Wednesday, September 28, 2005

For Immediate Release
Office of the Press Secretary

May 7, 2001

Press Briefing by Ari Fleischer
The James S. Brady Briefing Room

1:13 P.M. EDT

MR. FLEISCHER: Good afternoon. I have nothing to announce, so I'm pleased to take your questions.

Q Ari, why is a temporary or permanent cut in the federal gasoline tax not a possible option for the problem with spiraling prices?

MR. FLEISCHER: The President is very concerned about the rise in gasoline prices. He's very concerned about the impact that it's having on Americans, particularly, lower income Americans, who need their vehicles to drive to get to work and to enjoy their family lives. And that's one of the reasons the President is pushing so strongly for a comprehensive energy policy, and also for a tax cut, so he can get money into the hands of people who are being hit by rising gas prices.

During the campaign last year there was much made about the possibility of repealing the federal gas tax, or limiting the federal gas tax. The President did not join in that call. I would alert you just to wait until the final recommendations come out of the task force.

As I indicated this morning, the President has not joined that chorus before -- I do not rule it out, but I have said very clearly that's not something the President is focused on. His focus is on long-term solutions, not quick fixes. Quick fixes don't work. He wants to have a focus on that which is long-term, that will work.

Q Well, wouldn't this quick fix certainly work in shaving a little bit off the price? What's the detriment of doing it?

MR. FLEISCHER: Again, the focus of the President is to move forward on a long-term solution to a problem that's been very long in the making. And one of the things that's wrong with Washington, in the President's opinion, is people too often move from one quick fix, one short-term, non-solution to the next short-term non-solution, without focusing people's attention on the big matters that really count.

And in the case of energy, that's a focus on how to conserve energy, conserve fuel, develop more resources, have better infrastructures so that electricity can move across transmission grids and natural gas can move across pipelines in a manner that gets the market to the market, in a manner that lowers costs on a full-time basis for the consumer.

Q Is one of the problems with this, and the entire energy field, American lifestyles? Does the President believe that, given the amount of energy Americans consume per capita, how much it exceeds any other citizen in any other country in the world, does the President believe we need to correct our lifestyles to address the energy problem?

MR. FLEISCHER: That's a big no. The President believes that it's an American way of life, and that it should be the goal of policy makers to protect the American way of life. The American way of life is a blessed one. And we have a bounty of resources in this country. What we need to do is make certain that we're able to get those resources in an efficient way, in a way that also emphasizes protecting the environment and conservation, into the hands of consumers so they can make the choices that they want to make as they live their lives day to day.

Q So Americans should go on consuming as much more energy than any other citizens in any other countries of the world, as long as they want?

MR. FLEISCHER: Terry, the President believes that the American people are very wise and that, given the right incentives, they will know how and they will make their own right determinations about how much they can conserve, just as the President announced last week that the federal government, as part of its consumership in California will reduce energy needs -- for example, the Department of Defense facilities in California, by 10 percent. He believes the American people, too, will make the right decisions about conservation and the program he will announce shortly will also include a series of conservation items.

But the President also believes that the American people's use of energy is a reflection of the strength of our economy, of the way of life that the American people have come to enjoy. And he wants to make certain that a national energy policy is comprehensive, that includes conservation, includes a way of allowing the American people to continue to enjoy the way of life that has made the United States such a leading nation in the world.

Q Ari, would he recommend, then, to people, as a President exercising his moral leadership, that they're more conscious of the amount of energy they use, that they scale back, that people conserve more?

MR. FLEISCHER: I think you'll hear a rounded and comprehensive proposal very shortly from the President that includes several items that hint at what you're suggesting.

Q -- use the word "conservation" in selling the energy plan, the reality is that the core of this plan to be unveiled is a call on finding more energy supplies. And everybody has emphasized that. There's a growing chorus now of not just environmental activists, but also scientists within the government who say that, in fact, conservation and renewable energies could do a lot more to cut demand than is being given credit for or even being given a try. Do you dismiss the recent DOE study that came to that conclusion?

MR. FLEISCHER: No, we do not dismiss it. But you can't prejudge what the President is going to propose because you don't know what he is going to propose in terms of conservation.

Q Well, I think we all know some of the really core outlines of it.

MR. FLEISCHER: There's also a reflection of the fact that 88 percent of America's energy comes from fossil fuels. The remaining 12 percent come from renewables, biomass, wind, solar. It's a very small percentage. And among that 12 percent -- you also have nuclear in that mix. And so the amount of energy that can come from -- let me put it to you this way.

The place that the American people get most of their energy that we are dependent on to preserve the American way of life does come from fossil fuels. And within the remaining portion of the energy that the American people use, the President is committed to a conservation program to help Americans to conserve more. And that's reflected in the President's priorities, the weatherization program in his budget, for example, to help people have more energy-efficient homes. And it will also be reflected in some other things you're going to learn in the next week or two when the President unveils his policy.

