The Empire Strikes Back: Down with those Silly Environmental Policies!

I defined this image as "The most amazing graph of the 21st century," and I argued that the rapid inversion of the declining trend of crude oil production is the cause of the US government's currently aggressive foreign policy. But the vagaries of oil production in the US haven't ceased to amaze us. We are now seeing a desperate attempt to keep oil production growing, even at the cost of dumping everything done so far in terms of "green" policies to mitigate climate change and ecosystem disruption. It is a major historical change. 

Sometimes, things change so fast in our world that we are left bewildered at seeing the rapid disappearance of the world we had thought was normal. The Covid pandemic was a case in point. It changed our habits, how we see ourselves and others, and affected our fundamental rights. In less than a couple of years, it propelled us into a "new normal" that became the way things are and have to be. 

The wave of rapid changes is not over. Now, change is sweeping through energy and environmental policies, and not in a good direction. A recent article in "The Epoch Times" reports about a document approved by the House Natural Resources Committee with the title, "GOP-Led House Panels Shift Gears, Go Full Throttle for Domestic Energy Production." It is a true tsunami poised to propel us into another kind of "new normal." Here are some excerpts.

"Republicans made it clear that many initiatives passed under the Biden administration promoting electric vehicles, carbon capture, green energy, and environmental protection are on the proverbial chopping block.

"Among the proposals that will dominate the committee’s and its subsidiary panels’ agendas in the coming months are bills prohibiting restrictions on hydraulic fracking without congressional approval, expanding natural gas exports, repealing the IRA’s Green House Reduction Fund, and amending the Clean Air, Toxic Substances Control, Solid Waste Disposal, and National Gas Tax acts.

"Within the tranche of proposed legislation on the committee’s “unleashing American energy agenda” are bills calling for permitting reform, promoting development of “critical minerals,” and prohibiting the import of Russian uranium. 

"Current energy policies not only degrade the economy but imperil national security... We are exporting wealth from here in the United States, many times to our adversaries, because of a not-in-my-backyard mentality,

"Grijalva’s proposed amendment to incorporate a statement that the impacts of climate change be weighed in evaluating proposals was defeated on a 21–15 party-line tally."

And more like that.

Let's try to unravel this set of ideas. We can start with the key sentence: "prohibiting restrictions on hydraulic fracking." It means that the Republicans want to ramp up the production of natural gas and crude oil at all costs, and the hell with "Climate Change" and "environmental protection." These silly ideas came from those scientists who think they deserve a salary just because they spend their time scaring the public with invented catastrophes that never arrive. Who do they think they are? 

The Republicans seem to be riding a wave of public opinion that sees environmental policies in a bad light. Indeed, most people were never enthusiastic about making sacrifices for a nebulous entity called "the environment." But, today, the public's trust in science has taken a considerable beating from the Covid crisis, and it is becoming more and more difficult to convince people to act in the name of a "science" that they see with increasing suspicion. Independently of individual opinions, when things get tough, most people tend to agree that there is no space for niceties and luxuries, as environmental policies are usually perceived. 

Apart from dumping regulations, neither the Republicans nor the general public seem to be able to see the glaring contradiction in what they are planning to do. Increasing oil and gas production means that more oil and gas will be used and exported. But once oil is produced and burned, it is gone. Then, the country will be impoverished, having lost some of its natural resources. (Unless, of course, you think that oil and gas are an infinite resource.... and that's precisely what the US elites think.). This is a classic case of hastening one's own doom, but it is normal. It happens all the time. 

Besides, there is an even more worrisome point in these ideas. Can fracking production be actually increased? The sentence about prohibiting restrictions on hydraulic fracking actually smacks of desperation. During the past 10 years, an incredibly rapid increase in oil production was obtained without the need for such a radical legislation. So why is it needed now? It may be a way for senators to show their determination, but it is more likely that the fracking industry is in trouble, unable to recover after the drop caused by the Covid pandemic. 

Let's see some recent data from "Peak Oil Barrel." 

You see that the US oil production collapsed in 2020 due to the Covid epidemic. Then, it restarted growing but has yet to return to the record level of Nov 2019. During the years of fast growth, up to 2019, it had grown more than 1 million barrels per year, a nearly 10% increase. It was a rate never seen during the whole history of US oil production. But, during the current recovery, it has declined to about half that value. The forecasts see a further reduction to nearly zero growth so that the 2019 record may not be breached before December 2024 -- if ever. Note also how production went down for about 6 months before the Covid shock. Something was rotten in Texas already by then. 

What's happening? One thing is clear: the US oil industry can no longer sustain the incredible growth rate that had been the rule up to 2019. We may well be close to the second (and final) peak of oil production in the US (as also noted by others)

So, as in the old Chinese malediction, we live in interesting times. An empire that does not expand is a dead empire, and the American Empire needs energy to keep its expansion going. A war, after all, is just a continuation of the economy by other means: the market is the battlefield, and "programmed obsolescence" is assured by the competitor's products. During the past decade, the US empire has accumulated considerable economic potential through the "fracking miracle." This potential has been turned in large part into a military potential. It is now time to dissipate this potential; it is the primary reason for what we see in the world nowadays. It is a concept explored in depth by Ingo Piepers.

