The Energy Crunch to Come

Soaring Oil Profits, Declining Discoveries, and Danger Signs

by Michael T. Klare

Data released annually at this time by the major oil companies on their prior-year performances rarely generates much interest outside the business world. With oil prices at an all-time high and Big Oil reporting record profits, however, this year has been exceptional. Many media outlets covered the announcement of mammoth profits garnered by ExxonMobil, the nation's wealthiest public corporation, and other large firms. Exxon's fourth-quarter earnings, at $8.42 billion, represented the highest quarterly income ever reported by an American firm.

"This is the most profitable company in the world," declared Nick Raich, research director of Zacks Investment Research in Chicago. But cheering as the recent announcements may have been for many on Wall Street, they also contained a less auspicious sign. Despite having spent billions of dollars on exploration, the major energy firms are reporting few new discoveries and so have been digging ever deeper into existing reserves. If this trend continues -- and there is every reason to assume it will -- the world is headed for a severe and prolonged energy crunch in the not-too-distant future.

To put this in perspective, bear in mind that the global oil industry has, until now, largely been able to increase its combined output every year in step with rising world demand. True, there have been a number of occasions when demand has outpaced supply, producing temporary shortages and high gasoline prices at the pump. But the industry has always been able been able to catch up again and so quench the world's insatiable thirst for oil. This has been possible because the big energy companies kept up a constant and successful search for new sources of oil to supplement the supplies drawn from their existing reserves. The world's known reserves still contain a lot of oil -- approximately 1.1 trillion barrels, by the estimates of experts at the oil major BP -- but they cannot satisfy rising world demand indefinitely; and so, in the absence of major new discoveries, we face a gradual contraction in the global supply of petroleum.

Signs of an Energy Crunch

It is in this context that the following disclosures, all reported in recent months, take on such significance.

·                     ConocoPhillips, the Houston-based amalgam of Continental Oil and Phillips Petroleum, announced in January that new additions to its oil reserves in 2004 amounted to only about 60-65% of all the oil it produced that year, entailing a significant depletion of those existing reserves.

·                     ChevronTexaco, the second largest U.S. energy firm after ExxonMobil, also reported a significant imbalance between oil production and replacement. Although not willing to disclose the precise nature of the company's shortfall, chief executive Dave O'Reilly told analysts that he expects "our 2004 reserves-replacement rate to be low."

·                     Royal Dutch/Shell, already reeling from admissions last year that it had over-stated its oil and natural gas reserves by 20%, recently lowered its estimated holdings by another 10%, bringing its net loss to the equivalent of 5.3 billion barrels of oil. Even more worrisome, Shell announced in February that it had replaced only about 45-55% of the oil and gas it produced in 2004, an unexpectedly disappointing figure.

These and similar disclosures suggest that the major private oil companies are failing to discover promising new sources of petroleum just as demand for their products soars. According to a recent study released by PFC Energy of Washington, D.C., over the past 20 years, the major oil firms have been producing and consuming twice as much oil as they have been finding. "In effect," says Mike Rodgers, author of the report, "the world's crude oil supply is still largely dependent on legacy assets discovered during the exploration heydays." True, vast reservoirs of untapped petroleum were discovered in those "heydays," mostly the 1950s and 1960s, but these reserves, being finite, will eventually run dry and, if not replaced soon, will leave the world facing a devastating energy crunch.

The notion that world oil supplies are likely to contract in the years ahead is hotly contested by numerous analysts in government and industry, who contend that many large fields await discovery. "Is the resource base large enough [to satisfy rising world demand]? We believe it is," affirmed ExxonMobil president Rex W. Tillerson in December. But other experts cast doubt on such claims by pointing to those disappointing reserve-replacement rates. "We've run out of good projects," said Matt Simmons, head of the oil-investment bank Simmons & Co. International. "This is not a money issue.... If these companies had fantastic projects, they'd be out there [developing new fields]."

That the major oil firms see few promising new fields to invest in right now is further suggested by reports that these companies are sinking their colossal profits in mega-mergers and stock buy-back programs rather than in exploration and field development. ExxonMobil, for example, spent $9.95 billion to buy back its own stock in 2004, while ChevronTexaco put out $2.5 billion to do the same. Meanwhile several big companies, including ChevronTexaco, are said to be eyeing California-based Unocal Corp. as a possible acquisition, and ConocoPhillips recently announced a $2 billion investment in Lukoil, the Russian energy giant. These moves are consuming funds that might have gone into new-field exploration -- yet another indicator of diminished expectations for major new discoveries. "If they had attractive things to invest in, they'd be investing their little heads off," explained PFC Energy managing director Gerald Kepes. But the great exploration opportunities of yesteryear "have largely dried up."

It is true, of course, that the private energy firms are largely barred from investment in Mexico, Venezuela, and the Persian Gulf countries, where oilfield development is the exclusive prerogative of state-owned companies. Hence, a major goal of the Bush administration's energy policy is to persuade or compel these countries to open up their territories to exploration by U.S. firms -- which, it is claimed, possess the advanced technological know-how that would make possible the discovery of previously unknown fields. But the energy professionals who run the state-owned companies insist that they do not need outside help to search for oil and that they have already mapped their countries' major prospects. Here, too, there has been a marked slowdown in new discoveries over the past decade or so.