Conservation is, indeed, an important part of getting America energy-independent. Conservation alone is not the answer. Nothing alone is the answer, and that's why the President's proposal will be a very well-rounded one.
Running Out of Oil?

Wednesday, August 24 2005 3:39pm EDT
by Peter Maass - NYTimes Magazine
NYTimes Magazine

Published August 21, 2005

The Breaking Point


The largest oil terminal in the world, Ras Tanura, is located on the eastern coast of Saudi Arabia, along the Persian Gulf. From Ras Tanura's control tower, you can see the classic totems of oil's dominion -- supertankers coming and going, row upon row of storage tanks and miles and miles of pipes. Ras Tanura, which I visited in June, is the funnel through which nearly 10 percent of the world's daily supply of petroleum flows. Standing in the control tower, you are surrounded by more than 50 million barrels of oil, yet not a drop can be seen.

The oil is there, of course. In a technological sleight of hand, oil can be extracted from the deserts of Arabia, processed to get rid of water and gas, sent through pipelines to a terminal on the gulf, loaded onto a supertanker and shipped to a port thousands of miles away, then run through a refinery and poured into a tanker truck that delivers it to a suburban gas station, where it is pumped into an S.U.V. -- all without anyone's actually glimpsing the stuff. So long as there is enough oil to fuel the global economy, it is not only out of sight but also out of mind, at least for consumers.

I visited Ras Tanura because oil is no longer out of mind, thanks to record prices caused by refinery shortages and surging demand -- most notably in the United States and China -- which has strained the capacity of oil producers and especially Saudi Arabia, the largest exporter of all. Unlike the 1973 crisis, when the embargo by the Arab members of the Organization of Petroleum Exporting Countries created an artificial shortfall, today's shortage, or near-shortage, is real. If demand surges even more, or if a producer goes offline because of unrest or terrorism, there may suddenly not be enough oil to go around.

As Aref al-Ali, my escort from Saudi Aramco, the giant state-owned oil company, pointed out, ''One mistake at Ras Tanura today, and the price of oil will go up.'' This has turned the port into a fortress; its entrances have an array of gates and bomb barriers to prevent terrorists from cutting off the black oxygen that the modern world depends on. Yet the problem is far greater than the brief havoc that could be wrought by a speeding zealot with 50 pounds of TNT in the trunk of his car. Concerns are being voiced by some oil experts that Saudi Arabia and other producers may, in the near future, be unable to meet rising world demand. The producers are not running out of oil, not yet, but their decades-old reservoirs are not as full and geologically spry as they used to be, and they may be incapable of producing, on a daily basis, the increasing volumes of oil that the world requires. ''One thing is clear,'' warns Chevron, the second-largest American oil company, in a series of new advertisements, ''the era of easy oil is over.''

In the past several years, the gap between demand and supply, once considerable, has steadily narrowed, and today is almost negligible. The consequences of an actual shortfall of supply would be immense. If consumption begins to exceed production by even a small amount, the price of a barrel of oil could soar to triple-digit levels. This, in turn, could bring on a global recession, a result of exorbitant prices for transport fuels and for products that rely on petrochemicals -- which is to say, almost every product on the market. The impact on the American way of life would be profound: cars cannot be propelled by roof-borne windmills. The suburban and exurban lifestyles, hinged to two-car families and constant trips to work, school and Wal-Mart, might become unaffordable or, if gas rationing is imposed, impossible. Carpools would be the least imposing of many inconveniences; the cost of home heating would soar -- assuming, of course, that climate-controlled habitats do not become just a fond memory.

But will such a situation really come to pass? That depends on Saudi Arabia. To know the answer, you need to know whether the Saudis, who possess 22 percent of the world's oil reserves, can increase their country's output beyond its current limit of 10.5 million barrels a day, and even beyond the 12.5-million-barrel target it has set for 2009. (World consumption is about 84 million barrels a day.) Saudi Arabia is the sole oil superpower. No other producer possesses reserves close to its 263 billion barrels, which is almost twice as much as the runner-up, Iran, with 133 billion barrels. New fields in other countries are discovered now and then, but they tend to offer only small increments. For example, the much-contested and as-yet-unexploited reserves in the Alaska National Wildlife Refuge are believed to amount to about 10 billion barrels, or just a fraction of what the Saudis possess.

But the truth about Saudi oil is hard to figure out. Oil reservoirs cannot be inventoried like wood in a wilderness: the oil is underground, unseen by geologists and engineers, who can, at best, make highly educated guesses about how much is underfoot and how much can be extracted in the future. And there is a further obstacle: the Saudis will not let outsiders audit their confidential data on reserves and production. Oil is an industry in which not only is the product hidden from sight but so is reliable information about it. And because we do not know when a supply-demand shortfall might arrive, we do not know when to begin preparing for it, so as to soften its impact; the economic blow may come as a sledgehammer from the darkness.

