Russian and the Mideast are sure loving these escalating oil prices. Their economies are booming. As a result they’re consuming more oil and exporting less. Dove tail this with global giant oil field depletion (average age +55 years) and this will make the downside of peak oil even steeper.


The forthcoming decline in global oil exports.

So the BIG DECEPTION is gonna be the war with Iran. We’re gonna blame our economic woes and deficient domestic energy fundamentals on those evil Iranians.

But the truth is our global economy stalled because oil supplies did. Contrary to economic dogma, sky high oil prices haven’t spurred supplies or curtailed demand. So oil prices go up and stay up. Our wealth keeps flowing to oil producers. It doesnt leave enough for debt service. And when oil prices move even higher, its going to get worse.

Its biting the little countries like Greece and Hungary first but don’t think we’re immune. After all, we’ve gone from the largest creditor nation and largest oil exporter in the world – post WWII- to the largest recipient of oil and debt (by far-there’s no close 2nd!).

So global oil supplies have plateaued. Oil exports are already starting to drop. Its time for action! Don’t be scrutinizing that oil export downslope on the road ahead. We might not have the oil reserves we used to but it sure financed lots of slick military harware. We’ve had a couple of warm-ups in Iraq and Libya. Next up is the big one. And when the economy of the largest oil consumer in the world drops faster than the above depicted oil export chart, just remember it was caused by those evil expasionist Iranians!




The ‘Wisdom’ of U.S. policy in the Mideast

by Robert Anderson on Tuesday, December 20, 2011

1) The oil sanctions we’ve applied to Iran, Iraq & Libya benefited them greatly. This restricted their oil production into $20/bl-type economics. They’ll soon be producing these same resources into $150-200/barrel prices.

2) The Qadhafi regime we overthrew in Libya was anti-al-Qaeda. They probably won’t be anymore!

3) We overthrew Hussein in Iraq. With a majority Shiite population, their politics have since shifted away from the U.S. and toward their neighbor Iran.

4) Iran is unacceptable so we are tightening the sanctions there. This will drive up the price of oil. Iranian oil flows will shift from west to east.  It formerly flowed to the Mediterranean. The 3 biggest EU debt crisis countries Greece, Italy & Spain- were also the biggest recipients of Iranian oil in Europe. At the apex of the EU debt crisis, they will now scramble for higher cost alternatives. Any benefits from austerity programs will then flow to oil producers.

5) Saudi Arabia & the other GCC members (UAE, Kuwait, Qatar, Bahrain & Oman) will be the biggest benefactors of tightened Iranian sanctions and this Mideast policy. al-Qaeda & extremist Wahhabism gets nearly 100% of their funding from Saudi Arabia & these GCC countries (as confirmed by State Dept docs & Wikileaks).

6) The U.S. will continue to spend as much money on protecting oil flows, fighting al-Qaeda and ‘defense’ as the rest of the world combined.

7) Hubris & ….

If You Don’t like this Oil Supply Plateau, Just Wait for the Slide!

by Robert Anderson on Tuesday, November 8, 2011 at 11:10am

Dear American voracious oil consumer,

Please take note. Its really pretty simple.

The global economy has been in the grips of a severe economic contraction for 3 years now. But have you seen oil prices? Over $115/bl across the Atlantic and +$95 in the U.S. (we’ve got a short term oversupply anomaly here in the Midcontinent). A slow economy used to deflate oil prices. What gives? Certainly not U.S. energy policy!

Its pretty simple. Lets do this with 3 pictures:

Contrary to classic economics, high oil prices have not translated into more supply or less demand.

Conventional global oil production is depicted here. In other words, it doesn’t include the expensive, polluting, poor net-energy projects like Canadian tar sands. We could also title this ‘cheap abundant oil’. In spite of sky high oil prices, its plateaued for the last 6 years! There’s been a very high incentive to produce more oil and it hasn’t happened. Oh oh.

