Mercedes-benz Bicylces-part 2
The Golden Triangle and "Plan B"
In an ironic reference to the Southeast Asian region known for its CIA-connected cultivation of the opium poppy, Simmons observed that the Middle East was still the "Promised Land," and that eighty-five per cent of all Middle Eastern oil was in a golden triangle running from Kirkuk, in northern Iraq, through Iran to the United Arab Emirates, then west through Saudi Arabia's central oil fields, then northwards and back up to Kirkuk. In Simmons' analysis, Saudi Arabia was "home court."
Referring to a 1960's report from The Club of Rome suggesting that there were limits to growth, Simmons observed that, "The world has no Plan B."
During a brief question and answer session, this writer posed a question to Simmons which evoked laughter from the audience and a blushed, bowed head from Simmons.
Q._ Mike Ruppert: I have two questions. In the Baker Institute CFR Report from April, 2001, you were kind of dissenting and you called for a Manhattan Project-type investment program to address energy, what would that entail? My second question is in The War on Terrorism since 9/11, we have gone to Afghanistan, and we've seen some pipeline development across Afghanistan, we've seen Iraq, now Saudi Arabia, developments in West Africa, also in Colombia where the terrorism coincidentally seems to appear exactly where the oil is, either in large reserves or in swing producing nations, do you believe that is all coincidental? (Audience laughter)
A._ Simmons: (More laughter) _Those are pretty intelligent questions. What I encouraged people to think about when the Council on Foreign Relations and the Baker Institute were doing the energy blueprints was to think in terms of future energy plans the way we did the Marshall Plan in rebuilding Europe. It was about collecting the largest group of experts we could and having them fan out across Europe and figure out how we could get from A to Z. I still believe that there is an urgent need for an Energy Marshall Plan. I think we need to couple that with a water, a water energy program...
On the terrorists, I don't know if you can draw any parallels on why does it seem that every place we have energy we also have terrorism other than just musing about the fact that over the last twenty years while we have apparently benefited from these unbelievably low bargain oil prices, the prices were so low that none of the host nations were able to basically create any semblance of a modern society. And over a 20-year period of time, all of their populations exploded, they all have high birthrate, very young people, and terrible economies. Unfortunately, we ended up with an oil price that was so low that it was hard for them to maintain a healthy infrastructure and there was nothing left over to start rebuilding their societies._ I suspect that had they been lucky enough to have had energy prices two to three times higher and then worked carefully with these producing countries to be enlightened about how they should spend this newfound wealth instead of putting in some young and powerful leaders to start creating a middle class then the people would have started focusing more on how to become more prosperous._ I guess in hindsightthat is easy to say.
Another questioner asked Simmons why there was such an unbelievable disconnect between oval office policy and Simmons' stated views. The first words out of Simmons' mouth in reply were, "The US has some unbelievable energy problems."
[A full transcript of Simmons' statement at the ASPO conference will be made available shortly. – Ed]
Different Motivations, Some Consensus,
and Alice in Wonderland
The ASPO conference was attended by oil company experts, academics from the fields of geology, and the sciences, such as political science, alternative energy advocates, economic and financial concerns like Deutschebank, government research facilities, and, journalists. Three "camps" emerged fairly quickly. The Peak Oil camp generally represented those who felt that oil and gas depletion was extremely serious and about to become the paramount issue on the planet because there are no suitable alternative energy sources either in the near or intermediate term that will soften the effects. The Alternative Energy Panacea camp generally agreed that Peak Oil was imminent but argued that alternative energy sources would generally permit life to go on as usual. The Flat Earth camp, generally comprised of oil company employees, oil industry representatives, representatives of the International Energy Agency (IEA) and investment banks, and, politicians, all off whom generally assumed that demand and increased investment would somehow produce all the solutions and energy necessary to solve any problems and, that new technology would find the oil and gas that most attendees of the conference – especially after the presentation of data from undisputed experts – agreed was nonexistent.
Dishonest Reserve Reporting and Definitions
There was no defense raised from any of the attending camps for overstated oil reserve estimates previously produced by either the US Geological Survey (USGS) or the IEA. It took little effort from experts like Campbell, Laherrère, Aleklett, Chris Skrebowski of the UK's Institute of Petroleum, and Professor Kenneth Deffeyes of Princeton to demonstrate that the books on oil reserves are as cooked as the books of Enron.
The chief misleading error always committed by both oil companies and government institutions is their failure to backdate reserve discoveries. When oil companies drill their first successful well in any field they generally have a reasonable idea of how much oil will be ultimately recoverable. The first problem is, that if they report the anticipated size of the field in the year of discovery, they have to pay taxes on all of it. Naturally, they report the reserve estimates as increasing over time to spread out the tax burden. They do it also to keep share prices up and stable, and to stimulate continued investment by reporting the discovery of new reserves in older fields that are not new discoveries at all. And in cases where national production is determined by stated "proven" reserves, estimates are sometime changed, as with the OPEC nations in the mid 1980s, simply as a result of an accountant applying an eraser to the previously stated reserves when more cash is needed as a result of increased production.
Experts like Campbell and Laherrère insist that all reserves everywhere should immediately be backdated to the first successful borehole in a field and then the amount pumped subsequently subtracted as a means of accurately determining how much oil is really left. To engage in honest discussion of what is really there, terms like Probable, Estimated, and even Proven Reserves need to be thrown out in favor of Ultimately Recoverable Reserves (URR) which have been properly backdated. Anything else is pandering to the needs of an accountant, a politician, or a stock market analyst.
There is a reason why -- in spite of all the reserve numbers put out by governments, oil companies and market analysts -- a company called Petroleum Consultants in Geneva Switzerland publishes an annual report on oil reserves country by country and charges a reported million dollars per copy. The CIA is reported to have a hand in its drafting and is a recipient of the work product. That is a testament in itself to the unreliability of reserve estimates from other sources.