The worldwide decline in new discoveries has profound implications for the global supply of energy and, by extension, the world economy. Given a recent surge in energy demand from China and other rapidly-developing countries, the U.S. Department of Energy (DoE) predicts that, for all future energy needs to be satisfied, total world oil output will have to climb by 50% between now and 2025; from, that is, approximately 80 million to 120 million barrels per day. A staggering increase in global production, that extra 40 million barrels per day would be the equivalent of total world daily consumption in 1969. Absent major new discoveries, however, the global oil industry will likely prove incapable of providing all of this additional energy. Without massive new oil discoveries, prices will rise, supplies will dwindle, and the world economy will plunge into recession -- or worse.

Where Is Oil's Peak?

Just how soon such an energy crunch will arrive and just how severe it is likely to be are matters of considerable debate. To a great extent, this debate hinges on the concept of "peak oil," or maximum sustainable daily output. In the 1950s, a petroleum geologist named M. King Hubbert published a series of equations showing that the output of any given oil well or reservoir will follow a parabolic curve over time. Production rises quickly after initial drilling and then loses momentum as output reaches its maximum or "peak" -- usually when half of the total amount of oil has been extracted -- after which production falls at an increasingly sharp rate. In 1956, using these equations, Hubbert predicted that conventional (that is, liquid) U.S. oil output would peak in the early 1970s. His prediction provoked much derision at the time, but earned him considerable renown when U.S. output did indeed achieve its peak level in 1972. Because of insufficient data at the time, Hubbert was unable to apply his equations to non-U.S. production. He did, however, predict that global output -- just like U.S. output -- would eventually reach a peak level and then begin an irreversible decline.

Today, the concept of global peak oil is widely accepted in the energy field, though debate rages over when this moment will actually occur. Those who believe that oil supplies are abundant tend to put this date far in the future, well beyond our immediate concern. The DoE, for example, noted in its International Energy Outlook for 2004 that it expects "conventional oil to peak closer to the middle than to the beginning of the 21st century." But other analysts are not so sanguine. "It is my opinion that the peak will occur in late 2005 or in the first few months of 2006," says Princeton geologist Kenneth S. Deffeyes in a new book, Beyond Oil. A more conservative estimate by Mike Rodgers of PFC Energy locates the peak somewhere in the vicinity of 2010-2015. If either of these predictions proves accurate, global oil supply can never climb high enough to satisfy the elevated consumption levels projected by the DoE for 2025 and beyond.

Where one stands on this critical issue depends on one's estimate of how much petroleum the Earth originally possessed. Those like Deffeyes, who contend that peak oil will arrive soon, believe that our petroleum inheritance amounted to roughly 2,000 billion barrels when commercial oil drilling first commenced in 1859. Since we have already consumed approximately 950 billion barrels and are now burning some 30 billion barrels each year, in this scenario the halfway point of total world extraction -- and so the moment of peak production -- should be just a year or two away. By contrast, those who hold that peak oil is safely in the distance claim that the world's total inheritance is closer to 3,000 billion barrels.

This more optimistic figure would include the 950 billion barrels already consumed, "proven" reserves of approximately 1,150 billion barrels, and as-yet-undiscovered fields believed to hold another 900 billion barrels. This latter amount, it should be noted, represents the equivalent of all the known oil in the Middle East, Asia, and Africa combined.

Where might these mammoth still-undiscovered reservoirs lie? This is no idle question, given that the major oil companies have scoured the world for over a century in the search of new sources of supply -- and, in recent years, have come up virtually empty-handed. True, a handful of impressive finds -- in the 1 billion barrel range -- have been uncovered off the west coast of Africa, and one very large field (the 10-billion barrel Kashagan field) was discovered in Kazakhstan's portion of the Caspian Sea.

Most other recent discoveries have been relatively small, and often located in deep offshore waters or other remote locations where the costs of production are high. "The reason [investment] is not increasing," Mike Rodgers has observed, "is that, in so many regions of the world, the fields have gotten so small that even though you might be able to drill a well and get a positive rate of return, the incremental value doesn't mean a lot." It is conceivable, of course, that Iraq and Saudi Arabia could harbor large fields that have simply escaped discovery in earlier sweeps. Perhaps these could indeed be located through the use of advanced seismic technology, as advocated by the Bush administration.

Put all of this together, however, and none of it comes remotely close to the scale of discovery needed to generate that additional 900 billion barrels of oil, which is why the recent oil-company reports are so significant. If the more optimistic estimates of global oil are on the mark, it stands to reason that the major firms should be finding more new oil every year than they are producing; yet the very opposite has been the case for the last 20 years. If this continues to be the case, it is hard to imagine that the approach of global peak oil can be that far in the future.