So the global economy has tried to grow but the fuel that really allows this growth hasn’t kept pace. Its just like starving the food source for any organic system. Restricted inputs = contracted growth. And since we have a global debt-based fiat (funnymoney) financial system, when oil production stopped growing so did our true money supplies and economies. What economic growth we’ve had has been a result of just piling on more debt.

Economists didn’t think oil was any more important than any other input variable on their high faluting economic theories and equations. They were wrong! And the major oil company’s PR departments perpetuated this misconception. They still are! Read anything Dan Yergin and his crew has put out lately.

Here’s an economic concept they DID understand- if the global economy tries to keep growing and there’s not enough oil to supply it, oil producers profits will SKYROCKET! Since the U.S. is the largest oil consumer in the world -by far- and places like Venezuela, Russia and the Mideast are the largest oil producers (with the largest existing oil reserves) it won’t bode well for us here in the U.S. But this is our societal genre of late: greed is good! profits! bonuses! We’ve got this huge military machine. Maybe we can use it to alter our deficient energy and financial geopolitical position! Yeah. That’ll create more profits and bonuses!

OK so oil production has plateaued. What happens next? About 30% of the oil the world currently consumes comes from giant and super giant fields. In other words > 500,000 bls /day. The average age of these fields is >57 years! We quit discovering these giants back in the 60s! They’re going to start to deplete. But the new oil projects we’re bringing on- like Baaken in North Dakota- are little 2,500 bl/d wells where we’re drilling down and across 20,000 feet. In spite of the highly touted new technology, it just won’t be enough. So we are about to shift from a global oil output plateau to an ugly slide.  Our own U.S. Department of Defense has come out with a study indicating that the oil production plateau will start sliding by next year and global oil output will contract by 10 million barrels a day by 2015.

See why they call it ‘peak oil’? Its also peak economic growth!

Oh oh. If this oil plateau has created such economic chaos, whats going to happen when oil supplies actually start sliding? There is not going to be any bouncing up out of this recession -scratch that term, this depression- with oil supplies contracting. Maybe we can throw in a war with Iran and blame it on them!

Don’t worry. You’ll be fine as long as you are in that upper 1%. Oil company and military industrial profits will soar. Its going to be very profitable. And its actually really easy to move ill gotten gains offshore! I’d flee to a good oil producer!

The peak WILL happen, its only a matter of exactly when.

Wacky WSJ Hype: “How North Dakota Became Saudi Arabia”

Poster’s Note: I have a Mizzou buddy who is a partner at the local Smith Barney office here in KC. He IMed me on Friday to call my attention to this Wall Street Journal article. I thought I’d blog post my email response to him here. Here’s the WSJ article headline and link:

‘How North Dakota Became Saudi Arabia’

In all my years of reading the WSJournal, that’s the craziest headline and article I’ve ever read there. North Dakota ‘became’ the Saudi Arabia! Lets see were drilling down and across 20,000 feet for wells that produce less than 3,000 bls a day. Do the frigging math! Bakken produces 350,000 bls a day. By this guys own admission he says it’ll triple. Meanwhile the US consumes 19 mil bls a day and the world 86m. Its definitely the biggest U.S. play since Prud Bay and its a low flow, poor net energy trickle. You are an investment guy. Watch the hype. It reminds me of the hype behind the U.S. Gulf deepwater or Austin Chalk. Totally over blown. Where are they now? already peaked out.
The world is predominately supplied by giant (+500,000 bls/d) and super giant (+1,000,000 bls/d) fields. The average age on these are over 55 years. They are starting to deplete.
Reserve stats are dangerous. US reserves have gone up at late. We’ve got +$80 oil for 4 years now. Where’s the additional output? I love reading how regs are too restrictive while Bakken and other area drilling has more than tripled! Ha! Colo oil shale and Cand tar sands have massive Saudi type reserves. But u can’t do Colo because you spend more energy than u get. Canada will never exceed 4 mil bls a day- too much  environmental carnage, water, carbon and energy needed.
Another mistake is to just take new output plays and accept these additional volumes. No, you need to net it against depletion elsewhere.
Here’s a good perspective on the big picture:

I wont even get into carbon issues. Yeah strawman about birds as the planet bakes.

