Forecast: Perfect Storm in Egypt, Part I
"The Climate Summit sails towards dangerous shoals at Sharm El Sheikh"
“They need to loosen regulations, they need to release all those permits sitting on someone’s desk for drilling on federal lands, and they need to allow the Keystone XL pipeline to come down to deliver the Canadian oil sands to American consumers,” said Darlene Wallace, a board member of the Oklahoma Energy Producers Alliance. “And the president needs to encourage investors to invest in the oil business.”
— The New York Times
The announcement by the Saudi-led Organization for Economic Cooperation and Development-Plus energy cartel that it would pump two million fewer barrels shocked Washington but came as no surprise to those of us who have been watching the oil patch since the Arab Oil Embargo following the Yom Kippur War.
OPEC+ knows it needs a minimum price per barrel to drill and pump. Letting NATO undercut the costs of keeping princely pleasure palaces running to subsidize the Ukraine adventure won’t do. That is a favor Prince Bandar might have been willing to extend to Pappy Bush et sequelae but at below $80/barrel, too costly for Mohammed bin Salman to push beyond a perfunctory couple of months, and then only in exchange for the latest fighter jet upgrades with which to torment Yemen.
Some sources suggest the Prince has a more urgent reason for the cutbacks. “Industry oil stockpiles in countries that make up OPEC+ are 9.2% lower than the five-year average… While the oil cartel has often cut production in the face of weakening demand, it never implemented a cut in such a tight market, according to a Goldman Sachs research note from Monday,” reported Jinjoo Lee in the Wall Street Journal. Analysts have for many years suggested that Saudi estimates of ultimate reserves have been greatly overstated. If the Middle East is scraping the bottom of its oil province the same way Texas drillers have reached the dregs of the Permian Basin, a ten percent cutback may not be entirely optional.
Casting around for rescue remedies, the Biden Administration sees that easing sanctions on Iran and Venezuela could free up more than a million barrels of oil per day, which would help lower prices at home and in Europe and potentially replace some of the Russian barrels now sold to Chinese and Indian refineries. Unfortunately, nuclear weapons talks with Iran have stalled with scant hope of a breakthrough, the deal would send an awful message to Muslim women protesters being courted and supported, and the prospects of a deal with Venezuela are a political and economic fly-trap. In Europe, the real crisis will come in December when the Russian oil boycott goes into full effect. Shivering Europeans who can no longer afford vacations in Ibiza and Cancun may by then be feeling the combined effects of slower Atlantic circulation and Rossby waves generated by this year’s dramatic loss of polar ice. That will have a chilling effect on NATO bonhomie.“We will struggle to avoid a gas emergency this winter without at least 20% savings in private households, businesses and industry. The situation may become very serious if we do not significantly reduce our gas consumption.”
— Klaus Mueller of Germany’s Bundesnetzagentur
Vladimir Putin is in no hurry to negotiate a withdrawal from Ukraine knowing that time is on his side regardless of losses at the front. He can make up for the fallen with conscripts. He need only recall Napolean’s ill-fated march to Moscow or the Siege of Leningrad, when it was General Winter that reversed the fortunes of war for Mother Russia.
So it is, that only weeks before the opening of the COP 27 Climate Summit in Sharm El Sheikh, the US finds itself compelled to knuckle under to climate foes and open more federal lands and waters, resume pipeline laying, and drill baby drill.
Still, Prince MBS may be missing the bigger picture here.
“Shale will likely tip over in five years, and US production will be down 20 to 30% quickly. When it does — this feels like watching the steamroller scene in Austin Powers. Oil prices in the late 2020s will be something to behold.”
— An industry executive responding to a poll by the Dallas Fed, reported by Energy Bulletin
[In the Permian Basin] “The number of new horizontal wells increased to 4,524 in 2021, compared with 350 in 2010. In June 2022, the Permian Basin accounted for about 43% of U.S. crude oil production and 17% of U.S. natural gas production (measured as gross withdrawals). The length of a well’s horizontal section, or lateral, is a key factor in well productivity. In the Permian Basin, average well horizontal length has increased to more than 10,000 feet in the first nine months of 2022, compared with less than 4,000 feet in 2010.”
— US Energy Information Administration
Fossil prices are going to skyrocket if left alone. Scarcity will force that. Shutting the spigot prematurely only brings on solar power sooner and gets people to conserve. That should be the last thing OPEC+ wants.
Next Week: The Achilles Heel of COP 27, Part II: Loss and Damage.
Towns, villages and cities in Ukraine are being bombed every day. Ecovillages and permaculture farms have organized something like an underground railroad to shelter families fleeing the cities, either on a long-term basis or temporarily, as people wait for the best moments to cross the border to a safer place, or to return to their homes if that becomes possible. So far there are 62 sites in Ukraine and 265 around the region. They are calling their project “The Green Road.”
The Green Road is helping these places grow their own food, and raising money to acquire farm machinery and seed, and to erect greenhouses. The opportunity, however, is larger than that. The majority of the migrants are children. This will be the first experience in ecovillage living for most. They will directly experience its wonders, skills, and safety. They may never want to go back. Those that do will carry the seeds within them of the better world they glimpsed through the eyes of a child.
Those wishing to make a tax-deductible gift can do so through Global Village Institute by going to http://PayPal.me/greenroad2022 or by directing donations to greenroad@thefarm.org.
There is more info on the Global Village Institute website at https://www.gvix.org/greenroad
The COVID-19 pandemic has destroyed lives, livelihoods, and economies. But it has not slowed down climate change, which presents an existential threat to all life, humans included. The warnings could not be stronger: temperatures and fires are breaking records, greenhouse gas levels keep climbing, sea level is rising, and natural disasters are upsizing.
As the world confronts the pandemic and emerges into recovery, there is growing recognition that the recovery must be a pathway to a new carbon economy, one that goes beyond zero emissions and runs the industrial carbon cycle backward — taking CO2 from the atmosphere and ocean, turning it into coal and oil, and burying it in the ground. The triple bottom line of this new economy is antifragility, regeneration, and resilience.
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