Whether peak oil arrives in 2005, 2010, or 2015, and whether the maximum level of daily oil output turns out to be 90 or 100 million barrels will not matter much in the long run. In any of these scenarios, global oil production will level off and begin to decline at a level far below the anticipated world demand of 120 million barrels per day in 2025. True, some of this shortfall may be absorbed by the accelerated development of "unconventional" petroleum fuels -- liquid condensate from the production of natural gas, fuels derived from tar sands and oil shale, liquids extracted from coal, and the like -- but these materials are exceedingly costly to produce and their manufacture entails too many environmental risks to make them practical substitutes for conventional oil.

Even with increased production of such substitutes, the inevitable contraction in global petroleum supplies would only be postponed for a few years. Eventually, scientists and engineers may develop entirely new sources of energy -- for example, geothermal, biomass, or hydrogen-based systems -- but at current rates of development, none of these alternatives will be available on a large enough scale when petroleum products become scarce.

So while the major stockholders of Exxon, Chevron, and the other oil giants may be exulting at the moment, the rest of us should be deeply disturbed by their recent reports. Despite all the optimistic talk from Washington, we are facing a substantial and inescapable threat of global energy scarcity, which can only have dire consequences for our economy and the world's. Indeed, we are beginning to see hints of that today, with rising prices at the neighborhood gas pump and a perceptible decline in consumer spending.

This coming scarcity cannot be wished away, nor can it be erased through drilling in the Arctic National Wildlife Refuge, which contains far too little petroleum to make a significant difference even in U.S. oil supplies. Only an ambitious program of energy conservation -- entailing the imposition of much higher fuel-efficiency standards for American automobiles and SUVs -- and the massive funding of R&D in, and then the full-scale development of alternative, environmentally-friendly fuels can offer hope of averting the disaster otherwise awaiting us.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author, most recently, of Blood and Oil: The Dangers and Consequences of America's Growing Petroleum Dependency (Metropolitan Books).

BAGHDAD COUP D'ETAT FOR BIG OIL

March 28, 2005

Harper's Magazine investigation reveals how Big Oil vanquished the neo-cons ...and OPEC is the winner.

"For months, the State Department officially denied the existence of this 323-page plan for Iraq's oil ...."

Some conspiracy nuts believe the Bush Administration had a secret plan to control Iraq's oil. In fact, there were TWO plans. In a joint investigation with BBC Television Newsnight, Harper's Magazine has uncovered a hidden battle over Iraq's oil. It began right after Mr. Bush took office - with a previously unreported plot to invade Iraq.

From the exclusive Harper's report by Greg Palast:

Within weeks of the first inaugural, prominent Iraqi expatriates -- many with ties to U.S. industry -- were invited to secret discussions directed by Pamela Quanrud, National Security Council, now at the State Department. "It quickly became an oil group," said one participant, Falah Aljibury. Aljibury is an advisor to Amerada Hess' oil trading arm and Goldman Sachs.

"The petroleum industry, the chemical industry, the banking industry -- they'd hoped that Iraq would go for a revolution like in the past and government was shut down for two or three days," Aljibury told me. On this plan, Hussein would simply have been replaced by some former Baathist general.

However, by February 2003, a hundred-page blue-print for the occupied nation, favored by neo-cons, had been enshrined as official policy. "Moving the Iraqi Economy from Recovery to Sustainable Growth" generally embodied the principles for postwar Iraq favored by Deputy Defense Secretary Paul Wolfowitz and the Iran-Contra figure, now Deputy National Security Advisor, Elliott Abrams. The blue-print mapped out a radical makeover of Iraq as a free-maket Xanadu including, on page 73, the sell-off of the nation's crown jewels: "privatization [of] the oil and supporting industries."

It was reasoned that if Iraq's fields were broken up and sold off, competing operators would crank up production. This extra crude would flood world petroleum markets, OPEC would devolve into mass cheating and overproduction, oil prices would fall over a cliff, and Saudi Arabia, both economically and politically, would fall to its knees.

However, in plotting the destruction of OPEC, the neocons failed to predict the virulent resistance of insurgent forces: the U.S. oil industry itself. Rob McKee, a former executive vice-president of ConocoPhillips, designated by the Bush Administration to advise the Iraqi oil ministry, had little tolerance for the neocons' threat to privatize the oil fields nor their obsession on ways to undermine OPEC. (In 2004, with oil approaching the $50 a barrel mark all year, the major U.S. oil companies posted record or near-record profits. ConocoPhillips this February reported a doubling of its quarterly profits.)

In November 2003, McKee quietly ordered up a new plan for Iraq's oil. For months, the State Department officially denied the existence of this 323-page plan, but when I threatened legal action, I was able to obtain the multi-volume document describing seven possible models of oil production for Iraq, each one merely a different flavor of a single option: a state-owned oil company under which the state maintains official title to the reserves but operation and control are given to foreign oil companies.

According to Ed Morse, another Hess Oil advisor, the switch to an OPEC-friendly policy for Iraq was driven by Dick Cheney. "The VP's office [has] not pursued a policy in Iraq that would lead to a rapid opening of the Iraqi energy sector that would put us on a track to say, "We're going to put a squeeze on OPEC."

Cheney, far from "putting the squeeze on OPEC," has taken a defacto seat there, allowing the cartel to maintain its suffocating grip on the U.S. economy.

