The Coming Oil Shortage?
It hasn't received much play on this side of the Atlantic (oddly enough), but the U.S. military is warning of a severe oil shortage by 2015.
According to a new study produced by Norfolk-based Joint Forces Command (JFCOM), the current surplus in oil production could evaporate within two years, leading to potentially crippling shortages by the middle of this decade.
The U.K. Guardian reports the assessment was forwarded by JFCOM's Commander, Marine Corps General James Mattis. His signature underscores the importance of the study, since a MAJCOM commander typically doesn't "sign out" all intel reports produced by his organization.
JFCOM analysts believe the global shortage will mushroom quickly, reaching 10 million barrels a day within three years after "peak oil"--the moment when demand permanently exceeds supply.
The consequences of the shortfall would be devastating. As outlined in the JFCOM study:
"While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India."
While the report doesn't address the potential impact on the United States, you don't need to be an energy analyst to understand that $200 a barrel oil would crush any hopes of an economic recovery and severely impact our military--the largest "single" user of energy in the world.
Still, a cautionary note (or two) is in order. While JFCOM strives to provide an "intellectual foundation" for joint force development, the command's expertise in energy intelligence is limited. Meanwhile, the intel community's experts in such matters (based at the CIA and Department of Energy) have either remained silent--at least publicly--or they offer a more optimistic scenario.
Lionel Badal, a researcher in peak oil theories at King's College in London, told the Guardian that DOE's Energy Information Administration (EIA) has been saying that "peak oil" is still decades away. In light of the JFCOM report, he wonders if DOE is sticking with its rosy scenario.
The military assessment was released as oil surged past $100 a barrel in Great Britain, and retail gasoline prices are approaching $3.00 a gallon in much of the United States. During the shortage that followed Hurricane Katrina in 2005, gas climbed to more than $4.00 a gallon in the U.S.; that level is widely considered a "tipping point," when the public demands action to increase supplies.
Unfortunately, there may be little the United States can do to bolster supplies in the current regulatory environment. President Obama recently approved off-shore drilling along portions of the east coast, but the rest of our coastline (and much of Alaska) remains off-limits. Additionally, environmental challenges often delay the opening of new fields for years.
In an unguarded moment on the campaign trail, then-candidate Barack Obama said his only real regret about $4.00 gasoline was that prices reached that level "so quickly." Based on that statement, it stands to reason that some in the administration see much higher energy prices as inevitable--a development that could be used to spur the development of alternative fuels. Never mind that so-called green fuels can't meet our needs for decades to come.
ADDENDUM: The JFCOM study is merely the latest to warn of a coming oil shortage. The Guardian reports that the U.K. Energy Minister convened a meeting with top industrialists two weeks ago, apparently reversing his previous position that peak oil was not a short-term problem. Officials at the Paris-based International Energy Agency have voiced similar concerns, though the organization has (officially) stated that energy supplies will remain sufficient.
It's also worth noting that General Mattis, the commander who put his signature on the controversial report, has a reputation for being blunt--sometimes a little too blunt, as evidenced by his famous remarks about how much "fun" it is to shoot terrorists. This time around, Mattis seems appears willing to stake his reputation and credibility on the report, which goes against the "official" U.S. government position on the issue. If no one else is willing to sound the alarm, Jim Mattis has no qualms about stepping up to the plate.