In fact, go to the Oil Drum anytime you want good perspectives. Use their search box. ie ‘Bakken’
The $18 trillion royalty potential comment (greater than all U.S. debt) is the dumbest, wackiest comment I’ve ever read in the WSJ.
U.S. oil production peaked in 1970 Or in other words we pissed away half of our +100 million year hydrocarbon legacy  into sub-$3 / bl oil. Now we’ll soon import it from Russia, the Mideast (& Al-Qaeda) and West Africa for $100. Your classic economics didn’t treat us very well on that one!
‘OPEC is losing their power and market share’ is the 2nd dumbest comment I’ve read in the WSJ. OPEC will rake in over $1 trillion in 2011. This will multiplier effect in their overseas economies instead of ours. Have you seen us beg Saudi Arabia for more oil output of late? Yeah. they’re losing power and market share. HA!
Good luck with all of this. If we can’t grow energy supplies, we can’t grow the economy. If Bakken is the best we can do- and it is- we are in trouble. We are.

Oil Theft That Pays and Stays

by Robert Anderson 

Where’s the outrage on seizing the $70 billion Libyan Sovereign Wealth Fund and redirecting it to Libyan rebels & elsewhere? Where’d the US and NATO get this authority? Its not right, and its déjà vu all over again on Chapter 2 of the Great 21st Century Oil War. Chapter 1 was Iraq. And don’t give me the malarkey that Qaddafi was a corrupt despot so it justifies such action. He was no more so than the rest of the Mideast including ‘our allies’ in places like Saudi Arabia. And if we are going to make corruption allegations we’d best not look in a mirror. Recently we’ve learned that $6.6 billion of a $12 billion fly-in-cargo-planeloads-of-money into Iraq is missing and probably stolen. Its incorrect to blame this on the Iraqis. The US was in charge of the provisional government there when the probable theft occurred. I’m betting it ended up going to a combination of Iraqis and U.S. war profiteers. Eisenhower was right about his military industrial warnings. Big planeloads of money in an insufficient checks & balances set-up couldn’t possibly turn out favorably. And here we are doing the same scandalous thieving in Libya a few years later. Same game. Different oilfields. Pick an eccentric dictator with extensive oil wealth, fire up the propaganda machine and take him down while shaking them down. “Hey. We can’t account for all this oil wealth. Its war!”

 And here’s a bigger graft outrage from our great oil war chapter 1 that wasn’t widely reported. It wasn’t just $6.6 billion in oil wealth stolen. There was probably an even bigger theft of oil! Here’s an article posted on my peak oil message board in 2007. I’ve posted there as DeRonin. This message board has been going strong since 1999! I’m glad we setup one section of Important Archieved Threads:

How Much Iraqi Crude Oil is Being Stolen?

“Rumors are rife among suspicious Iraqis about the failure to measure the oil flow. “Iraq is the victim of the biggest robbery of its oil production in modern history,” blazed a March 2006 headline in Azzaman, Iraq’s most widely read newspaper. A May 2006 study of oil production and export figures by Platt’s Oilgram News, an industry magazine, showed that up to $3 billion a year is unaccounted for…With billions of dollars to spend and extensive experience with oil infrastructure and Iraqi ports, Haliburton and Parsons seem unable to deal with the routine problem of broken meters at the Southern Iraq terminals….After the 2003 invasion, the meters appear to have been turned off and there have since been no reliable estimates of how much crude has been shipped from the southern oil fields.”

Got that? We took over Iraqi oil operations and intentionally didn’t fix the meters for 4 years at Basra through which all the Iraqi oil flowed at the time. There was no metering of the oil at the production point, the pipeline or the export port for 4 years! This was obviously intentional.