*****

Read the full story in the April edition of Harper's Magazine, out this week:

"OPEC ON THE MARCH: Why Iraq Still Sells Its Oil à la Cartel," by Greg Palast.

Greg Palast is the author of the New York Times bestseller, "The Best Democracy

Money Can Buy."  View his writings at www.GregPalast.com.

Leni von Eckardt contributed investigative research to this project.

For interviews, email us at contact(at)GregPalast.com

The Long Emergency

What's going to happen as we start running out of cheap gas to guzzle?

March 27, 2005

By James Howard Kunster

Rolling Stone

A few weeks ago, the price of oil ratcheted above fifty-five dollars a barrel, which is about twenty dollars a barrel more than a year ago. The next day, the oil story was buried on page six of the New York Times business section. Apparently, the price of oil is not considered significant news, even when it goes up five bucks a barrel in the span of ten days. That same day, the stock market shot up more than a hundred points because, CNN said, government data showed no signs of inflation. Note to clueless nation: Call planet Earth.

Carl Jung, one of the fathers of psychology, famously remarked that "people cannot stand too much reality." What you're about to read may challenge your assumptions about the kind of world we live in, and especially the kind of world into which events are propelling us. We are in for a rough ride through uncharted territory.

It has been very hard for Americans -- lost in dark raptures of nonstop infotainment, recreational shopping and compulsive motoring -- to make sense of the gathering forces that will fundamentally alter the terms of everyday life in our technological society. Even after the terrorist attacks of 9/11, America is still sleepwalking into the future. I call this coming time the Long Emergency.

Most immediately we face the end of the cheap-fossil-fuel era. It is no exaggeration to state that reliable supplies of cheap oil and natural gas underlie everything we identify as the necessities of modern life -- not to mention all of its comforts and luxuries: central heating, air conditioning, cars, airplanes, electric lights, inexpensive clothing, recorded music, movies, hip-replacement surgery, national defense -- you name it.

The few Americans who are even aware that there is a gathering global-energy predicament usually misunderstand the core of the argument. That argument states that we don't have to run out of oil to start having severe problems with industrial civilization and its dependent systems. We only have to slip over the all-time production peak and begin a slide down the arc of steady depletion.

The term "global oil-production peak" means that a turning point will come when the world produces the most oil it will ever produce in a given year and, after that, yearly production will inexorably decline. It is usually represented graphically in a bell curve. The peak is the top of the curve, the halfway point of the world's all-time total endowment, meaning half the world's oil will be left. That seems like a lot of oil, and it is, but there's a big catch: It's the half that is much more difficult to extract, far more costly to get, of much poorer quality and located mostly in places where the people hate us. A substantial amount of it will never be extracted.

The United States passed its own oil peak -- about 11 million barrels a day -- in 1970, and since then production has dropped steadily. In 2004 it ran just above 5 million barrels a day (we get a tad more from natural-gas condensates). Yet we consume roughly 20 million barrels a day now. That means we have to import about two-thirds of our oil, and the ratio will continue to worsen.

The U.S. peak in 1970 brought on a portentous change in geoeconomic power. Within a few years, foreign producers, chiefly OPEC, were setting the price of oil, and this in turn led to the oil crises of the 1970s. In response, frantic development of non-OPEC oil, especially the North Sea fields of England and Norway, essentially saved the West's ass for about two decades. Since 1999, these fields have entered depletion. Meanwhile, worldwide discovery of new oil has steadily declined to insignificant levels in 2003 and 2004.

Some "cornucopians" claim that the Earth has something like a creamy nougat center of "abiotic" oil that will naturally replenish the great oil fields of the world. The facts speak differently. There has been no replacement whatsoever of oil already extracted from the fields of America or any other place.

Now we are faced with the global oil-production peak. The best estimates of when this will actually happen have been somewhere between now and 2010. In 2004, however, after demand from burgeoning China and India shot up, and revelations that Shell Oil wildly misstated its reserves, and Saudi Arabia proved incapable of goosing up its production despite promises to do so, the most knowledgeable experts revised their predictions and now concur that 2005 is apt to be the year of all-time global peak production.

It will change everything about how we live.

To aggravate matters, American natural-gas production is also declining, at five percent a year, despite frenetic new drilling, and with the potential of much steeper declines ahead. Because of the oil crises of the 1970s, the nuclear-plant disasters at Three Mile Island and Chernobyl and the acid-rain problem, the U.S. chose to make gas its first choice for electric-power generation. The result was that just about every power plant built after 1980 has to run on gas. Half the homes in America are heated with gas. To further complicate matters, gas isn't easy to import. Here in North America, it is distributed through a vast pipeline network. Gas imported from overseas would have to be compressed at minus-260 degrees Fahrenheit in pressurized tanker ships and unloaded (re-gasified) at special terminals, of which few exist in America. Moreover, the first attempts to site new terminals have met furious opposition because they are such ripe targets for terrorism.

Some other things about the global energy predicament are poorly understood by the public and even our leaders. This is going to be a permanent energy crisis, and these energy problems will synergize with the disruptions of climate change, epidemic disease and population overshoot to produce higher orders of trouble.