The American elites understand what's happening. Hence, the effort to prop up the oil industry at all costs. So, will the Empire succeed in surviving for some more years? The current war is not being fought on the battlefield but on the oil fields. The side that runs out of fuel first will be the loser. 

In the long run, anyway, the winner will also lose: at some moment, production by fracking will not just decline: it will crash in one of the most brutal Seneca Cliffs ever witnessed by humankind. But do not despair: humankind has been thriving before the age of oil, and it may well do the same afterward. It will just be a very different world for those who will survive to see it. 

Below is a post I published in 2015, where I compared the growth of shale oil production to that of cod fishing in the Atlantic. In both cases, producers were blinded by a false sensation of abundance generated by production growth. They didn't realize that the faster you extract it, the faster you run out of it. 

The shale oil "miracle": how growth may falsely signal abundance. 

Originally published on "Cassandra's Legacy,  February 24, 2015

Oil production (all liquids in barrels per day) in the US and Canada. (From Ron Patterson's blog). Does this rapid growth indicate that the resources are abundant and that all the worries about peak oil are misplaced? Maybe not...

Sometimes, we use a simple metric to evaluate complex systems. For instance, a war is a complex affair where millions of people fight and struggle. However, in the end, the final result is a yes/no question: either you win or you lose. Not for nothing, General McArthur said once that "there is no substitute for victory."

Think of the economy: it is an immense and complex system where millions of people work, produce, buy, sell, and make or lose money. IEventually the final result is a simple yes/no question: either you grow, or you don't. And what McArthur said about war can be applied to the economy: "there is no substitute for growth."

But complex systems have ways of behaving, surprising you that can't be reduced to a simple yes/no judgment. Both victory and growth may create more problems than they solve. Victory may falsely signal a military might that doesn't exist (think of the outcome of some recent wars....), while growth may signal an abundance that is just not there.

Look at the figure at the beginning of this post (from Ron Patterson's blog). It shows the oil production (barrels/day) in the US and Canada. The data are in thousand barrels per day for "crude oil + condensate," and the rapid growth for the past few years is primarily due to tight oil (also known as "shale oil") and oil from tar sands. If you follow the debate in this field, you know that this growth trend has been hailed as a great result and as the definitive demonstration that all worries about oil depletion and peak oil were misplaced.

Fine. But let me show you another graph, the US landings of North Atlantic Cod up to 1980 (data from Faostat).

Doesn't it look similar to the data for oil in the US/Canada? We can imagine what was being said at the time; "new fishing technologies dispel all worries about overfishing" and things like that. It is what was said, indeed (see Hamilton et al. (2003)).

Now, look at the cod landings data up to 2012 and see what happened after the great burst of growth.

This doesn't require more than a couple of comments. The first is to note how overexploitation leads to collapse: people don't realize that by pushing for growth at all costs, they are destroying the very resource that creates growth. This can happen with fisheries just as with oil fields. But, also note that we have another case of a "Seneca Cliff," a production curve where the decline is much faster than growth. As the ancient Roman philosopher said, "The road to ruin is rapid." And this is exactly what we could expect to happen with tight oil.

The Dewdrop World is a Dewdrop World, and yet, and yet..... The Ethereal Nature of Collapse

It is said that the Japanese poet Kobayashi Issa wrote this haiku upon the death of his daughter: "The dewdrop world is a dewdrop world, and yet, and yet......." (tsuyu no yo wa tsuyu no yo nagara sari nagara). It is poetry at its best: it hints at much more than it says. Here, I start from this poem about dew being an incorporeal thing to examine how another incorporeal thing, such as money, can affect us.

 

A few days ago, I was looking again at the presentation that Nathan John Hagens produced for the Earth Day of 2021. I had watched it when it appeared, but something made me return to it. It is a long story, but the point that remained in my mind is when Nate shows a graph with a clear "Seneca" shape for the global oil production curve. That is, something that grows slowly, then declines rapidly (at minute 38 of the presentation). Later, at minute 44, he shows a similar curve for the GDP. 

 

Nate attributes the slanting forward of the curve to financial effects. My first reaction to that was that financial tricks, in themselves, do not produce oil (and can't raise the GDP, either). How can a basically non-existing thing such as money, mainly numbers stored in computer memories, affect the real world in such a way?

But, rethinking the matter, I am not sure anymore that the financial world really is an ethereal and inconsequential thing. Maybe it is the opposite. As I learn more about more things, I am always surprised by what I discover. My latest epiphany came from a talk given by Fabio Vighi, who teaches at the University of Cardiff, about a correlation between the lockdowns of 2020 and the global financial situation and, in particular, of the "REPO" market (you can find his take at this link). 

I must confess that I had no idea of what the REPO was, not even that such a thing existed. Now, I know that it stands for "Repurchase Agreements" and I think I have some idea of how it is supposed to work. Basically, it is a market where financial operators can resupply with money by borrowing it. Where does that money come from? Typically, financial firms with large pools of cash do not want to let that money sit around, so they lend it to financial institutions, banks, at low interest rates. Then, the banks will use this money to fund short-term needs. The REPO market is a short-term thing.

