Turner: "Do we have plans to invade the Middle East?"
Higgins: "Are you crazy"
T: Am I? ........
H: Look Turner....
T: Do we have plans?
H: ..... The plan was all right. The plan would have worked.
T: What is it with you people? You think not getting caught in a lie is the same thing as telling the truth?
H: No. It's simple economics. Today it's oil, right? In 10 or 15 years -- food, plutonium. And maybe even sooner. Now what do you think the people are gonna want us to do then?
T: Ask them.
H: Not now -- then. Ask them when they're running out. Ask them when there's no heat in their homes and they're cold. Ask them when their engines stop. Ask them when people who've never known hunger start going hungry. Do you want to know something? They won't want us to ask them. They'll just want us to get it for them.

Monday, 16 June 2008

Saudi Arabia appears ready to cave in to demands from Western governments for the kingdom to make special efforts to increase its production of oil. Analysts forecast that the world's largest producer will shortly raise its output by half a million barrels a day. The United Nations Secretary-General, Ban Ki-Moon, confirmed this impression at the weekend after emerging from talks with the Saudi monarch, King Abdullah.

But there are also indications that the Saudis will make their own counter-demands when oil producers and consumers meet at an emergency energy summit next weekend. One such requirement might be for Western governments to play their part in adapting to the higher prices by relaxing their domestic taxes on fuel. This represents a considerable shift from Saudi Arabia. Up until now, the country's rulers have blamed the soaring oil price on speculation in Western financial markets – a phenomenon driven, they say, by a false perception of a shortage of global capacity. There is little doubt that speculation is playing some part in pushing up the price of oil to an unprecedented $140 a barrel. Yet the fact that inventories have been at normal levels suggests this is not the driving force behind price rises.

Growing demand is the far more likely culprit. It is often asserted that Saudis still have vast oil reserves. But there is no independently verified proof of this. We have no choice but to rely on what they choose to tell us. If the kingdom really thinks the present price is the result of a speculative bubble driven by misinformation about its reserves, it ought to open up its oilfields to independent inspection to dispel the doubts. Of course it will not do this. But, for now at least, it looks ready to increase production.

An increase in Saudi oil pumping might well have the desired effect of bringing down the price somewhat. But what if it does not fall low enough to ease the pain of the world economy? How long before our political leaders return to Saudi and its Opec allies to plead for more? And what will be the political price extracted for this? What we are seeing in this desperate horse-trading is the endgame of the oil age. Even if we have not yet reached the inevitable moment of "peak oil", when production begins its inexorable decline, it is abundantly clear that the age of cheap fuel is over. The economic leaps forward by China and India represent a step-change in energy demand. The rate of discovery of new oilfields has failed to keep pace with the speed at which nations are joining the global economy. That means the price of oil will remain considerably above the level to which we have historically been accustomed.

That is the central fact that governments ought to be addressing. It is ridiculous for the Saudis to attempt to tell Western governments how they ought to tax fuel sales, just as it is ridiculous for Western governments to tell Saudi Arabia and other oil producers how much they ought to pump out of the ground. The debate ought to be about how best to break our economic dependence on oil.

Governments should recognise the pain being endured by drivers and businesses at the petrol pumps. But their response should not be to tell their electorates that hectoring the Saudis will bring down the price of fuel, or to mess around with short-term gestures such as suspending taxation. Instead, it should be to announce that funds from higher fuel taxes will be channelled into alternative, clean power generation and energy conservation schemes. The fact that so many of our political leaders are pinning their hopes on the oil producers riding to the rescue merely confirms how tenuously they grasp the new reality.

While waiting to see how the contest between a demand-killing recession and shrinking oil stockpiles plays out, it might be worthwhile to spend a little time reviewing the world’s electricity situation. If there is any form of energy that would be sorely missed by people who had once had it, electricity would be it.

Private cars we could do without, but not our lights and appliances. Most of us here in America have been blessed to have an unlimited amount of electricity for all of our adult lives. There are very few left who can remember a time when it was not universally available.

Although it has received scant coverage in the U.S. media, in many parts of the world, the electric grids are shutting down for long periods each day. In a few places the electricity is now off most of the time. Some of this is due to droughts which have reduced the hydroelectric generating capacity in many parts of the world. Some is due to the price of oil which has simply become too expensive to use in thermoelectric generating stations and in a few places the electricity is out or has been greatly reduced because of civil strife. Iraq, Nigeria, Gaza and Pakistan are the most prominent instances of the latter. Even the climate has contributed to the problem as a wave of unusually cold weather has enveloped the Middle East, Central Asia and Siberia, forcing many to use electric heat as their only means of survival.