I learned this trick when I was entrenched in the Russian oil business when I worked for the Hermes Group in the mid-1990s. Under the communist system, the vehicles, buildings and oil were all government owned. No one got billed so no oil got metered. And when they shifted to a market system there wasn’t any rush to shift to metering. No records. No quantifying who’s getting what from who. Its an oil theft bonanza!

Wait a sec! This is hard to believe. What is the source of this article? You’ve never heard of CorpWatch? OK. How about an best selling author and former CIA agent writing in Time Magazine, backing it all up?

Who Is Stealing Iraq’s Oil?

By Robert Baer

“The Government Accountability Office is about to release a report that estimates 100,000 to 300,000 barrels of oil goes missing every month. According to the New York Times, the GAO will not offer a conclusion about what specifically is happening to the missing oil, other than it is probably lost to corruption, smuggling or just bad accounting.

Iraqis oil traders, on the other hand, tell me they think they know exactly where the stolen oil is going — the militias appropriate it to arm and feed the rank and file. The same traders also tell me there’s a lot more pilfered oil than the GAO acknowledges, and that the practice started as soon as Saddam fell.”

The lines to the north were out of service so it almost all came through Basra from '04-'08.

So nearly 10 years after we moved in and destroyed Saddam Hussein and much of Iraq, have you noticed the reports of ongoing water and power shortages there in spite of +$100 oil prices and the resultant oil revenue windfall? Now you know why. The post Saddam regime is just too corrupt. Oh that’s us? Oh well. Or actually its OIL WELL! On to Libya! Because oil theft that pays is oil theft that stays!

Why Is Libya in the Crosshairs of the West?

Here’s an important non-Western perspective
on why we launched another military boondoggle in the Mideast.
Its one more chapter of the ‘Great 21st Century Oil War’.

Have you noticed Iraq weapons of mass destruction was a bogus issue, and we only intervene on the Arab Spring oil exporter-Libya. Oil & a Sovereign Wealth Fund!!

As is typical, its not as simple as just controlling Libyan oil. Here’s an abreviated recap of the myriad of reasons:

~ Qaddafi was the main supporter of pricing oil -especially within OPEC- in a new gold dinar instead of dollars.

~ Huge water aquifers under the Sahara in Libya.

~ The Libyan economy was never integrated into the BIS and the Western banking system so it couldn’t be manipulated by the West. Notice we set up a Central Banking structure for the rebels very soon after fighting commenced.

~ Libyan oil is high quality sweet and onshore – so cheap to produce.

~ Qaddafi was negotiating for higher oil royalty cuts and delaying new projects for Western oil company concessions.

~ Libya had a $70 billion Sovereign Wealth Fund. Its already been seized and some of it redirected to the rebels and who knows where else.

~ Qaddafi had opted out of USAC, one of the 9 global Pentagon commands, to control Africa and the Mediterranean Basin, including the strategic energy transit routes and choke points, crucial for the world economy.

Its all the result of faulty economic theory that subordinates energy to economics when it should have been the other way around. U.S. oil production peaked in 1970. Or- to phrase this another way- we drained over half our valuable +100 million year hydrocarbon legacy into sub-$3/ barrel economics. The Brits did it in the North Sea into sub $15 oil economics. So now that we’ve figured out oil ISN’T expendable and easily replacable, its a futile scramble for what’s left. The U.S and the U.K. are the main 2 perpetrators of the ‘Great 21st Century Oil War’ in which we concoct false humanitarian reasons to try and extend our flagging  petroleum imperialism. Its a faulty strategy that’s not working- and can’t work- due to huge oil purchase wealth transfers to our adversaries and the prohibitive costs of this exorbitant militaritarization. To coin the author Paul Kennedy’s phrase, its ‘imperial overstretch’ with an oily twist.

Welcome to the new world of post peak fundamentals. Take heed. It won’t  be any fun being on the oil depleted side of this strategic equation.

