Empty Tank Oil, Gas, Hot Air, And the Coming Global Financial Catastrophe

Chapter 1 PART ONE CHAPTER 1 INSUFFICIENCY We have allowed oil to become vital to virtually everything we do. Ninety percent of all our transportation, whether by land, air, or sea, is fueled by oil. Ninety-five percent of all goods in shops involve the use of oil. Ninety-five percent of all our food products require oil use.1 Just to farm a single cow and deliver it to market requires six barrels of oil, enough to drive a car from New York to Los Angeles.2 The world consumes more than 80 million barrels of oil a day, 29 billion barrels a year, at the time of writing. This figure is rising fast, as it has done for decades. The almost universal expectation is that it will keep doing so for years to come. The U.S. government assumes that global demand will grow to around 120 million barrels a day, 43 billion barrels a year by 2025.3 The International Energy Agency, the organization set up by industrialized countries to give them advice on oil and other energy matters, is scarcely less bullish. Its 2004 World Energy Outlook forecasts 121 million barrels a day by 2030.4 Few question the feasibility of this requirement, or the oil industry's ability to meet it. They should, because the oil industry won't come close to producing 120 million barrels a day. The most basic of the foundations of our assumptions of future economic well-being is rotten. Our society is in a state of collective denial that has no precedent in history, in terms of its scale and implications. Of the current global demand, America consumes a quarter. Because domestic oil production has been falling steadily for thirty-five years, with demand rising equally steadily, America's relative share is set to grow, and with it her imports of oil. Of America's current daily consumption of 20 million barrels, 5 million barrels are imported from the Middle East, where almost two thirds of the world's oil reserves lie in a region of especially intense and long-lived conflicts.5 Every day, 15 million barrels pass in tankers through the narrow Strait of Hormuz, in the troubled waters between Saudi Arabia and Iran.6 The U.S. government could wipe out the need for all their 5 million barrels, and stanch the flow of much blood in the process, by requiring its domestic automobile industry to increase the fuel efficiency of autos and light trucks by a mere 2.7 miles per gallon.7 But instead it allows General Motors and the rest to build ever more oil-profligate vehicles. Many sport utility vehicles average just four miles per gallon. The SUV market share in the United States was 2 percent in 1975. By 2003 it was 24 percent. In consequence, average U.S. vehicle fuel efficiency fell between 1987 and 2001, from 26.2 to 24.4 miles per gallon. This at a time when other countries were producing cars capable of up to sixty miles per gallon.8 Most U.S. presidents since the Second World War have ordered military action of some sort in the Middle East. American leaders may prefer to dress their military entanglements east of Suez in the rhetoric of democracy building, but the long-running strategic theme is obvious. It was stated most clearly, paradoxically, by the most liberal of them. In 1980 Jimmy Carter declared access to the Persian Gulf a vital national interest to be protected "by any means necessary, including military force."9 This the United States has been doing ever since, clocking up a bill measured in the hundreds of billions of dollars, and counting.10 With such a strategy comes an increasingly disquieting descent into moral ambiguity, at least in the minds of something approaching half the country. The nation that gave the world such significant landmarks in the annals of democracy as the Marshall Plan is forced by itsLeggett, Jeremy is the author of 'Empty Tank Oil, Gas, Hot Air, And the Coming Global Financial Catastrophe', published 2005 under ISBN 9781400065271 and ISBN 1400065275.