We will have to accommodate ourselves to fundamentally changed conditions.

No combination of alternative fuels will allow us to run American life the way we have been used to running it, or even a substantial fraction of it. The wonders of steady technological progress achieved through the reign of cheap oil have lulled us into a kind of Jiminy Cricket syndrome, leading many Americans to believe that anything we wish for hard enough will come true. These days, even people who ought to know better are wishing ardently for a seamless transition from fossil fuels to their putative replacements.

The widely touted "hydrogen economy" is a particularly cruel hoax. We are not going to replace the U.S. automobile and truck fleet with vehicles run on fuel cells. For one thing, the current generation of fuel cells is largely designed to run on hydrogen obtained from natural gas. The other way to get hydrogen in the quantities wished for would be electrolysis of water using power from hundreds of nuclear plants. Apart from the dim prospect of our building that many nuclear plants soon enough, there are also numerous severe problems with hydrogen's nature as an element that present forbidding obstacles to its use as a replacement for oil and gas, especially in storage and transport.

Wishful notions about rescuing our way of life with "renewables" are also unrealistic. Solar-electric systems and wind turbines face not only the enormous problem of scale but the fact that the components require substantial amounts of energy to manufacture and the probability that they can't be manufactured at all without the underlying support platform of a fossil-fuel economy. We will surely use solar and wind technology to generate some electricity for a period ahead but probably at a very local and small scale.

Virtually all "biomass" schemes for using plants to create liquid fuels cannot be scaled up to even a fraction of the level at which things are currently run. What's more, these schemes are predicated on using oil and gas "inputs" (fertilizers, weed-killers) to grow the biomass crops that would be converted into ethanol or bio-diesel fuels. This is a net energy loser -- you might as well just burn the inputs and not bother with the biomass products. Proposals to distill trash and waste into oil by means of thermal depolymerization depend on the huge waste stream produced by a cheap oil and gas economy in the first place.

Coal is far less versatile than oil and gas, extant in less abundant supplies than many people assume and fraught with huge ecological drawbacks -- as a contributor to greenhouse "global warming" gases and many health and toxicity issues ranging from widespread mercury poisoning to acid rain. You can make synthetic oil from coal, but the only time this was tried on a large scale was by the Nazis under wartime conditions, using impressive amounts of slave labor.

If we wish to keep the lights on in America after 2020, we may indeed have to resort to nuclear power, with all its practical problems and eco-conundrums. Under optimal conditions, it could take ten years to get a new generation of nuclear power plants into operation, and the price may be beyond our means. Uranium is also a resource in finite supply. We are no closer to the more difficult project of atomic fusion, by the way, than we were in the 1970s.

The upshot of all this is that we are entering a historical period of potentially great instability, turbulence and hardship. Obviously, geopolitical maneuvering around the world's richest energy regions has already led to war and promises more international military conflict. Since the Middle East contains two-thirds of the world's remaining oil supplies, the U.S. has attempted desperately to stabilize the region by, in effect, opening a big police station in Iraq. The intent was not just to secure Iraq's oil but to modify and influence the behavior of neighboring states around the Persian Gulf, especially Iran and Saudi Arabia. The results have been far from entirely positive, and our future prospects in that part of the world are not something we can feel altogether confident about.

And then there is the issue of China, which, in 2004, became the world's second-greatest consumer of oil, surpassing Japan. China's surging industrial growth has made it increasingly dependent on the imports we are counting on. If China wanted to, it could easily walk into some of these places -- the Middle East, former Soviet republics in central Asia -- and extend its hegemony by force. Is America prepared to contest for this oil in an Asian land war with the Chinese army? I doubt it. Nor can the U.S. military occupy regions of the Eastern Hemisphere indefinitely, or hope to secure either the terrain or the oil infrastructure of one distant, unfriendly country after another. A likely scenario is that the U.S. could exhaust and bankrupt itself trying to do this, and be forced to withdraw back into our own hemisphere, having lost access to most of the world's remaining oil in the process.

We know that our national leaders are hardly uninformed about this predicament. President George W. Bush has been briefed on the dangers of the oil-peak situation as long ago as before the 2000 election and repeatedly since then. In March, the Department of Energy released a report that officially acknowledges for the first time that peak oil is for real and states plainly that "the world has never faced a problem like this. Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary."

Most of all, the Long Emergency will require us to make other arrangements for the way we live in the United States. America is in a special predicament due to a set of unfortunate choices we made as a society in the twentieth century. Perhaps the worst was to let our towns and cities rot away and to replace them with suburbia, which had the additional side effect of trashing a lot of the best farmland in America. Suburbia will come to be regarded as the greatest misallocation of resources in the history of the world. It has a tragic destiny. The psychology of previous investment suggests that we will defend our drive-in utopia long after it has become a terrible liability.

Before long, the suburbs will fail us in practical terms. We made the ongoing development of housing subdivisions, highway strips, fried-food shacks and shopping malls the basis of our economy, and when we have to stop making more of those things, the bottom will fall out.

