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Re: SC92

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June 16, 2009 11:28PM
http://www.globalresearch.ca/index.php?context=va&aid=13980

Goodbye to Cheap Oil

Buckle your seatbelt, you may be going nowhere -- and it could be a very bumpy ride. Oil futures have just passed $71 for a barrel of "light, sweet crude oil" (sweet for energy stocks, anyway) on its way to... well, we don't know exactly where, but it won't feel good, not at the pump and not in the economy either. In the Midwest and scattered other locations, gas prices are already at the edge of $3.00 a gallon and the height of summer isn't even upon us.

Much of this sudden rise has been fueled by OPEC production cuts, investor dreams of a global economic recovery (and so a heightened desire for energy), and the enthusiasm of market speculators. Explain it as you will, the price of crude, which hit a low of about $32 a barrel in December, as the planet seemed to meltdown economically, has doubled in recent months.

Oil is like the undead. Just when you think it's gone down for the count, it rises from the grave ravenous. As Clifford Krauss of the New York Times reported recently, gas prices have risen 41 days in a row, and yet the price at the pump is still "lagging behind the increase in the price of oil." According to Tom Kloza, chief oil analyst at the Oil Price Information Service, consumers are now shelling out one billion dollars a day to keep their tanks full. (It was $1.5 billion last summer when the price of a barrel of oil hit an astronomical $147.)

Whether this is the energy version of irrational exuberance and a mini-bubble to be burst as further economic bad times hit or the reality of our near future, sooner or later, far worse is in store on the energy front, as Michael Klare, author of Rising Powers, Shrinking World: The New Geopolitics of Energy, makes clear. But don't listen to him. Instead, check out his latest energy scoop -- the real news he found buried in the most recent report from the U.S. Department of Energy, whose seers have put irrational exuberance in mothballs and brought out the sackcloth and ashes.

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It's Official -- The Era of Cheap Oil Is Over
Energy Department Changes Tune on Peak Oil

Every summer, the Energy Information Administration (EIA) of the U.S. Department of Energy issues its International Energy Outlook (IEO) -- a jam-packed compendium of data and analysis on the evolving world energy equation. For those with the background to interpret its key statistical findings, the release of the IEO can provide a unique opportunity to gauge important shifts in global energy trends, much as reports of routine Communist Party functions in the party journal Pravda once provided America's Kremlin watchers with insights into changes in the Soviet Union's top leadership circle.

As it happens, the recent release of the 2009 IEO has provided energy watchers with a feast of significant revelations. By far the most significant disclosure: the IEO predicts a sharp drop in projected future world oil output (compared to previous expectations) and a corresponding increase in reliance on what are called "unconventional fuels" -- oil sands, ultra-deep oil, shale oil, and biofuels.

So here's the headline for you: For the first time, the well-respected Energy Information Administration appears to be joining with those experts who have long argued that the era of cheap and plentiful oil is drawing to a close. Almost as notable, when it comes to news, the 2009 report highlights Asia's insatiable demand for energy and suggests that China is moving ever closer to the point at which it will overtake the United States as the world's number one energy consumer. Clearly, a new era of cutthroat energy competition is upon us........

........New Powers, New Problems

The IEO report hints at other geopolitical changes occurring in the global energy landscape, especially an expected stunning increase in the share of the global energy supply consumed in Asia and a corresponding decline by the United States, Japan, and other "First World" powers. In 1990, the developing nations of Asia and the Middle East accounted for only 17% of world energy consumption; by 2030, that number, the report suggests, should reach 41%, matching that of the major First World powers.

All recent editions of the report have predicted that China would eventually overtake the United States as number one energy consumer. What's notable is how quickly the 2009 edition expects that to happen. The 2006 report had China assuming the leadership position in a 2026-2030 timeframe; in 2007, it was 2021-2024; in 2008, it was 2016-2020. This year, the EIA is projecting that China will overtake the United States between 2010 and 2014.

It's easy enough to overlook these shifting estimates, since the reports don't emphasize how they have changed from year to year. What they suggest, however, is that the United States will face ever fiercer competition from China in the global struggle to secure adequate supplies of energy to meet national needs.

Given what we have learned about the dwindling prospects for adequate future oil supplies, we are sure to face increased geopolitical competition and strife between the two countries in those few areas that are capable of producing additional quantities of oil (and undoubtedly genuine desperation among many other countries with far less resources and power).

And much else follows: As the world's leading energy consumer, Beijing will undoubtedly play a far more critical role in setting international energy policies and prices, undercutting the pivotal role long played by Washington. It is not hard to imagine, then, that major oil producers in the Middle East and Africa will see it as in their interest to deepen political and economic ties with China at the expense of the United States. China can also be expected to maintain close ties with oil providers like Iran and Sudan, no matter how this clashes with American foreign policy objectives.

At first glance, the International Energy Outlook for 2009 hardly looks different from previous editions: a tedious compendium of tables and text on global energy trends. Looked at another way, however, it trumpets the headlines of the future -- and their news is not comforting.

The global energy equation is changing rapidly, and with it is likely to come great power competition, economic peril, rising starvation, growing unrest, environmental disaster, and shrinking energy supplies, no matter what steps are taken. No doubt the 2010 edition of the report and those that follow will reveal far more, but the new trends in energy on the planet are already increasingly evident -- and unsettling.
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