asking for trouble, because inevitably some among that number are going to prove not to be loyal Americans/Brit’s, or have a fundamental disagreement with US/UK foreign policy, or will get into financial difficulty and sell secrets to the Russians (as was the case for John Walker, the most damaging spy in US history). The chief suspect it seems just walked in with a CD-R, downloaded it all and copied the lot onto the disk while pretending to listen to lady Gaga! Sounds more Johnny English than James Bond! Clearly we know now where a few budget cuts can be made.

Bottom line is, several people in the corridors of powers have screwed up royal. Blaming wiki-leaks or some lowly intern isn’t the answer, some people in very high places should now be fired and a full review of the system of information classification must be instituted, both to ensure the right information is being classified (sparing politicians or Supergrades blushes isn’t a good reason) and that the information that genuinely should be kept secret is kept secret. Obviously the Obama adm. Will point the finger at the Bush adm., and indeed it seems it was the latter’s cavalier policies are largely to blame (not that that gets Hilary and Obama completely off the hook, why didn’t they find and closing this loophole in the 2.5 years they’ve been in office?)

We have a contract with the security services which amounts to saying we accept they’re right to keep some info secret, tap our phones, read our e-mails/credit card bills and indeed more recently even peer at us naked as we go through airport security. In return however, they must keep us safe, spend the funds we allocate wisely, and treat sensitive information with the level of professionalism and discretion it deserves (remind me, how many laptops and pen drives have the MoD lost this year?). If they cannot be trusted to keep their side of the bargain, then the deals off – we can justifiably demand a roll back of they’re powers plus a dramatic cut in both funding and head count. This to me is the real point to be learnt from the Wikileaks saga.

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**Ok, I know its not fair of me to be making light of this. Its not Kim(not-so)Jung(and-very)il’s fault that his Dong(missiles) are very small, take ages to get upright and ready then tend to explode seconds after takeoff and well short of the target. No this isn’t the North Koreans fault and one should not jest about it.