The circumstances of the Long Emergency will require us to downscale and re-scale virtually everything we do and how we do it, from the kind of communities we physically inhabit to the way we grow our food to the way we work and trade the products of our work. Our lives will become profoundly and intensely local. Daily life will be far less about mobility and much more about staying where you are. Anything organized on the large scale, whether it is government or a corporate business enterprise such as Wal-Mart, will wither as the cheap energy props that support bigness fall away. The turbulence of the Long Emergency will produce a lot of economic losers, and many of these will be members of an angry and aggrieved former middle class.

Food production is going to be an enormous problem in the Long Emergency. As industrial agriculture fails due to a scarcity of oil- and gas-based inputs, we will certainly have to grow more of our food closer to where we live, and do it on a smaller scale. The American economy of the mid-twenty-first century may actually center on agriculture, not information, not high tech, not "services" like real estate sales or hawking cheeseburgers to tourists. Farming. This is no doubt a startling, radical idea, and it raises extremely difficult questions about the reallocation of land and the nature of work. The relentless subdividing of land in the late twentieth century has destroyed the contiguity and integrity of the rural landscape in most places. The process of readjustment is apt to be disorderly and improvisational. Food production will necessarily be much more labor-intensive than it has been for decades. We can anticipate the re-formation of a native-born American farm-laboring class. It will be composed largely of the aforementioned economic losers who had to relinquish their grip on the American dream. These masses of disentitled people may enter into quasi-feudal social relations with those who own land in exchange for food and physical security. But their sense of grievance will remain fresh, and if mistreated they may simply seize that land.

The way that commerce is currently organized in America will not survive far into the Long Emergency. Wal-Mart's "warehouse on wheels" won't be such a bargain in a non-cheap-oil economy. The national chain stores' 12,000-mile manufacturing supply lines could easily be interrupted by military contests over oil and by internal conflict in the nations that have been supplying us with ultra-cheap manufactured goods, because they, too, will be struggling with similar issues of energy famine and all the disorders that go with it.

As these things occur, America will have to make other arrangements for the manufacture, distribution and sale of ordinary goods. They will probably be made on a "cottage industry" basis rather than the factory system we once had, since the scale of available energy will be much lower -- and we are not going to replay the twentieth century. Tens of thousands of the common products we enjoy today, from paints to pharmaceuticals, are made out of oil. They will become increasingly scarce or unavailable. The selling of things will have to be reorganized at the local scale. It will have to be based on moving merchandise shorter distances. It is almost certain to result in higher costs for the things we buy and far fewer choices.

The automobile will be a diminished presence in our lives, to say the least. With gasoline in short supply, not to mention tax revenue, our roads will surely suffer. The interstate highway system is more delicate than the public realizes. If the "level of service" (as traffic engineers call it) is not maintained to the highest degree, problems multiply and escalate quickly. The system does not tolerate partial failure. The interstates are either in excellent condition, or they quickly fall apart.

America today has a railroad system that the Bulgarians would be ashamed of. Neither of the two major presidential candidates in 2004 mentioned railroads, but if we don't refurbish our rail system, then there may be no long-range travel or transport of goods at all a few decades from now. The commercial aviation industry, already on its knees financially, is likely to vanish. The sheer cost of maintaining gigantic airports may not justify the operation of a much-reduced air-travel fleet. Railroads are far more energy efficient than cars, trucks or airplanes, and they can be run on anything from wood to electricity. The rail-bed infrastructure is also far more economical to maintain than our highway network.

The successful regions in the twenty-first century will be the ones surrounded by viable farming hinterlands that can reconstitute locally sustainable economies on an armature of civic cohesion. Small towns and smaller cities have better prospects than the big cities, which will probably have to contract substantially. The process will be painful and tumultuous. In many American cities, such as Cleveland, Detroit and St. Louis, that process is already well advanced. Others have further to fall. New York and Chicago face extraordinary difficulties, being oversupplied with gigantic buildings out of scale with the reality of declining energy supplies. Their former agricultural hinterlands have long been paved over. They will be encysted in a surrounding fabric of necrotic suburbia that will only amplify and reinforce the cities' problems. Still, our cities occupy important sites. Some kind of urban entities will exist where they are in the future, but probably not the colossi of twentieth-century industrialism.

Some regions of the country will do better than others in the Long Emergency. The Southwest will suffer in proportion to the degree that it prospered during the cheap-oil blowout of the late twentieth century. I predict that Sunbelt states like Arizona and Nevada will become significantly depopulated, since the region will be short of water as well as gasoline and natural gas. Imagine Phoenix without cheap air conditioning.

I'm not optimistic about the Southeast, either, for different reasons. I think it will be subject to substantial levels of violence as the grievances of the formerly middle class boil over and collide with the delusions of Pentecostal Christian extremism. The latent encoded behavior of Southern culture includes an outsized notion of individualism and the belief that firearms ought to be used in the defense of it. This is a poor recipe for civic cohesion.

