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Friday, November 16, 2012

EIA: Oh, You. Avowal of Energy Independence is Inconsonant With Reality

Fool me once ...

For those who have taken the EIA report of US energy independence by 2020 and renaissance as an oil exporter by 2030, seriously, I would like to introduce you to the 2000 World Energy Outlook that's sitting on the bookshelf in front of me, and was published by that same organization.  I picked it up several years ago at a bookstore for .33 (a 3/$1 sale: I also picked up Pat Choate's "Agents of Influence" (1990) about how Japan's government and corporations hire American lobbyists and PR firms to deflect US criticism about Japan's closed markets. Most of us are unaware of the fact that any foreign-owned company can operate a PAC and make contributions as if they were American Citizens, but more on this very cogent subject, considering this blog's Title, "USA's War Against the Dollar", in a future post).

The reason for my interest in this subject, stems however, not only from the entire economics profession's pretense that oil's just another commodity like corn, let's say, but the more immediate problem of continued escalation of consumption of approximately 1.5%/year in oil imports by the US all through the 90's, even as telecommuting was being hailed as the solution to the pollution of urban air as well as its potential of freeing us from our dependence on foreign oil.

All nonsense, of course. All noise to distract investors and pensioners that their life's savings were being poured into an infrastructure meant to facilitate the movement of industries and their manufacturing capabilities offshore to far-off continents where such trivialities as air to breathe and water to drink were not under the control of rabble-rousing Unions demanding healthcare and pension benefits for their workers. Global Crossing, Enron, Cisco, AT&T, Teledyne, Frontier Communications, ESL and a long list of other companies were raking in outrageous profits as they built companies whose sole purpose was resource extraction. And the resource being extracted was share-holder value going into CEO paychecks and shuffled into off-shore tax-haven accounts with the aid and advise of such companies as Lehman, Bear-Stearn, JPMorgan, Goldman sacks America, Accenture, and Arthur Anderson Accounting, and, of course, Bain Capital.

But in those days so much of the proceeds from these massive operations of fraud and chicanery were still being poured into the pensions funds of that middle class that is now so loudly bemoaning its destruction that they could've cared less for the lives of the working class that the introduction of all this technology was impacting. So listening, during the election campaign, to complaints about the disappearing middle class, left me somewhat bemused, not because there's anything funny about it, but because the silence of that very same middle class as the jobs and livelihood of the working class was being torn out from under them and their skills left to languish, along with their neighborhoods, offspring, and futures, was indicative of the class warfare being waged against them as well. But blinded by greed and convinced of the complete dependence of the so-called "New Paradigm" of a globalized economy on their unassailable skills, the middle class technocrats and quants felt invulnerable to the onslaught the newly-empowered Supra-class was making on their countrymen.

I, however, having been raised in the economic backwater of the once-mighty industrial city of Lowell, in a family of eleven, was not so sanguine about the future being tantalizingly held in front of us. I was, after all, schooled by nuns and a harsh New England Catholic theology, that left me much more cognizant of the stick kept assiduously hidden from all those carrot-chasers.

But, in the words of Lord Overstone, "No amount of warning can save people determined to grow suddenly rich”. So self-scrutiny, the greatest support to minimal good sense, disappeared, as people became further and deeper enslaved to their jobs. Meanwhile, all the ingredients of financial calamity were being swirled in a deadly dance, fueled by a toxic cocktail of new, supremely confident and brilliantly innovative youth, mixed with a speculative euphoria and programmed collapse as the specious association of money with intelligence forged an impenetrable bramble of vested interest in error, even as the grim face of disaster hovered like a Cheshire Cat over the mania engendered by financial innovations that centered on the obfuscation and purposeful hiding and shuffling of Risk.

To this mix we can add the EIA's WEO that sits in front of me predicting that the 1997 world oil supply of 75 mb/d (million barrels per day) would increase such that by 2010, the world would be producing 96 mb/d, and by 2020, 115 mb/day. That world, however, never materialized. Fifteen years after 1997, we sit at the exact same level of oil production, the only means of growth in supply being instead derived from that mysterious concoction referred to as oil liquids. But as the blogspot "Energy Balance" states: "We should not be fooled by estimates of how much "oil" there is in the form of "liquids", the supply of which must inevitably fall. Our best option is to look toward means for reducing the amount of oil that we use, almost certainly by curbing the need for transport", and transport, as became increasingly obvious as I went through the 2000 WEO, was exactly what the report chose to ignore, emphasizing instead electricity, as if its production alone would feed the energy needs of the future.

Nowhere in the report is it projected that Russian oil production would, in 10 years' time, exceed that of the US and Saudi Arabia, making it the #1 producer of not only Natural Gas but oil as well. What they did predict, however, was that by 2020, the price of oil would slowly increase to $28/bbl. The world that such an excess of cheap energy products would have created would be strikingly different from the stark world of strangling austerity we live in today.

The Supra-class, however, that group of narcissists and vanity-driven Superiors amongst whom Climate Change is by no means just a theory, nor a hoax, had access to more and better data, and to the levers of financial manipulation and commodity speculation that were used to drive the price of oil to stratospheric heights and the Global Economy over the cliff, leaving the sovereign nations of Europe bankrupt, their banks insolvent, and their jobless and penniless citizens on the streets, will continue to maintain themselves in a position of ascendancy as they strangle the economic growth of the vast OECD economies and continue the planned blighting of the future prospects of their citizens.

Because unlike the general public, the Supra-class is well aware that the utilization of dwindling amount of oil being used, not for productive, profit-growing activity, but instead for the transportation of a mindless middle class that has no concept that taking the vast amounts of energy  products that industry provides and using them simply to fuel mass daily migrations from suburbs to the jobs that enable their existence, is not just unprofitable: it is senselessly destructive.

So, take the EIA report for what it really is: yet another tool for traders to use to sucker investors into relinquishing the last of their financial resources, as the middle class is too besotted on their own ascendancy to see what's staring them right in the face: the fact that the entire financial industry and Corporate infrastructure, is in bed with their own government, (which is, after all, of the People, for the People, and by the People, my friend, which now, unfortunately, does not include YOU) to wrangle the rest of their savings from their old cold hands.

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