Peak Exports: The Real Reason Behind War in the Middle East?

I have long suggested in discussions on the war in Iraq (and the coming war on Iran) that the conventional wisdom (expressed by commentators across the ideological spectrum) that sees the Iraq War as having become a disaster for its neocon champions is seriously flawed. This is especially the case if it is taken to mean (as many believe) that the war is recognized as a disaster in the eyes of Bush regime insiders themselves.

The notion of the war as a catastrophic blow to the neocon project rests on the belief that what the US ultimately wanted in Iraq was something that at least bears some resemblance to what the invasion's architects said they wanted: a stable, secure, and at least somewhat prosperous country, firmly subordinated under the US-led regional military "security" umbrella, open to US multinational corporate "investment" (and that of other Western countries of our - - not their - - choosing) for resource extraction and other purposes. This supposed ultimate goal is generally taken at face value, not only in right-wing and mainstream circles (where it is called an effort to create a "democratic" Iraq), but on the left, as well.

The standard left analysis is implied by my statement of this premise above: What the US wanted was not to bring "democracy" to Iraq (unless that term is taken as a euphemism for "openness to corporate penetration"), but, rather, what is very nearly its opposite: to place Iraq under classic neocolonial control. Such control most certainly implies a fundamental cession of Iraqi sovereignty: it would lose the authority to inhibit multinational corporate penetration of its economy, and it would cede any pretense of independent military power that could in any way challenge the hegemony in the Middle East of the US or of its local surrogate, Israel. Indeed, this latter element involves a concrete loss of sovereignty, in that Iraq's territory, itself, would be open, as necessary, for the installation of US military bases, to function as a staging-ground for further military aggression in the region.

Nonetheless (and this is the critical point), what this left view does not imply is the total destruction of Iraqi society and infrastructure. In fact, this model seems to envision what I suggested above: the creation of a reasonably stable and (given its immense resource wealth) prosperous country, albeit, with much greater inequality of wealth than under the Baathist regime, and with a significant share of that wealth flowing into the coffers of Western, not indigenous, elites. In this view, then, the fact that Iraq has been laid waste by the US invasion must mean that the US project has been a colossal failure from the perspective of its architects.

Well, what if, as I've long suspected, this is not the case? What it the real goal of US war planners (one that, for obvious reasons, they could never broach publicly) was to decimate Iraq, to turn it into a shambles? Were this the case, it would necessitate a thoroughgoing reexamination of the meaning of the invasion, as well as a significantly revised analysis of our current historical conjuncture, nearly five years on.

When I suggest to people that, from Bush's perspective, the war in Iraq may be fundamentally a success, the response is usually incredulity, followed by an argument that runs something like this: "Why on earth would the neocons have wanted to create this quagmire? Sure, they had no interest in bringing real democracy to Iraq, but how does it serve their interests to have sown chaos there? If they were trying to get their hands on the oil, it seems that instability would be counterproductive, since US multinationals will be required to invest tens of millions of dollars in infrastructure costs in order to get the oil out profitably. Who's going to invest in Iraq when you have insurgents regularly blowing up pipelines and murdering contractors?"

Until recently, I didn't have a compelling counter-argument to this. I would generally cite broader geopolitical imperatives that seemed to be trumping neocolonial ones; in particular, the determination of US policymakers that under no circumstances would any other country (except, of course, Israel) be permitted to even aspire to a regional leadership role in the Middle East that might in any way, now or in the future, challenge US hegemony there. I surmised that Iraq had been seen as so potentially dangerous to US long-term interests (given its resource wealth, educated populace, strategic location, etc.), that only by utterly shattering the country could this threat be deemed neutralized. Not implausible, perhaps, but not entirely compelling either.

This is where the concept of "peak exports" comes in. I won't provide a general discussion of the meaning and import of the peak oil theory here (any reader unfamiliar with this theory - - essential, in my view, for understanding the current state of the world - - should click on the "Resource Depletion" links on this blog, or pick up a copy of Richard Heinberg's The Party's Over). The peak exports theory deals with what's likely to happen to petroleum production once we pass the global peak (as I'll detail in a future post, several recent studies convince me we have already done so - - at least with respect to conventional oil). Hubbert theory posits a gradual downslope of post-peak production, roughly matching the trajectory of the upslope - - that is to say, a classic bell-shaped curve. Were post-peak production to follow this path, we might expect an annual decline rate of perhaps 2 to 5 percent.

Make no mistake, a decline rate in this range is hardly good news - - it would have grave, even catastrophic consequences for industrial societies. The notion of peak exports, however, moves us from the catastrophic to the apocalyptic. Jeffrey Brown, a Texas petroleum geologist and a frequent contributor to The Oil Drum (under the name westexas), as well as to the GraphOilogy blog, recognized that when one considers the implications of peak oil, one has to be careful to avoid conflating production with exports. To do so is to ignore the impact on exports of rising consumption within exporting countries, themselves. This rise in internal consumption coupled with a decline in production results in the tendency of exporting countries to cannibalize exports to feed internal demand, which leads to a much sharper export decline rate than the standard Hubbert production curve would indicate.