The Mountain States and Great Plains will face an array of problems, from poor farming potential to water shortages to population loss. The Pacific Northwest, New England and the Upper Midwest have somewhat better prospects. I regard them as less likely to fall into lawlessness, anarchy or despotism and more likely to salvage the bits and pieces of our best social traditions and keep them in operation at some level.

These are daunting and even dreadful prospects. The Long Emergency is going to be a tremendous trauma for the human race. We will not believe that this is happening to us, that 200 years of modernity can be brought to its knees by a world-wide power shortage. The survivors will have to cultivate a religion of hope -- that is, a deep and comprehensive belief that humanity is worth carrying on. If there is any positive side to stark changes coming our way, it may be in the benefits of close communal relations, of having to really work intimately (and physically) with our neighbors, to be part of an enterprise that really matters and to be fully engaged in meaningful social enactments instead of being merely entertained to avoid boredom. Years from now, when we hear singing at all, we will hear ourselves, and we will sing with our whole hearts.

Adapted from The Long Emergency, 2005, by James Howard Kunstler, and reprinted with permission of the publisher, Grove/Atlantic, Inc.

Why Syria will not go quietly

March 29, 2005
by Brian Maher
Asia Times

Last month's assassination of former Lebanese prime minister Rafik Hariri in Beirut and its political fallout have proved portentous developments for Syria, to say the least. Even if Damascus is innocent of any involvement or if rogue elements in one of its 14 intelligence agencies carried out the murder, the effect remains unchanged. It has set in motion widespread civil opposition to the Syrian presence in Lebanon and renewed calls from the international community for a complete Syrian withdrawal from its neighbor.

Not only the United States but also the likes of France, Russia, Egypt and Saudi Arabia have publicly called on Syria to quit Lebanon. With so many forces falling into alignment against Damascus, the increasingly isolated regime of President Bashar Assad confronts a shrinking universe of options with which to maintain its strategic leverage in the region. In the space of a few weeks, Assad has stepped back from an intransigent refusal to consider withdrawing from Lebanon to a conciliatory position promising the removal of Syrian troops and intelligence forces within "a few months". Unfolding events in Lebanon affect not only Syria, but have the potential to alter the balance of power in the region.

Implications of a Syrian withdrawal

A full withdrawal from Lebanon in the face of Western pressure would represent a serious humiliation for the ossified Ba'athist regime, which may not be able to survive such a display of perceived weakness. Surrounded by hostile and semi-hostile states, Lebanon stands alone as part of a Syrian sphere of influence. In important respects, Lebanon is the mortar holding together the bricks of a weak regime. Over the course of three decades, Syria has transformed Lebanon into a vassal state that lacks any true independence - Syria doesn't even recognize Lebanese passports or maintain an embassy in Beirut. The Syrian Ba'athists have long considered Lebanon an integral part of their concept of Bilad al-Sham, or "Greater Syria", a territorial abstraction that also lays claim to Israel, Jordan and parts of Turkey. It is a construct that carries substantial ideological currency and losing its position in Lebanon would only serve to bring Damascus' regional ambitions to an ignominious end. This explains its flurry of diplomatic activity to help place a pan-Arab patina on any withdrawal agreement.

In addition, Syria may face harsh economic realities if forced to quit Lebanon. Perhaps 20% or more of the Syrian economy is based on Lebanese sources of revenue. Up to a million Syrians work in Lebanon, where they earn respectable wages, much of which is remitted to Syria. Commissions on business deals and extensive corruption also benefit the well-heeled in Syria. Syrian interests control much of the country's resources and Syrian domination of the robust Bekaa Valley drug trade also provides significant streams of revenue. Losing its economic suzerainty over Lebanon could cripple an already teetering Syrian economy.

Most important, however, a pliant Lebanon provides Syria strategic depth along its western frontier, a crucial buffer Damascus has relied on to check its Israeli adversary. Quite simply, Lebanon is Damascus' strongest negotiating card with Israel. Losing Lebanon, in the full sense of the word, would represent a significant attenuation of Syria's deterrent posture with Israel - and, if that is lost, a diminution of leverage over the Palestinian issue may not be far behind.

Damascus will not relinquish that easily, and removing 14,000 troops from Lebanon is not especially important from a strategic standpoint. Damascus is not without arrows in its quiver. It has extended its tentacles deeply into Lebanese society, effectively controlling its political, economic and military/intelligence apparatus. Its intelligence services, which are deeply entrenched within Lebanon, are of far greater importance. Their cheek-by-jowl relationship with Lebanese intelligence and thousands of local informants ensure that a pro forma closing of their main office will not end Syrian influence. They still wield the ability to shape political developments and destabilize Lebanon by unleashing massive civil strife.

The role of Hezbollah

In addition, Damascus still maintains great influence over Hezbollah, which one former senior US Federal Bureau of Investigation official described as "the best light infantry in the world". Syrian patronage of Hezbollah is well known and its logic rather simple. Its 25,000-man force, armed with 10,000 rockets and missiles, is a strategic asset that Syria has used as leverage in its conflict with Israel, especially with respect to the Golan Heights. Damascus has jealously guarded Hezbollah's position in Lebanon and disarmed all of its rivals. In the face of a Syrian withdrawal, Hezbollah and other Lebanese concerns that have benefited from Syrian patronage may very well resort to violence to protect their interests. Hezbollah may choose to foment strife, conveying the all too clear message that there will be no stability in Lebanon without Syria's steadying hand. Recent bombings in Christian suburbs of Beirut may provide a foretaste of what lies ahead.