Don’t fuel your car or economy on economic projections.


Special to The Star

Published as a Guest Op/Ed piece May29, 2011

Its Memorial Day weekend- the start of the summer driving season! Oh, wait…..not this year. Who can afford to drive anywhere with these near-$4 gasoline prices and our economy in the ditch? And it’s becoming increasingly apparent that the high petroleum prices are the primary reason our economy is in that roadside ditch once again.

We have a tendency to focus on domestic oil and energy policy but the same petroleum supply crunch is actually biting down hard everywhere globally.

Although there’s been a myriad of excuses and blame for this current energy quagmire, the bottom line is oil supply has not been able to keep pace with global economic growth. From 2003 to 2007 the global economy was growing at a +6% / year clip. But global oil production stopped growing in 2005.  It’s like we have a governor on our fuel line. The world is trying to hit the economic accelerator but the fuel flow is restricted. Economic growth projections are crashing into geologic reality.

Since large oil production projects or viable alternatives to oil take at least 5-6 years to bring on, we can state with conviction that these supply restrictions aren’t going to ease anytime soon. Actually, they’re bound to tighten further due to accelerating older oil field depletion. In spite of sky high oil prices, global production has been on a steady plateau since 2005. Very soon, it’ll downtrend. The economist’s contentions that high prices will curtail demand and encourage additional supply aren’t working on either count.

Charles Koch recently authored an op/ed piece here in the KC Star entitled ‘U.S. Economic Prosperity Demands More Freedom’.

I was fortunate to have learned the oil business at Wichita-based Koch Refining having worked there as a refinery rep. and marketing manager throughout the ‘80s. The Koch brothers are definitely ardent libertarians with a legitimate firm conviction of the merits competitive forces and free markets. It’s not a self-serving facade. I have considerable respect for their business acumen within the context of our current business paradigm.  They’ve grown to become the 2nd largest private company in the U.S. by instilling and honing business efficiencies in the backwaters of major oil. They outmaneuvered and outmanaged many of their larger competitors. They’ve aggressively moved into any markets where profits seemed excessive. Contrary to the public’s perception, the oil industry- downstream from the wellhead- is very competitive. Fuels flow to the highest prices. Any collusion soon gets undermined. And it’s the large independents like Koch who really contribute to these constructive competitive forces.

But our current dire global energy supply problem isn’t due to market inefficiencies downstream from the wellhead. Its past time to acknowledge economists and their free market doctrines got it wrong on these very pivotal energy resource depletion issues.

Economists have always implied the world economy is powered by money. They even seem to imply that this money can create resources. They’re wrong. It’s the other way around.

We’ve reached a society changing crescendo which isn’t even on an economist’s radar screen. We can no longer grow energy supplies like we have for the past 150 years. It’s increasing apparent that until new breakthrough energy sources are developed, we can’t grow our economy. The political power is now shifting from oil consumers- who built very vibrant economies on cheap energy- to oil producers. This will translate into onerous wealth transfers to our adversaries and an escalating propensity for oil wars. To quote a recent McClatchy newspaper headline, “WikiLeaks cables show that it was all about the oil.”‎

A free market system only rewards the monetization and consumption of oil with all its inherent pollution. BP Deepwater Horizon, Fukishima, Fracking…are you seeing a pattern? Our system rewarded excessive energy consumption while failing to figure in the very expensive environmental costs.

There wasn’t any inherent economic incentive to conserve and preserve our valuable +100 million year petroleum legacy. To an economist oil, was no more important than any of their other input variables. It was incorrectly deemed replaceable and expendable. As a result, we overconsumed. We are still overconsuming.

U.S. Oil Production Peak in 1970 at sub$3/barrel

U.S. oil production peaked in 1970. Or to rephrase this, we depleted half of our valuable oil resource legacy into sub $3/ barrel economics. From here on out we’ll import oil from adversarial and autocratic regimes at over $100/ barrel. Those much heralded economic money flows won’t be reverberating here. If this reflects the merits of a free market approach to energy consumption, we sure should have passed.