I am far from having assimilated the obscure mechanisms operating inside the entrails of the REPO market, but this much I can understand: it determines the cost of money. Now, connect this concept with the real economy. The economy is made out of real things: resources, materials, equipment, goods, people, and more. And everything in the economy is subjected to depreciation (a name that economists use for the thing that physicists call entropy). If you want to fight depreciation (entropy) you must expend energy. (you can do that in an open system -- in closed ones, entropy always increases, but this is not the case for the economic system.) 

So, to keep the economy running, you need energy. In order to get energy, you need energy (you probably heard the concept of "energy return on energy invested", "EROI"). But, in order to get energy to be invested, our economic system is geared in such a way that you need that non-physical thing called "money."  No money, no investments. No investments in energy, no production of energy. 

What if there is no money? Energy is not produced. Then people become very poor, and many die. Incidentally, it also happens that the rich get richer, but that's another story. Apart from the rich, the poor slide down the downward step of the curve: the Seneca Cliff. I do think that Nate is right in his interpretation: the Seneca Cliff would arrive even independently of financial factors, but financial factors can make it steeper. Money doesn't create resources (as economists are fond to say). But it can direct more resources to exploitation, making it faster. That gives people the illusion that there is more of it. 

You see how everything is connected: our fate is determined by such mysterious things as the one called the "REPO market." Then, something horrible happened in 2019: a cash crunch caused the repo rate to soar — reaching as high as 10 percent intraday on Sept. 17. It pushed up the federal funds rate to levels much higher than it was supposed to be (between 2-2.25 percent) at the time.

The interesting thing about the story is Fabio Vighi's interpretation that the lockdowns of 2020 were the result of the attempt of the powers that be to cool the REPO market and avoid a financial Seneca Cliff. If this was their aim, they succeeded spectacularly.

Note how the REPO rate went down from the Spike of September 2019 to a very low, and apparently stable, level in 2021. So, Fabio Vighi's interpretation could make sense. But can it be true? Personally, I think it might well be the case, but it is also true that correlation does not mean causation and the spike disappeared much before the lockdowns. On the other hand, the powers that be may have been scared enough that they put into practice an emergency plan they had concocted long before. Whatever the case, they will never tell us the truth. 

The thing that doesn't cease to amaze me, though, is how it is possible that humans placed themselves to me so dependent on the thing called "money."  It is an ephemeral entity that has no physical consistency.  I can also understand that small disturbances in the repo (and other money) markets can ripple through the entire system. The physicists call this the "butterfly effect" and you know how small perturbations can send huge systems tumbling down to their doom. Money has no more consistency than the morning dew. And yet, and yet......

Take a look at this incredible painting by Quentin Matsys, "The Money Lender and His Wife." painted in 1514 and representing two burghers of Antwerp, the ancestors of the people who have been playing with the REPO market in modern times. Just like Issa's poem, this painting hints at much more than it shows, but in the opposite way. Whereas Issa hints that the world is not real, here we see it as even too real. Reality is gold coins, much more important than the book of devotions that the wife of the banker should have been looking at, but she is not. Yet, the true value of those coins is all in the minds of people, by themselves they are not worth more than dew in the morning.

You can find Nate Hagen's 2021 posts at https://www.thegreatsimplification.com/

A more recent documentary is at this link: https://www.youtube.com/watch?v=g0w3GfW240M 

 

All the World is a Stage: How the Global Drama is Being Played Out

 

The "Commedia dell'Arte" was a form of popular theatre, often played without a script. The masked actors would improvise according to the characteristics of their "persona", their mask.

There are many ways of predicting the future, and my remote ancestors, the Etruscan Haruspices, would do it by examining the liver of a freshly killed goat. I may have inherited from them my interest in the future, although I don't usually go around killing goats. 

A gentler way of studying the future consists in considering the world as a stage. You know what the characters are, what they want, the way they usually behave. Then, when you put them on stage, they may act and create a drama even without following a script. It was the way the ancient Commedia dell'Arte worked. No script, actors would just play their part, according to their "persona." a term that in Latin means "mask" and that in our times came to be related to "personality,"

It may also work for states. They have a certain persona, a way to behave that may be predictable. About two months ago, I proposed an interpretation of the current drama patterned on an older drama: the European tragedy of World War 2. The actors, the states, were different, but their masks were very similar, and I sketched out what their behavior could have been. 

You see how things are going: the world powers are acting on stage as their masks impose them to do. In particular, the EU is playing the role that was of Italy in 1940. The lack of natural resources forces the EU to depend on foreign sources, in particular on importing natural gas from Russia -- which plays the role that was of Britain in the 1930s: that of fossil fuel exporter. In the old drama, in 1940, Italy attacked its main coal supplier, Britain, in a desperately ineffective campaign. In my earlier post, I wrote that the current situation "could easily develop into a similar outcome as in 1941, with the EU doing something completely idiotic: attacking Russia." It is happening, although only indirectly, so far. And, as things stand, the EU campaign doesn't seem to be much more effective than the old Italian campaign against Britain, although not (yet?) turning into a similar humiliating disaster. 