This could potentially lead to widespread unrest, even civil war, which would have major ramifications in Israel, Syria and beyond. Some Israeli officials believe that Hezbollah has recently reinvigorated attempts to subcontract attacks in Israel by Palestinian militant groups. A Lebanese civil war may in fact redound to Hezbollah's favor, as a Syrian withdrawal would leave Hezbollah the most powerful force in Lebanon - more powerful than the Lebanese army. A Hezbollah victory in such a conflict would fulfill Shi'ite aspirations of controlling the country and create nightmares in neighboring countries with potentially restive Shi'ite populations, Saudi Arabia not least among them. Such a development would create a Shi'ite axis stretching from Iran, through Iraq to Lebanon, delighting Tehran.

For these reasons, Israel, especially, may have reservations about a full Syrian withdrawal from Lebanon and would want the Lebanese army to assume quick control of the southern parts of the country. Jerusalem is divided between those who prefer the overall stability that Hezbollah's Syrian overlords can provide and those who believe a Syrian withdrawal will undermine Hezbollah's power fundamentally. The known devil may be preferable to the unknown one, as far as some in Jerusalem are concerned. Syrian patronage of Hezbollah has allowed Damascus to call the proverbial shots - Syria unleashed Hezbollah when it suited its interests, like in Shebaa Farms, and reined it in when it feared provoking Israel. This was especially the case with the elder Assad, who exercised far greater control over Hezbollah. As such, Damascus provided Israel a calling card if Hezbollah attacked Israeli interests and Damascus realized that it would be held to account for the group's activities. "We have an address," many Israeli policymakers would warn. With that moderating influence removed, will Hezbollah pull off its proverbial gloves and try to draw Israel into a conflict?

Hezbollah's relative popularity in Lebanon stems from its defiant opposition to the Israeli occupation. By provoking Israel into a conflict, it may hope to play its strongest card and rally popular support at the expense of its political opposition. Without a common Israeli enemy, Hezbollah's appeal as a purely political entity diminishes. Jerusalem has remained decidedly hushed so far, partly at Washington's behest, so as not to provide rhetorical ammunition to Damascus or Hezbollah. However, even if Syria withdraws fully from Lebanon and its influence wanes, the country still may not be freed from foreign influence.

Iran attempts to fill the vacuum

Power, like nature, abhors a vacuum. With its Syrian ally in disarray, Tehran will attempt to fill the void left behind by Syria's putative departure from Lebanon. According to some sources, Iran has been fortifying Hezbollah bases in the face of a Syrian troop withdrawal in an attempt to enhance its strategic position. Iran has been using Revolutionary Guard units to fortify important positions Syria has promised to vacate, such as early warning stations. Iran maintains about 1,000 Revolutionary Guards in Lebanon, serving as ideological and military advisors to Hezbollah. Tehran is also reportedly increasing arms shipments to Hezbollah, as well as unmanned aerial vehicles, one of which unnerved the Israeli air force by recently penetrating Israeli airspace undetected. It is also using the organization to create a larger pro-Iranian Shi'ite force in Lebanon. Tehran thus wields the ability to ignite a larger Middle Eastern conflict.

According to a spokesman for the Druze opposition, "Iran sees the mounting pressure on its partner Syria to withdraw and is using it as an opportunity to become the next power broker in Lebanon." By fortifying its Hezbollah proxy in Lebanon, Tehran sends a resounding signal that Israel cannot disregard Iranian interests without suffering harsh consequences. More pointedly, it serves as a visible and powerful deterrent against any attack on Iranian nuclear facilities. Syrian President Assad recently appointed Assaf Chawkat, a family member, to the state's head intelligence post. Chawkat, who has close ties to Hezbollah, has long overseen relations between the organization and its Iranian sponsor. Chawkat has most likely assured Tehran that Hezbollah will not be weakened by a Syrian withdrawal and that Damascus will not restrain it if Israel or the US attacks Tehran's nuclear facilities. Hezbollah will remain a potent force that Tehran will control for the foreseeable future.

Conclusion

Damascus is notoriously adept at finding windows of opportunity to outmaneuver opponents. It will temporize and make tactical concessions in the short run in the hope that it will reassert its influence when the glare of scrutiny is removed. It will hope to outlast Washington and its allies, attempting to exploit fissures in their positions. It will not surrender control of Lebanon quietly. In the meantime, Washington and Jerusalem hope that the forces being unleashed in Lebanon will lead to a peaceful, democratic society that won't spawn another generation of militants. Washington's shifting stance on Hezbollah's future in that country provides some insight into the complexities of the situation. Tehran is also keeping a close eye on developments in Lebanon, ever wary of the threats to its own power in the region. The world is currently riding a wild tiger in the Middle East, marking a great watershed in the history of the region - which way it turns next is the big question.