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Today is the centennial of the Western discovery of oil in the middle east. On May 26, 1908 the British businessman William D'Arcy struck oil in Iran. Wired has an article about it, here is an excerpt:

Exactly 100 years ago today, the smell of sulfur hovered in the air at Masjid-i-Suleiman. That was a good sign for an experienced oil hand like Reynolds. At 4 in the morning, the drill reached 1,180 feet below the desert and struck oil. A huge gusher shot 75 feet into the air.
The site was so remote that it took five days before D'Arcy got word by telegram in England. "If this is true," he replied, "all our troubles are over." It was indeed true, and more wells hit oil elsewhere in Persia, including a huge one in September.
D'Arcy and Burmah reorganized their holdings in 1909 as the Anglo-Persian Oil Co. (which became the Anglo-Iranian Oil Co. in 1935, British Petroleum in 1954 and BP in 2000.) Its initial public offering of stock shares sold out in 30 minutes in London. People stood five deep around the tellers' cages to buy shares in Glasgow. The race for oil accelerated throughout the Middle East.

Let's hope the second century is better for the region than the first.

Posted on May 26, 2008 | Comments? (0)

Peak Oil Primer

A recurring theme on this blog is that fossil fuel dependence is the determining factor of Western involvement in the middle east. This is hardly a groundbreaking observation, but is one that is far too absent from discussions in the mainstream media. There, the involvement is described as concerns from actors in the region directly threatening our security, rather than asserting power over their own resources.

A key to understanding contemporary petro-politics is the phenomenon known as peak oil - a prediction of how the supply of oil will evolve over time. The basic premise is that given a finite amount of oil in a region, the production (barrels produced per year) will approximately follow a bell shaped curve, starting at zero gradually climbing to maximum production and then irreversibly declining. This was true of the continental United States, as can be seen in the curve below:

It is also true for the United States as a whole (including off shore drilling and Alaska). Oil production has also already peaked in dozens of other countries so there is a fear that eventually the world as a whole will peak and then go into irreversible decline. Given how dependent the world economy is on the use of oil for transportation and natural gas for energy production, this could have very serious consequences. There is a wide amount of disagreement on when that peak will occur. There are even those who dispute that there will be a peak, claiming instead that there will be an undulating plateau. The pessimists however, believe that oil could peak in the near future. Below is a scenario put together by the Association for the Study of Peak Oil and Gas (ASPO).

Although this phenomenon has been barely discussed in the mainstream media it has started to get attention at relatively high levels of government. There is a peak oil caucus in the house of representatives as well as a study by the GAO (Government Accountability Office). The GAO study demonstrates the extreme divergence of views that exist on when the World peak for oil production is expected to occur, as demonstrated by this figure lifted from the report:

If such peak will occur in the near future, some believe it has happened already, it has very important consequences for policy and everyone's well being. The extended entry of this post contains further comments and links regarding the topic of peak oil.

Continue reading Peak Oil Primer.

Posted on May 25, 2008 | Comments? (0)