The new drama is just in its early stages. If it continues along the same lines as the old one, we'll see the involvement of the bigger players and the growing confrontation will lead to some kind of final catharsis. Let's just hope that, afterward, there will be someone left to ponder on what has happened.

(h/t "Art Deco") 

Monday, January 10, 2022

How to keep gasoline prices low: bomb your gas station

 

An Italian fighter plane (note the "fasci" symbols on the wings) shot down in England in November 1940, during WW2 (source). Sending obsolete biplanes with open cockpits against the modern British Spitfires is one of the most glaring examples of military incompetence in history. Among other things, this old tragedy may give us hints about the current situation in the world and, in particular, why the consumers of fossil fuels tend to bomb their suppliers. 

Not everyone in Europe has understood exactly what is happening with gas prices, yet, but the consequences could be heavy. For a brief moment, prices rose of a factor ten over what was considered as "normal." Then, prices subsided a little but still remain way higher than before. Electricity prices are directly affected by the trend and that is not only traumatic for consumers, but also for the European industry. 

So, what's happening? As usual, interpretations are flying free in the memesphere: those evil Russians, the conspiracy of the Americans, it is all a fault of those ugly Greens who don't want nuclear energy, the financial lobby conspiring against the people, etcetera.

Let me try an approach a little different. Let me compare the current situation with that of the 1930s in Europe. Back then, fossil fuels were already fundamental for the functioning of the economy, but coal was the truly critical resource: not for nothing it was called "King Coal."

The coal revolution had started to appear in Europe in the 19th century. The countries that had large coal reserves, England, Germany, and France, could start their industrial revolutions. Others were cut off from the bonanza: the lack of coal was the main cause of the decline of the Southern Mediterranean countries. The Turkish empire, the "sick man of Europe," was not really sick, it was starved of coal. 

But it was not strictly necessary to have coal mines to industrialize: it could be done by importing coal from the producing countries. Sailing ships could carry coal at low cost just about everywhere in the world, the problem was to transport it inland. Coal is bulky and heavy, the only way to do that is to have a good network of waterways. And having that depends on climate: the Southern Mediterranean countries are too dry to have it. But Northern Mediterranean countries had the network and could industrialize: it was the case of Italy. 

Italy went through its industrial revolution much later than the Northern European countries but succeeded using British coal. That, of course, meant that Italy became dependent on British coal imports. Not a problem as long as the two countries were friendly to each other. Unfortunately, as it often happens in life, money may well take the priority over friendship. 

In the early 1920s, coal production in England reached a peak and couldn't be increased any more. That, of course, led to higher prices and cuts in exports. At that time, nobody could understand how depletion affects production (not even nowadays people do). So most Italians took the reduced coal supply from Britain as a geopolitical attack. It was an evil strategy of the decadent plutocracy called the Perfidious Albion, specifically designed to harm the young and growing southern countries.  

The Italian conquest of Ethiopia was the turning point of the struggle. Britain reacted by stopping the exports of coal to Italy. That, and other international economic sanctions, pushed the Italian economy, already crippled by the cost of the war, to the brink of collapse. Given the situation, events played out as if following a prophecy written down long before. Italy had to rely more and more on German coal and that had obvious political consequences. 

The tragedy became a farce when old Italian biplanes tried to bomb Britain into submission in 1940. The campaign lasted just two months, enough for the Italian contingent to take heavy losses before it was withdrawn (*). It was not just a tactical blunder, but a strategic disaster since it gave the British and their allies an excuse to bomb Italy at will. Which they did, enthusiastically and very successfully. 

The curious thing about this disastrous campaign is how it inaugurated a tradition: bombing one's supplier of fossil fuels. Italy's bombing of Britain was just the first of a long series: in August 1941, the British attacked and bombed Iran to secure the Iranian oil wells. They were much more successful than the Italians and Iran surrendered in less than a week. In the same year, in November, the Japanese attempted the same trick by bombing the United States, their main supplier of oil. The Japanese attack on Pearl Harbor was a tactical success, but a major strategic disaster, as we all know. 

After WWII, the "Carter Doctrine" implied the strategic value of oil producers in the Middle East. One of the outcomes was the protracted bombing of Iraq from 1991, still intermittently ongoing. Other oil suppliers bombed by Western states were Libya and Syria. 

In short, the tradition of bombing one's suppliers of fuels remains alive and well. Whether it can accomplish anything better than the disastrous attempt of Italy in 1941 is debatable, to say the least. After all, it is equivalent to blasting away your neighborhood gas station in order to get the gas you need, but this is the way the human mind seems to work. 

So, on the basis of this historical tradition, let's try to build a narrative about what's going on, right now, with the gas supply to Europe. We just need to translate the roles that some countries had in the 1930s with those of today. 

Coal --> Natural Gas
Italy --> Western Europe (EU)
Britain --> Russia
Germany --> USA

The correspondence is very good: we have a consumer of fossil energy (now Western Europe, then Italy) which is militarily weak, but threatens the supplier (Now Russia, then Britain) with military action despite the obvious superiority of the latter. The weak consumer (Europe/Italy) feels that it can get away with this suicidal strategy because it has the backup of a powerful ally (Now the USA, then Germany). 