How much sharper? Brown and a colleague (Khebab at TOD and GraphOilogy) created a theoretical model for a hypothetical exporter Export Land. Here's a description of the model available here, at GraphOilogy:

In previous articles posted on The Oil Drum we outlined a simplistic export model for a hypothetical country with Ultimate Recoverable Reserves (URR) of about 38 billion barrels (Gb), labeled the Export Land Model (ELM). The model showed the effect on net exports of a country that hit peak production and started declining at 5% per year. The exporting country consumes 50% of its production, and that consumption is increasing by 2.5% per year. The 5% decline rate is loosely based on the post-peak Texas decline rate of about 4% per year. The ELM is shown graphically below, Figure One.

Figure 1

While this is a simplistic model, it has some important lessons for us.

First, assuming ultimate recoverable reserves of 38 Gb, and assuming that Export Land peaked when it was about 55% depleted, Export Land would have about 17 Gb of remaining recoverable reserves, after peaking. The model shows that only about 1.7 Gb, or 10%, of remaining post-peak recoverable reserves would be exported.

Second, the overall exponential net export decline rate, about 29% per year over the eight year net export decline period, is much more rapid than the production decline rate of 5% per year, because net exports in a given year are the net difference between two exponential functions: exponentially declining production and (generally) exponentially increasing consumption.

Third, the net export decline rate in a given year accelerates with time, from an initial year over year change in net exports of -12.5% to a final year over year change in net exports of -47.6% (last year of net exports) [emphasis added].

Brown then compares his model to the real-world cases of the UK and Indonesia, and he discovers that, in both cases, these countries' post-peak export decline rates exceeded the 28.8 percent rate posited for his hypothetical Export Land based on his model (they were 55.7 and 28.9 percent, respectively). He acknowledges that the decline rate for world exports is unlikely to be as high as even that of the model; however, Brown expects the export decline rate to be considerably higher than that of the production decline, and he expects this rate to accelerate over time.

It's not just Brown who is concerned with this issue; discussion of peak exports is suddenly everywhere. For example, it was a major topic of conversation at the recent ASPO USA conference in Houston, as noted by Tom Whipple in his article reviewing the meeting:

The most ominous development for countries such as the U.S., which must import most of its oil, is the emerging concept of “peak exports” which was discussed by several speakers. Peak exports simply means that oil-producing countries are using more and more oil at home – leaving less to sell abroad. Moreover, sentiment is starting to develop in many nations that they must save some oil for future generations, not just sell it to the foreign devils as quickly as possible.
This clearly means that major oil importers will face a shortfall in their ability to obtain oil many months or years sooner than they had been anticipating. The fall in the amount of oil available for purchase is likely to drop much more quickly than declines in production. When world oil exports fall, if they have not started doing so already, effects are likely to sharp and painful.

And here's a quote from an interview [scroll down for the interview transcript, which is in English] that David Strahan conducted at the ASPO-USA conference with Robert Hirsch (he of the now-famous Hirsch Report on peak oil, "Peaking of World Oil Production: Impacts, Mitigation and Risk Management," [.pdf] prepared for the Department of Energy in 2005):

One of the things that it seems to me is that peak oil to many people is not yet real. When it becomes real, I think that a number of oil exporters will stop and think about what they are doing with their resource for the longer term. When peak oil is realised, oil price will increase dramatically so there [sic] will have another major windfall, financial windfall. Some of those folks, I think, are very likely to say that they will cut back on their exports in order to husband the resource for a longer period of time for their own country. In fact Mr. Putin in Russia already has said as much.

Other people in the Middle East have made noises that they may do something like that also. It becomes a matter of an individual country deciding what is best for itself versus what is best for the world and individual countries really ought to look out for their own well being which could mean that indeed a number of them decide to hold back on exports for their own purposes and that would mean that peaking would occur earlier than might otherwise be the case, and be much more abrupt. So the decline rates in a situation like that would be I think much larger than one would calculate if one thinks only about the geology.

The significance of this is breathtaking. Quite simply, it suggests that, if market forces are allowed to work unhindered, oil importers (of which the US is, of course, the world's largest), could face the prospect of their fossil energy supply literally going off a cliff following the worldwide production peak. Without doubt, the result for these societies would be rapid, total collapse.

In this light, I believe that I finally understand the logic behind the destruction of Iraq. Given the reality of peak exports, even neocolonial business-as-usual becomes a woefully insufficient outcome. What is needed is the near-total destruction of internal demand for fossil fuels within exporting countries, such that, eventually (even if pacification takes years), we can take all of it for our use. If this is the goal, the best way to accomplish it would be to thoroughly destroy the exporting country's modern infrastructure and to kill or drive off as large a share of the population as possible. Sadly, this appears to be just what is occurring in Iraq.

It's interesting to note that Iran claims that it wants to build up a nuclear power infrastructure so that it can meet internal energy demand in a manner that will have as minimal an impact as possible on fossil fuel exports. [See, "Why Iran might need nuclear power after all"] Whatever one thinks of nuclear power as an energy source, the fact is that, from Iran's perspective, a search for non-fossil energy sources for internal needs makes eminent economic sense. The US, however, appears to have a different, and far more sinister plan for how to deal with the increase in Iranian domestic energy consumption.

If all of this is correct, then it is not hyperbole to suggest that the recent actions of the US in the Middle East constitute crimes against humanity of the highest order.