We needed a new energy policy 40 years ago. Congress knew that in 1974, which is why they held closed-door meetings on energy policy, resulting in the 1979 Senate staff report entitled, "The Future of Saudi Arabian Oil Production: A Staff Report to the Subcommittee on International Economic Policy of the Committee on Foreign Relations, United States Senate," which was about nine years after American oil production had peaked, and six years after Saudi Arabia drew its "Oil Sword" in response to Nixon’s October 1973 announcement that the US would arm Israel. King Faisal and various oil ministers met and agreed to cut production by 10%.
According to energy analyst Matthew Simmons (author of the highly recommended book, Twilight in the Desert):
While this cutback amounted only to a tiny percentage of global production, it created a genuine panic that reverberated through all oil-consuming nations...
...its impact on the price of oil was enormous and more violent than most Arab oil ministers had expected...
...Most oil observers today know little of the long era during which oil prices did not change every few minutes through the actions of commodity traders buying and selling crude oil contracts on the New York Mercantile Exchange (NYMEX) or London’s commodity exchange, but instead changed only occasionally through adjustment of an official posted price.
Ironically, several years earlier at Eisenhower’s funeral (1969), Nixon politely declined an offer from the Shah of Iran for a 10-year contract to buy oil at $1 a barrel, believing that oil would never stay as high $1 a barrel over such a long time. Exactly one year before Hubbert’s correct Peak Oil prediction. Hooyah.
Within days after the 1973 oil embargo was announced, oil prices began to soar. By the end of 1973, oil prices had risen almost fourfold, finishing the year at $11.65 per barrel. The embargo was soon lifted, but long after it faded into distant history, the price of oil climbed steadily. By mid-1978, oil was selling a stable price band of $16 to $17 per barrel.
I have always felt that the cause of the 1973 oil embargo, an event that Dr. Kissinger in his Ford presidency memoirs called the most threatening even for the world’s developed economies since World War II, has never been properly understood. The culprit that caused oil prices to jump by a factor of four to six was not King Faisal’s brief oil embargo. The real villain was the evaporation of spare oil capacity while global oil demand had become a proverbial runaway train barreling down a steep track. These converging trends—increasing demand, shrinking market liquidity—created the formula for increasing prices.
In short, the Senate report concluded that there were many uncertainties about Saudi oil capacity. Proven reserves were reclassified as "probable" or "possible," and at best, the total reserves were just over half of the original oil-in-place. The super-giant oil field, Ghawar, was stressed through overproduction (which for technical reasons causes premature demise), and would be in irreversible decline between 1989 and 1992, whereas the giant field Abqaiq was known to have been overproduced by ARAMCO as early as 1972.
While this assessment was grim, the prognosis was even worse:
[The report] stated that the owners of ARAMCO had reached a conclusion by 1979 that "the prognosis for future discoveries in Saudi Arabia is uncertain." One of the four owners of ARAMCO [at the time Chevron, Texaco, Mobil, & Exxon] was reported to believe that there was an undiscovered reserve potential of 33 billion in the whole of Saudi Arabia. (History would prove this assessment to be remarkable in its precision.)
Since then, I believe oil production has peaked in the North Sea, Alaska, and Mexico, as well. The bigger point, however, is that our government, our ruling classes, have known about these problems for decades, but have hidden the facts through evasions, denials, and conflicts-of-interest. From administration to administration, the underlying policy has never changed.
Fast forward to an article in Stars & Stripes noted by Chris Floyd:
Permanent U.S. Army command taking shape in Kuwait
By Vince Little, Stars and Stripes
Mideast edition, Tuesday, February 19, 2008
CAMP ARIFJAN, Kuwait — U.S. Army Central is establishing a permanent platform for "full spectrum operations" in 27 countries around southwest Asia and the Middle East, its commander says.
Lt. Gen. James J. Lovelace said the Army has diverse capabilities here now but plans to reach a complete level of operational effectiveness by July.
The restructuring, which offers more flexibility for offensive, defensive and stability operations, is a major piece of transformation worldwide, said Lovelace.
Snip
"They regionally focus on this area. That was not always the case," said Lovelace, who took command in mid-December. "These commands now have a permanent responsibility to this theater. They’ll have a permanent presence here. The personnel will change; the commands will remain."
snip
"This is not the 3rd Army of the 1990s, or the one that went to Baghdad. It’s been improved upon significantly," he said. "Our communications platforms have become more robust. We are a multifunctional headquarters. Now, we can do them all, and do them well."
"That’s full spectrum operations," he added. "We’re able to adapt better ... and go from high-intensity to regular warfare. We can also handle humanitarian efforts."
From Chris Floyd:
And that's why the new "full spectrum" Army base in Kuwait is just one of the force-projecting fortresses going up all over the world. As William Arkin reports in the Washington Post (not in the actual paper, mind you, but on the Post's blog):
http://blog.washingtonpost.com/...
The Air Force and Navy, meanwhile, have set up additional permanent bases in Bahrain, the United Arab Emirates, Qatar and Oman. By permanent I mean large and continuing American headquarters and presences, most of which are maintained through a combination of coalition activities, long-standing bilateral agreements and official secrecy. Tens of billions have been plowed into the American infrastructure. Admiral William J. Fallon, the overall commander of the region, was just in Oman this week after a trip to Iraq to secure continuing American military bases in that country.
This new base-building, Arkin says, astutely, has a two-fold purpose. First, it is part of the necessary infrastructure for continuing the war in Iraq on a permanent basis. Second, it is creating "facts on the ground" – like Ariel Sharon's illegal settlements all over Palestinian land – that any future president will find hard to undo...assuming that anyone who was not already committed heart-and-soul to imperial expansion would ever be allowed to get near the White House in the first place.
As Arkin notes, don’t expect any troop reductions or "surge-replacing pauses" in Iraq to actually result in troops getting "out of harm’s way," as if "harm" were the causal agent in question. "Harm" is not a causal agent. Harm knows nothing about ways and means. Rather, reconsider troop reductions as "redeployments" to other full spectrum operations around the world.
The veils of secrecy on our energy-dependence, peak oil, and our own state-sponsored terror, aka "strategic defense," have been falling away for some time. Ironically, the most secretive administration in US history has been the most informative in this regard. Our foreign and domestic policies are now blunt objects with which to club people senseless. We have become a nation of common thugs. Treaties, conventions, statutes, not even our own Constitution matters in this respect. All have pushed aside in favor of "full spectrum operations." Our current crop of Presidential front-runners either fully embrace the military solution to carrying capacity (McCain), or are less than full-throated in their repudiation of such violent and immoral tactics (Obama & Clinton). They and Congress will be the causal agents putting people "in harm’s way."
Over the decades, the ruling classes have stalled, feinted, and outright lied. With the brazen acts of terror committed by BushCo, it’s almost as if they simply stopped lying, almost as if it became too difficult to lie anymore; the mantles of freedom, democracy, the rule of law, once merely relegated to the purpose of keeping up appearances, simply became too burdensome, and were abandoned. Unfortunately, keeping up appearances, while becoming essentially impossible, a true laugh riot compared to reality, were it not so depressing in the bones, continues apace, albeit in baseless abstractions, such as "keeping things off the table." Unlike Bush & Cheney, who are "saving Americans from terrorists," Pelosi cannot even maintain an alibi.
That is the way that it is because it is that way.
The ruling class speaks.