Just like Britain did in 1936 to Italy, Russia appears to have reduced the supply of gas to Europe. In both cases, the result was/is a crisis in the economy of the consumers. Just as it happened in the late 1930s, the stronger ally is coming to the rescue: in 1936, Germany started supplying coal to Italy by rail, now the US is sending cryogenic gas to Europe -- both are expensive methods of transportation but allow the supplier to access a market that would have been barren, were it not for political reason. But becoming the customers of a militarily powerful country has political costs. 

The correspondence is so good that the current situation could easily develop into a similar outcome as in 1941, with the EU doing something completely idiotic: attacking Russia, hoping for the support of the powerful US ally. (also, traditionally, attacking Russia is done in Winter: what could go wrong?). 

One conclusion of this story is that humans always tend to worsen whatever major problem they happen to face. Apart from this, perhaps there is an alternative scenario that could lead Europe away from the perspective of nuclear annihilation: maybe we can learn something from the Italian experience. 

In 1936, during the coal embargo imposed by Britain, Italy carried out an attempt to reduce its consumption of fossil fuels that went under the name of "autarchy" (Autarchia). It was based on the renewable technologies available at that time, and it involved some crazy ideas, such as making shoe soles out of cardboard and dresses out of fiberglass. But, on the whole, the idea of relying as much as possible on national and local products made plenty of sense. It didn't work, mainly because the government squandered the Italian resources in useless wars, but, who knows? Today it might work better if we don't make the same mistake. 

(*) The Italian pilots had to fight with obsolete canvas biplanes: much slower than the British Spitfires. The Italian planes were also poorly armed, without an armored cockpit (the pilots used sandbags as makeshift armor), without sufficient heating, without the right training. And, of course, poor reliability of almost every mechanical system in a cold climate. Most of the Italian losses were due to mechanical failures, while no British planes are reported to have been lost to the Italians. If the definition of "epic" involves fighting against an overwhelmingly superior enemy, then the experience of the Italian force in the Battle of Britain can surely be defined in this way: an epic disaster. But whoever had this absurd idea deserved to be hanged, and at least one of them was.    

Afghanistan: The Twilight of the Global Empire

 

Afghanistan: a ragged blot of land more or less at the center of the mass of Eurasia and Africa. Over a couple of centuries, it repelled invasions from the largest empires in modern history: Britain, the Soviet Union, and now the United States. It is possible to make an educated guess on what led the United States to invade Afghanistan in 2001 (oil, what else?), but now the time of expansion is over for the Global Empire. We are entering the twilight zone that all empires tend to reach and maintain for a short time before their final collapse.

In 117 AD, Emperor Trajan died after having expanded the Roman Empire to the largest extension it would ever have. It was at the same time a military triumph and an economic disaster. The coffers of the state were nearly empty, the production of the mines was in decline, the army was overstretched and undermanned, unrest was brewing in the provinces. Trajan's successor, Hadrian, did his best to salvage the situation (*). He abandoned the territories that could not be kept, quelled the internal unrest, directed the remaining resources to build fortification at the borders of the Empire. It was a successful strategy and the result was about one century of "Pax Romana." It was the twilight of the Roman Empire, a century or so of relative peace that preceded the final descent.

Empires in history tend to follow similar paths. Not that empires are intelligent, they are nearly pure virtual holobionts and they tend to react to perturbations only by trying to maintain their internal homeostasis. In other words, they have little or no capability to plan for the future. Nevertheless, they are endowed with a certain degree of "swarm intelligence" and they may be able to take the right path by trial and error. Sometimes the process is eased by an intelligent decision-maker at the top. We may attribute the Pax Romana period to the decisions of Hadrian and his successors but, more likely, the Roman Empire simply followed the path it had to follow,

The current empire, the Western (or Global) one may be entering a similar period of retrenching and stabilization: a Pax Americana. I noted this trend when I realized that in the past ten years the Global Empire had not engaged in new major military campaigns. You may argue that 10 years is too short to use to detect meaningful trends. Correct, but there are other elements showing that the Global Empire is retreating and retrenching. For instance, global terrorist attacks and war casualties have been declining for at least five years in a row. And, of course, there has been the announcement that the US is leaving Afghanistan. There will remain "contractors" fighting there, and we can imagine that drones will keep patrolling the sky of Afghanistan, continuing their ongoing spree of senseless killing. But, on the whole, this war is over.

The Afghan campaign was a small military miracle. Just think of the challenges of maintaining an army in a hostile territory, in a remote region not connected to the mainland, and that for 20 years! I think it was never done before in history, not successfully at least. In an earlier Afghan campaign, the British army was not so lucky with only one survivor of an entire army during the retreat from Kabul in 1842. Later, in 1954, the French went through a similar disaster with their base of Dien Bien Phu, in Vietnam. Instead, the Western army is returning from Afghanistan more or less intact. 

