Home “It’s Really Bad” – Oil Supplies Intentionally Overstated

“It’s Really Bad” – Oil Supplies Intentionally Overstated

user profile picture Chris Martenson Nov 10, 2009
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The Guardian published an explosive article today.  If true, it means that governments have been intentionally overstating the amount of oil that we have and could pump out of the ground. The implications are enormous.

This confirms the evidence that I saw at ASPO that had been painstakingly developed by independent researchers.  So we might want to incorporate this news into our personal and financial frameworks.

First, a snippet:

Key oil figures were distorted by US pressure, says whistleblower

The world is much closer to running out of oil than official estimates admit, according to a whistleblower at the International Energy Agency who claims it has been deliberately underplaying a looming shortage for fear of triggering panic buying.

The senior official claims the US has played an influential role in encouraging the watchdog to underplay the rate of decline from existing oil fields while overplaying the chances of finding new reserves.

The allegations raise serious questions about the accuracy of the organisation’s latest World Energy Outlook on oil demand and supply to be published tomorrow – which is used by the British and many other governments to help guide their wider energy and climate change policies.

In particular they question the prediction in the last World Economic Outlook, believed to be repeated again this year, that oil production can be raised from its current level of 83m barrels a day to 105m barrels. External critics have frequently argued that this cannot be substantiated by firm evidence and say the world has already passed its peak in oil production.

Now the “peak oil” theory is gaining support at the heart of the global energy establishment. “The IEA in 2005 was predicting oil supplies could rise as high as 120m barrels a day by 2030 although it was forced to reduce this gradually to 116m and then 105m last year,” said the IEA source, who was unwilling to be identified for fear of reprisals inside the industry. “The 120m figure always was nonsense but even today’s number is much higher than can be justified and the IEA knows this.

Many inside the organisation believe that maintaining oil supplies at even 90m to 95m barrels a day would be impossible but there are fears that panic could spread on the financial markets if the figures were brought down further. And the Americans fear the end of oil supremacy because it would threaten their power over access to oil resources,” he added.

A second senior IEA source, who has now left but was also unwilling to give his name, said a key rule at the organisation was that it was “imperative not to anger the Americans” but the fact was that there was not as much oil in the world as had been admitted. “We have [already] entered the ‘peak oil’ zone. I think that the situation is really bad,” he added.

If this is true, and if it needs to be confirmed, it means that all models of stocks and bonds that rely on long-term cash flow models are wrong.  It means that our primary assumption of petroleum fueled growth is wrong.

It means that we are several decades late in responding.  It means that we do not have time to slowly modify our fleet to carbon-fiber electric cars or any other fantasy technology.

It means that we’ve squandered (and continue to squander) our most valuable resource of them all – time.

I’ll be honest, I would feel completely differently if there was even a glimmer that anybody in DC had the slightest inkling of the seriousness of the situation, but they display no public awareness.

To give one example of what I would be looking for, if we were on a crash program to convert cars to natural gas, mandating smaller and lighter vehicles going forward, and building the NG distribution pipelines and refueling stations necessary to make it all work, I’d have some reason to hope that we could manage the outcome somewhat favorably.

Instead, we have Cash4Clunkers as our most significant energy policy of the new millennium.  The gap between reality and policy dwarfs the Grand Canyon.

Given the complete lack of official leadership, and the presence of willful obfuscation of the public on the matter, I come to the conclusion that those who are working to secure the future of their own households and communities are the visionaries of our times.

The definition of a hero is someone who does something at risk to themselves because it needs to be done.  They see something that needs their efforts and they give it.  It is not easy to do something completely different from everybody else, and there’s a distinct social risk involved when that requires telling people a difficult truth.

Yet most people in most communities get their news and information from sources that are steadily being revealed to be more than unreliable, but actually misdirective.  One of the most common things I hear from people is that most people in their community have no idea what is coming or what the main issues really are.

Most would have no idea what is implied by the possibility that governments have been systematically overstating oil reserves and future flows.

But you do.

I implore you to keep on attempting to educate your friends, neighbors, and community.  I honor you for taking on the heroic efforts that requires.

Because if what the Guardian reported is true, it means that the future will change profoundly, radically, and probably quite suddenly when the implications are more widely appreciated.