World War Oil

A man walked into SN&R off the street last week, a refugee from the Bosnian war, clutching an Internet printout he assured me was of the utmost importance. It was a newspaper report of recent major petroleum discoveries near his hometown of Brcko, located in the northeastern corner of Bosnia and Herzegovina, where it borders Croatia and Serbia.

I don’t always open the door for strangers, but he’d said the magic word.

Oil.

It came as no surprise to me that 300 million barrels of oil suddenly had been “discovered” near one of the most heavily fought areas of the 1992-95 conflict; nor was it a shock that the United States continues to maintain a military presence in the Brcko district, where Serbs, Croats and Muslims seek to re-establish the harmony that existed for decades, before the Soviet empire crumbled and the Balkans erupted with ethnic and sectarian violence.

Historically, Americans refer to the subsequent conflict as the Bosnian War. My newfound Bosnian friend, now an American citizen, prefers to call it the beginning of World War III. The battle lines between the two old Cold warriors, the United States and Russia, already were being redrawn. Today, that front extends from Bosnia to Kazakhstan, across the Black and Caspian seas, a region rich with unexploited oil and natural-gas deposits. The scene has been set for the ultimate conflagration between two nuclear superpowers.

Vice President Dick Cheney’s tentacles are all over this one. The mastermind behind the Iraq war and the Project for the New American Century began planning the rape of Eastern Europe, the Middle East and the Near East as early as 1992. For Cheney, the former CEO of Halliburton, one of the world’s leading petroleum-exploration and production firms, it was, is and always will be about the oil.

The problem, as Cheney well knows, is that we’re running a couple of quarts or so low. During talks to industry executives in the late 1990s, Cheney spoke about the coming peak in global oil production. The phrase “peak oil” had yet to enter the lexicon, but that’s exactly what he was referring to. It’s also the topic of the three-day peak-oil conference hosted by the Association for the Study of Peak Oil and Gas-USA at the Hyatt Regency Sacramento from September 21-23.

The basic idea underlying “peak oil” is fairly simple. The petroleum age began in the mid-19th century with a finite amount of oil in the ground. On a graph, petroleum production follows the same bell-shaped curve, whether it’s a single oil field or the entire global oil supply. The same applies to natural gas. When production peaks, exactly half of the original oil or gas remains in the ground. Production then drops off at a rate much steeper than the ascent until all the oil is gone.

Where are we on the curve now? One of the conference’s speakers, Nate Hagens, is an editor at The Oil Drum, a respected peak-oil Web site. On the Web site, data culled from 14 industry models indicates that global oil production has flattened out since 2005. We may be right at the top of the roller coaster, waiting for the rush to the bottom.

How scary will the ride be? According to author James Howard Kunstler, peak oil’s pre-eminent prophet of doom, plenty. Kunstler, also one of the scheduled speakers at the conference, predicts that in a world in which economic growth depends upon an ever-increasing supply of petroleum, peak oil means nothing less than the end of civilization as we know it.

There will be more level-headed discussion at the conference as well, where former California Energy Commission commissioner John Geesman, energy investment banker Matthew Simmons and The Wall Street Journal’s Neil King are among the score of international energy experts on the itinerary. There’s plenty of disagreement about whether we’ve reached the peak and how we’ll handle the transition. But almost no one doubts the peak is coming, if it’s not already here, and that its advent will be significant.

With creatures like Cheney slithering around, I’m inclined to side with Kunstler on this one. Things are going to get ugly.

My newfound friend from Bosnia, where things already have gotten ugly, concurs. He prefers to view the world through the prism of astrology, numerology and the Mayan calendar. He knows the birthdates of all the candidates running in November, even Sarah Palin’s children. Brothers and sisters, I’m sad to report the stars and numbers are not on our side.

World War III has already begun.

Bring it on, Sarah. Bring it on.