The Global Empire didn't really lose this war, it just realized that it was impossible to keep fighting it. Indeed, Afghanistan was often termed "Graveyard of Empires" but it never really was. Empires didn't die because they had to leave this remote country, they died for other reasons and, in their agony, they let go this remote and untenable possession of theirs. But, before the Western Empire disappears for good, we may perhaps be able to enjoy a period of Pax Americana, just as the Romans did after that Hadrian became emperor.

With the Afghan campaign over, we may ask ourselves why did the empire engage in it. Wars, like all human enterprises, are generated by those virtual entities we call memes. These are patterns of ideas that dominate the human mind, it was Daniel Dennett who said that human beings are meme-infested apes. So, the general interpretation of this story is related to a meme that appeared in the aftermath of the attacks of Sept 11, 2001, supposed to have been masterminded by an evil sheik named Osama bin Laden who had a hidden military base in a complex of caves in North Afghanistan. The connection of this meme with reality was always flimsy, to say the least, not better than that of "weapons of mass destruction" in Iraq. And, indeed, no traces of Osama or of an important military base hiding terrorists in Afghanistan were ever found. But the power of memes does not depend on their link with reality.

But there probably was a much more powerful meme that led to the US invasion of Afghanistan. It had nothing to do with a bearded sheik hiding in a cave. Rather, it was about the issue that generated most of the recent wars: crude oil. 

Of course, Afghanistan has no oil, and this much was known. But in the 1990s the oil reserves of the Caspian region, adjacent to Afghanistan, had been the object of a game of aggrandizing that led to exaggerating their extent at least of an order of magnitude. As a result, the US may have been looking for the dark brown meme of "A New Saudi Arabia" that involved taking control of Afghanistan.

Back in 2004, I wrote the story of the development of this meme in a post in Italian. Below, I updated and condensed it into a version in English. At that time, I couldn't imagine that the Afghan campaign would go on for nearly two decades more, but memes are unstoppable when they take hold of human minds. 

Nevertheless, I don't think there is a rational explanation for these events. Just like what Tolstoy said about the French invasion of Russia, in 1812, the Afghan war happened "because it had to happen." And if it is over, now, it is because it had to be. 

My interpretation is that during the past 10 years or so, we created a Web creature endowed with swarm intelligence that is taking over humankind's memesphere. Maybe I am wrong and, of course, I have no proof that this is the case. But I have the strong impression that the great games that empires play may not be anymore in the hands of those psychopaths who call themselves "emperors". And the future will be what it has to be.

See also this post by Tom Engelhart that makes very similar observations on the withdrawal phase of the American Empire. 

(*) About Hadrian, you probably know the book titled "Memoirs of Hadrian" by Marguerite Yourcenar. It is an excellent book in many respects, first of all as a literary masterpiece, but also because it clearly understand and describes the situation of the Roman Empire after that Trajan had nearly destroyed by overextending its borders. But, despite Yourcenar's flattering portrait, Hadrian was no Mr. Nice Emperor. He was ruthless against his political enemies and against all opposition. In 136 AD, he destroyed what was left of Jerusalem after the siece of 70 AD, attempting to erase even the name of the city that was rebuilt under the name of Aelia Capitolina.

THE CASPIAN OIL FEVER.

By Ugo Bardi

A longer version of this story was published in Italian on the “ASPOITALIA” website in August 2004.

The Caspian oil fever started in the late 1990s, when it became fashionable in the West to speak about the "immense reserves" of crude oil that could be found in the area around the Caspian Sea. So rich was this region supposed to be that it would be possible to turn it into a "New Saudi Arabia" (sometimes "A New Persian Gulf"). But the story had started much earlier than that. 

Already in mid 19th century, the first oil wells were dug near Baku in the Azerbaijan region. In 1873, Robert Nobel, the brother of Alfred Nobel, the inventor of dynamite, led an expedition southward from St. Petersburg. He found in Baku, on the Caspian shore, an already operating oil industry. Nobel invested in this industry, developing it considerably. At the end of the nineteenth century, Baku was the largest oil-producing area in the world, even surpassing the American oil industry of the time.

At that time, oil was mainly turned into kerosene and then used as fuel for oil lamps. Our great-grandparents' lamps in Western Europe were almost certainly lit with oil supplied by the Caucasus mining industry (the advertising for kerosene, in the figure, seems to come from Latvia, but the oil surely came from the Caucasus). With the development of the internal combustion engine, in the early twentieth century, oil began to be used more and more as a fuel. The strategic value of the Caucasus fields was already important in the First World War, when the shortage of oil was one of the factors that caused the defeat of the Central Empires. But it became evident with the Second World War which was, in many ways, the first, true "war for oil."

When the Germans invaded the Soviet Union in 1941, one of their main strategic objectives was the oil fields of the Caucasus. In the offensives of 1941 and 1942, the Germans tried to advance towards the Caucasus, but the battle of Stalingrad put an end to their attempts. That was the turning point of the war. Had the Germans succeeded in taking hold of the Caucasus, history could have been very different (and maybe you would be reading this post in German).