So Charles Koch is clamoring for more economic freedom on energy policy? I’m not surprised. I’m just betting ExxonMobil and the Kingdom of Saudi Arabia like this approach too.

Those cagey oil speculators.

Published in Kansas City Star Midwest Voices Sunday, May 29, 2011 at 12:51pm

The Saudis, and now Obama, claim the run up in oil prices is due to speculators.

 Annual car sales in China have gone from 1 mil to 16 mil in the last decade. Are speculators running up the price of cars? No, because they know higher prices would bring on more car production and undermine the price rally. Oil is different because the price can go to $200 but geologic constraints limit output.

Yet conventional economics falsely treat cars and oil the same. This is a significant flaw in our system.

Smart speculators are indeed on the long side of the oil market. Because they understand global oil production capacity is bumping up against its limits. But their ‘front running’ is a good thing. They are preparing us for the $200/ barrel oil and $7 / gallon gasoline yet to come.

This isn’t a theory. We’ve had sky high oil economics since 2005. Yet global oil production has plateaued. Next comes the decline.

Instead of blaming speculators we should be digesting this as a wake up call. These escalating oil prices are telling us that our economics of plenty are now getting trumped by basic geologic depletion. Our American lifestyle is unsustainable. We’ve consumed past the ability of this finite world to supply us.

Squawking about speculators won’t help.

Read more:

Economic projections crash into geologic reality.

Kansas City Star Midwest Voices contributing columnist: Robert Anderson

The IMF (International Monetary Fund) and Stuart Staniford (PhysicsPhD) have provided a very important perspective on our current global oil fundamentals. I know most of you won’t read extensive reports on petroleum production and demand elasticity stats so allow me to recap and supplement what Stuart just published.

Here’s the link on the original. You can also check out the accompanying graphs:

Early Warning. The global economy will not grow at 4% for the next 5 years.

IMF Economic Fantasy Land: 4.5% Annual Growth.

Stuart’s taken the recent IMF economic growth projections for the next 5 years – over 4.5% annually – and multiplied this by their oil elasticity figure of .685% to calculate how much oil supplies will have to grow to fuel this economic growth. What does this elasticity figure mean? It means that for each 1% increase in economic growth, oil supplies need to expand by his elasticity factor (.685%), or about 3% annually. If they don’t, the price of oil has to escalate.

Using the IMF growth rate of 4.5% (approximately) and the .685% elasticity figure, global oil supplies would have to expand by 17 million barrels a day during this 5 year time frame. It’s important to recognize this means more than bringing on 17 million barrels/ day of fresh supply. Many of the world’s large fields are starting to deplete so one has to net new supplies against existing field depletion rates. In other words, if existing oilfield output rates drop by 10 million bls/ day during this time frame, we’d need 27 million bls/day of fresh output to net 17.

The other significant problem is large oil production projects generally take more than 4 or 5 years to develop and bring into production. Point being, we already know what’s ‘in the pipe’ during this projected time frame – very little. This is why global oil output has been fairly flat since 2005. Its projected to continue to be. New output really isn’t doing much more than offsetting depletion of existing fields.

As if this isn’t bad enough, here’s another detrimental factor. With high oil prices, oil producer economies are booming. As a result they are consuming more oil locally and exporting less. Most subsidize their retail fuel prices. China and India are also soaking up lots more of what’s available. So let’s combine these and look at the stats on net available oil exports from ‘05 to ‘09:

2005: 46 – 5.2* = 40.8

2006: 46 – 5.5* = 40.5

2007: 45 – 6.1* = 38.9

2008: 45 – 6.6* = 38.4

2009: 43 – 7.3* = 35.7

In million barrels /day.

These oil export stats are provided by WesTexas at :

*China & India’s combined net oil imports.

