WikiPeak Oil: Now Do You Believe It?

"Got oil?" "Not so much any more. You?"

M. King Hubbert started predicting the inevitable arrival of peak oil in 1950. In the ensuing 60 years, a steadily growing band of geologists, other scientists, and people who grasp the essentials of arithmetic have been warning strenously that peak oil is both inevitable and imminent. If they are right, its arrival will have consequences for the world that will rank somewhere between catastrophic and apocalyptic; yet, in the developed countries (and by developed, we mean oil-dependent) virtually no one in a position to do anything about it mentions the prospect, let alone taking it seriously. Now, powerful confirmation of peak oil has turned up in WikiLeaks. It’s where we learned, for example, that Prince Charles is not as well respected as Queen Elizabeth. So now do you believe?

The diplomatic cables made available by Wikileaks and publicized on February 8 by the British newspaper The Guardian chronicle, among other things, a series of conversations between senior US diplomatic officials in Saudi Arabia and Sadad al-Husseini, a geologist and former head of exploration for the Saudi oil monopoly Aramco. He told the diplomats as long as four years ago that for years, Aramco has been wildly overstating both the size of its oil reserves and its ability to bring the existing reserves to market.

Al Husseini was quoted in one cable as saying, “once 50% of original proven reserves has been reached … a steady output in decline will ensue and no amount of effort will be able to stop it.” This, of course, is the standard definition of peak oil that has been around since at least 1950, referred to in the cable as if it had just occurred to Al Husseini. And when will peak oil be reached, according to him? Oh, about now. And the most important ramification, according to both the cable writers and the Guardian, apparently is that the Saudis will not therefor be able to keep a lid on oil prices, which are in the $100-a-barrel neighborhood and heading uptown.

In 2005 and 2008, the Saudis reportedly gave President Bush personal assurances that they would bring more oil to the market in order to restrain price increases. Although records on such things are muddled and secretive, it does not appear that the Saudis were able to do so. It is widely believed that they, and the world, reached peak oil in 2005.  If that is true, then there is nothing new in the notion that the Saudis cannot solve the world’s oil thirst by simply opening a tap. What will be new is what happens if people start to believe that the Saudis are impotent. Astronomical oil prices would be only the first, and far from the worst, thing.

The first casualty would be Saudi Arabia itself. When its people realize that the future is going to be one of constant and irreversible decline, beginning with the end of lavish government subsidies for fuel and food, especially just when a transfer of power is at hand because of the country’s aging king, what will ensue is — to use the kindest possible word — instability. The kind that will in all likelihood lead to a major interruption in the supply of the 85 million barrels of oil the world needs to get though a day, ten million of which come from Saudi Arabia.

Next comes peak food. It’s not just that we need oil money to pay for food, nor just that we need refined oil to run the planes and trains and trucks that bring us our food (or to run the cars we use to go get the food) — the food itself cannot be grown (on an industrial scale) without plentiful and cheap fuel, synthetic fertilizer and pesticides, all of which come from petroleum.

In relaying the confirmation, from a top former official of Aramco, of the reality and proximity of peak oil, the US Consul in Riyadh warned his superiors in Washington not to take the testimony lightly: “While al-Husseini fundamentally contradicts the Aramco company line, he is no doomsday theorist. His pedigree, experience and outlook demand that his predictions be thoughtfully considered.”

M. King Hubbert (who was a Shell Oil geologist when he proposed the theory of peak oil) and all the rest of us who have been convinced by arithmetic of the folly of the world’s total dependence on a finite resource, are, of course, merely doomsday theorists. But now, perhaps, we will be taken seriously by serious people: we’ve been leaked.