After the Second World War, the Soviet Union began to find difficulties with expanding the production of oil from the Caucasus. From the 1950s onward, the reserves of the Urals, the Volga region, and eastern Siberia were the main target for development. These reserves made the Soviet Union the largest oil producer in the world until about 1990.

By the end of the 1980s, the Soviet oil production began to show signs of difficulty and, in 1991 the production peak was reached, with decline starting afterward. At the same time, there arrived the collapse of the Soviet Union itself. There are many interpretations of the reason for this collapse, but it is possible that the decline of oil production was not a consequence but the main cause of the collapse of the Soviet Empire, the political structure that was created to exploit it.
 

This story tells us a lot about the situation in the Caucasus after the fall of the Soviet Union. Since the oil fields had been exploited for over a century, we should not be surprised if they were depleted and declining. But the Western oil industry looked with some interest at the Caspian area, believing that their superior technology could extract oil not accessible to the Soviets. As early as in 1985, Harry E. Cook, of the United States Geological Survey (USGS) began exploring Central Asia for possible new oil reserves. Later, under Cook's leadership, a consortium called “USGS-Kazakhstan-Kyrgyzstan Oil Industry project” was formed which included ENI/AGIP as well as BG, BP, ExxonMobil, Inpex, Phillips, Royal Dutch Shell, Statoil, TotalFinaElf, and several ex-Soviet research institutes.

The first contract with the consortium to export Caspian oil to the West was signed in 1994. It turned out to be a difficult task because of the need to carry equipment to a remote geographical location, not accessible by sea. It was necessary to wait until 1999 before it became possible to export Caspian oil through the Baku-Novorossiirsk pipeline, which ends on the Black Sea. From there, the oil could be shipped worldwide.

But in the 1990s a virtual kind of oil that existed only in the minds of people had also appeared. The story started in 1997 with the publication of a U.S. Department of State Report: (U.S. Department of State, Caspian Region Energy Development Report, April 1997). (a version of the report can be found at this link). 

 

In the report, the following table could be found:

It seems that the data of the report were derived from Cook's work stating that the Kashagan field could hold up to 50 billion barrels, a value that had been further inflated here to 85 billion, so that the total for Kazakhstan arrived at a whopping 95 billion barrels. The total amount of "possible" reserves in the area was estimated at 178 billion barrels of oil. It is not clear what the authors meant by the term "possible oil." In the practice of reporting oil reserves, the term "possible reserves" is normally coupled with a probabilistic estimate, usually 5%. So, what the table said was that there was "a 5% chance of finding 163 billion barrels"

Such a statistical estimate was incomprehensible to the average politician and these data were badly misunderstood. The first political exponent to speak publicly about the discovery of new, "immense reserves" of the Caspian Sea seems to have been the US Deputy Secretary of State Strobe Talbott in 1997. Talbot used on that occasion, perhaps for the first time, the phrase "reserves up to two hundred billion barrels of oil."

Talbot had rounded up the "possible reserves" to 200 billion barrels. Other people spoke of 250 billion, and in some case, you heard of 300 billion barrels. If these estimates were true, it would have meant that the Caspian could have increased the global oil reserves of about by 20%, not a trifle! But the main effect of these new reserves would have been to drastically break the quasi-monopoly of OPEC countries and the Middle East on oil and completely changing the geopolitical framework of world oil production. This was the origin of the enthusiasm about "A New Saudi Arabia"  that could exist in the Caspian region. 

As the exploration proceeded, the available data was further processed. In 2000, the USGS released a report signed by Thomas Ahlbrandt that arrived at an estimate of world reserves at least 50% higher than all previous estimates. This report was criticized by many experts and contradicted by the trend of subsequent finds, but it was another of the elements that led to the myth of the Caspian Sea as a new oil El Dorado.

The "200 billion barrels" story began to generate doubts from the moment it appeared. Already in 1997, a report by Laurent Ruseckas to the United States congress scaled down the estimates by speaking of a "possible maximum" of 145 billion barrels, a value that had to be taken as an unlikely extreme, with a reasonable maximum value of around 70 billion barrels. Ruseckas also pointed out that someone was getting too enthusiastic.

Skepticism rapidly began to spread. A 1998 article in Time magazine stated that if these estimates were correct, the Caspian region could contain "the equivalent of 400 giant fields," yet there are only 370 giant fields in the world (Robin Knight, “Is The Caspian An Oil El Dorado? Time Magazine, June 29, 1998, Vol. 151 No.26). In 1999, a report presented to the SPD group in the German parliament (1999 by Friedrich-Ebert-Stiftung, Washington Office 1155 15th Street, NW Suite 1100 Washington, A.D 20005) was titled, significantly, "No longer the 'Great Game' in the Caspian". In one section of this report, Friedemann Muller stated that: "The often reported figure - preferably by politicians of a certain age - 200 billion barrels is a figment of the imagination ”. The issue of inflated reserves also appeared in the popular press, for example, in a November 11, 2001, Toronto "NOW" article, Damien Cave described the Caspian estimates of 200 billion barrels as "insanely optimistic, at least in the next twenty years." 