It’s evident ’10 & ’11 figures would continue this trend. So global oil production stats have been steady but the ‘net available exports’ have actually dropped.

What else has happened since 2005? Oil prices have more than quadrupled. These same trends are bound to continue.

Consequently, its ludicrous to project oil production growth of 17 million barrels/ day over the next 5 years. What Stuart Staniford did was temper this down to 11 million barrels /day. But based on current and projected fundamentals, this isn’t doable either.

IMF Growth Projections: Ain't gonna happen!

If there isn’t enough oil to flow into these economic growth projections and those complex economic elasticity factors stay constant, how much does the price of oil have to escalate to compensate for a 1%/ year reduction in global supplies? Stuart figured 53% – each year! We all know our wallets and gas cards can’t handle this! If this is the case, economic growth would be the other variable that would have to drop -along with the demand elasticity figure.

In terms of these IMF projections, something has to give. Either oil prices are going way up or the global economy is going to contract. Or I’d predict both!

In conclusion Stuart figured:

 “I think the IMF’s growth projections are seriously improbable. What is going to happen instead is that people will keep trying to grow without getting much more oil efficient, that won’t work, oil prices will go through the roof, another global recession, or at least a major slowdown, will ensue, and then people will begin in earnest the work of starting to transition away from oil dependence.”

Of course, I’ve recently concluded that Saudi Arabia’s output might have peaked out and will soon be contracting. We’d better not even consider throwing this into the ugly mix.

So there you go. The economists are still figuring that economic growth is back on track, and oil is no more important than any of their other input variables.

They’re wrong. Aren’t they, Stuart?

Probe this, President Obama

Midwest Voices contributing columnist: Robert Anderson

April 22, 2011

On Thursday, President Obama announced a new justice department probe to determine if the illegal activities of traders and speculators were the cause of spiraling oil and gasoline prices.

The answer is no. Traders know there is little to no global spare oil production capacity and there’s going to be oil wars and trouble in the Mideast. Demand will continue to exceed supply. The result will be higher oil prices. There ya go, Barack. I’ll send you an invoice.

But if you really want to launch some substantive oil related probes, here’s my recommendations:

1) Why has the U.S. government Department of Energy EIA (Energy Information Administration) been in cahoots with major oil, OPEC and the Saudis in putting out these bogus projections that indicated global oil production could grow and grow and grow without any geologic constraints? This just encouraged Americans to over-consume oil and gasoline with reckless abandon. Its why we are in this economy wrenching, energy policy dry hole right now. Sure, the oil producers wanted us to think there aren’t any CO2 climate change risks or limits to growth. We went out and bought all these Hummers and SUVs and now, low and behold, we’re finding out global oil production capacity can’t really grow past 85-88 million barrels a day. The economists were wrong. Many geologists were right. The result is going to be obscene oil profits for major oil and OPEC.

I understand why oil producers spun this yarn but why did the EIA go along with it? Shoot, the EIA had global oil production projections as high as 125 million barrels a day! They even contended the Saudis would be producing as much as 25 million barrels / day! Thats just crazy.

Now that its too late to do anything about it, we’ll all be indentured servants to the oil producers. We sure missed the oil tanker on that one!

2) Now that oil companies are going to be raking in all these gargantuan profits, how come they don’t pay any taxes? I just read ExxonMobil made $19 billion (wow, they sure like these peak oil economics!) and paid in $0 taxes.

It gets even crazier. Did you know oil companies pay zero royalties on much of the offshore oil they extract from Federal leases? It seems legislation has been passed in 1995, and sweetened in 2001, that exempt oil company’s from paying royalties no matter how high the price of oil goes. Here’s the scoop NYT: Bush’s $28 billion giveaway to oil companies.  This article is a tad dated. Since oil prices have doubled since this was published in ‘06, the government giveaway to major oil is more like $60 billion now.

Yep. Someone is getting probed all right, and it’s not just the oil market speculators.