The real world started intruding into the fantasy of politicians when the OKIOC consortium (ENI, BP, BG, ExxonMobil, Inpex, Phillips, Shell, Statoil, and TotalFinaElf) started actually drilling at the bottom of the Caspian sea. Apparently, the results were not impressive, since the consortium began to fall apart after the first exploratory drilling. By 2003 ExxonMobil, Statoil, BP, and BG had left. Agip remained and became the main operator of the consortium. In April 2002, Gian Maria Gros-Pietro, then the president of ENI, speaking at the Eurasian Economic Summit in Almaty, Kazakhstan, declared that the entire Caspian could contain only 7-8 billion barrels. Others have estimated up to 13 billion barrels for the Kashagan field alone. For the whole area around the Caspian Sea, it is possible to speak of amounts ​​between 30 and 50 billion barrels. These reserves are not negligible but available only at high costs and certainly not a new Saudi Arabia.

By the early 2000s, the situation was reasonably clear, at least in the eyes of the experts. Colin Campbell, the founder of the Association for the Study of Peak Oil (ASPO) summed it up like this in a private communication to the author of these notes.

  “ There were rumors that the area contained over 200 Gb [billion barrels] of oil (I think those rumors came from the US Geological Survey), but the results after ten years of construction have been disappointing. As early as 1979, the Soviets had found the Tengiz field on the mainland in Kazakhstan. It contains about 6 billion barrels of oil in a limestone reef at a depth of about 4500 m.This oil, however, contains up to 16% sulfur, which was too much even for Soviet steel, so they chose to not to exploit the field. After the fall of the Soviet Union, Chevron, and other American companies arrived and managed to extract that oil, but with many difficulties and at high economic and environmental costs.

Later, in a series of surveys made on the bottom of the Caspian Sea, a huge structure was found at about 4000 meters deep that in many ways resembled that of Tengiz.  This area (Kashagan) also had geological features similar to those of the giant Al Ghawar field in Saudi Arabia. Had it been full, it could have actually held 100 billion barrels or perhaps more and competed with Saudi wells.

At that point, an American businessman, Jack Grynberg, put together a large consortium of oil companies that included BP, Statoil, Total, Agip, Phillips, British Gas, and others. This consortium set out to exploit the deposits thought to exist in this facility.

Exploratory drilling has been enormously difficult. The field was offshore, so it was difficult and complex to transport equipment to the area. In addition, those waters were a breeding ground for the sturgeons that produce Russian caviar. Finally, the winter climate of the area is harsh with ice formations on the surface of the water and very strong winds. Eventually, at a cost of $ 400 million, the consortium managed to drill a 4,500-meter deep well in the easternmost area of ​​the facility. A deadly silence followed, followed shortly after by BP and Statoil's withdrawal from the company. British Gas announced in a report that the field could contain between 9 and 15 billion barrels. The reason is that,- unlike Al Ghawar - the field is very fragmented with the fields separated by low quality rocks. It is an interesting field and it is certain that further reserves will be found, but it is certainly not capable of having any significant effect on world supplies. There is a lot of gas nearby, but the transportation difficulties are immense. "

Nevertheless, the two worlds, that of the politicians and that of the experts had decoupled from each other and plenty of people were still believing in the existence of "200 billion barrels" in the Caspian region. From the left, the "immense reserves" of the Caspian were cited. as proof of evil Western imperialism. From the right, there was a clamor to get their hands on that bonanza as soon as possible. As an example, we can cite the speech that US Senator Conrad Burns, who had traveled to Kazakhstan himself, gave to the Heritage Foundation, on March 19, 2003

"Every dollar we spend of Middle East oil, we are really dealing in rogue oil. Money that goes to build weapons of mass destruction and also the fuel those terrorist groups that need money to operate around the world," Burns said. "We don't have to look to the Middle East, because the reserves in the Caspian Basin could be as large as what is in the Middle East"

and:

Internationally, our country is ignoring the opportunities that exist in Russia and in the Caspian Sea basin. In the Caspian Sea area, reserves of up to 33 billion barrels have been found, a potential greater than that of the United States and the double that of the North Sea. Estimates speak of an additional 233 billion barrels of reserves in the Caspian. These reserves could represent up to 25% of the world's proven reserves. Russia may have even more abundant reserves. 

These numbers are all wrong. For one thing, the North Sea reserves are estimated at around 50 billion barrels, and 33 is certainly not double 50. As for the "255 billion barrels", added to the other 33 make a total of 288 billion of barrels, which is out of the grace of God. But, clearly, Burns was not the only American politician who thought in these terms. And much of what happened after the 9/11 attacks of 2001 can be explained as an attempt by the US government to take direct control of the strategic oil fields of the Middle East and of Central Asia. Not for nothing Conrad Burns was a convinced supporter also of the invasion of Iraq.

In the end, it doesn't seem to be paranoid to think that the United States attacked Afghanistan in 2001 in order to clear the field at the passage of an oil pipeline from the Caspian that would reach the Indian Ocean passing through Pakistan. A grand dream, if ever there was one. But there were no "immense reserves" in the Caucasus and, therefore, no need for a pipeline to transport them. And reality, as usual, eventually took over.