Of course the Saudis do have something to say about this prospect. Before journeying to the kingdom, I went to Washington to hear the Saudi oil minister, Ali al-Naimi, speak at an energy conference in the mammoth Ronald Reagan Building and International Trade Center, not far from the White House. Naimi was the star attraction at a gathering of the American petro-political nexus. Samuel Bodman, the U.S. energy secretary, was on the dais next to him. David O'Reilly, chairman and C.E.O. of Chevron, was waiting in the wings. The moderator was an éminence grise of the oil world, James Schlesinger, a former energy secretary, defense secretary and C.I.A. director.

''I want to assure you here today that Saudi Arabia's reserves are plentiful, and we stand ready to increase output as the market dictates,'' said Naimi, dressed in a gray business suit and speaking with only a slight Arabic accent. He addressed skeptics who contend that Saudi reservoirs cannot be tapped for larger amounts of oil. ''I am quite bullish on technology as the key to our energy future,'' he said. ''Technological innovation will allow us to find and extract more oil around the world.'' He described the task of increasing output as just ''a question of investment'' in new wells and pipelines, and he noted that consuming nations urgently need to build new refineries to process increased supplies of crude. ''There is absolutely no lack of resources worldwide,'' he repeated.

His assurances did not assure. A barrel of oil cost $55 at the time of his speech; less than three months later, the price had jumped by 20 percent. The truth of the matter -- whether the world will really have enough petroleum in the years ahead -- was as well concealed as the millions of barrels of oil I couldn't see at Ras Tanura.

For 31 years, Matthew Simmons has prospered as the head of his own firm, Simmons & Company International, which advises energy companies on mergers and acquisitions. A member of the Council on Foreign Relations, a graduate of the Harvard Business School and an unpaid adviser on energy policy to the 2000 presidential campaign of George W. Bush, he would be a card-carrying member of the global oil nomenclatura, if cards were issued for such things. Yet he is one of the principal reasons the oil world is beginning to ask hard questions of itself.

Two years ago, Simmons went to Saudi Arabia on a government tour for business executives. The group was presented with the usual dog-and-pony show, but instead of being impressed, as most visitors tend to be, with the size and expertise of the Saudi oil industry, Simmons became perplexed. As he recalls in his somewhat heretical new book, ''Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy,'' a senior manager at Aramco told the visitors that ''fuzzy logic'' would be used to estimate the amount of oil that could be recovered. Simmons had never heard of fuzzy logic. What could be fuzzy about an oil reservoir? He suspected that Aramco, despite its promises of endless supplies, might in fact not know how much oil remained to be recovered.

Simmons returned home with an itch to scratch. Saudi Arabia was one of the charter members of OPEC, founded in 1960 in Baghdad to coordinate the policies of oil producers. Like every OPEC country, Saudi Arabia provides only general numbers about its output and reserves; it does not release details about how much oil is extracted from each reservoir and what methods are used to extract that oil, and it does not permit audits by outsiders. The condition of Saudi fields, and those of other OPEC nations, is a closely guarded secret. That's largely because OPEC quotas, which were first imposed in 1983 to limit the output of member countries, were based on overall reserves; the higher an OPEC member's reserves, the higher its quota. It is widely believed that most, if not all, OPEC members exaggerated the sizes of their reserves in order to have the largest possible quota -- and thus the largest possible revenue stream.

In the days of excess supply, bankers like Simmons did not know, or care, about the fudging; whether or not reserves were hyped, there was plenty of oil coming out of the ground. Through the 1970's, 80's and 90's, the capacity of OPEC and non-OPEC countries exceeded demand, and that's why OPEC imposed a quota system -- to keep some product off the market (although many OPEC members, seeking as much revenue as possible, quietly sold more oil than they were supposed to). Until quite recently, the only reason to fear a shortage was if a boycott, war or strike were to halt supplies. Few people imagined a time when supply would dry up because of demand alone. But a steady surge in demand in recent years -- led by China's emergence as a voracious importer of oil -- has changed that.

This demand-driven scarcity has prompted the emergence of a cottage industry of experts who predict an impending crisis that will dwarf anything seen before. Their point is not that we are running out of oil, per se; although as much as half of the world's recoverable reserves are estimated to have been consumed, about a trillion barrels remain underground. Rather, they are concerned with what is called ''capacity'' -- the amount of oil that can be pumped to the surface on a daily basis. These experts -- still a minority in the oil world -- contend that because of the peculiarities of geology and the limits of modern technology, it will soon be impossible for the world's reservoirs to surrender enough oil to meet daily demand.
One of the starkest warnings came in a February report commissioned by the United States Department of Energy's National Energy Technology Laboratory. ''Because oil prices have been relatively high for the past decade, oil companies have conducted extensive exploration over that period, but their results have been disappointing,'' stated the report, assembled by Science Applications International, a research company that works on security and energy issues. ''If recent trends hold, there is little reason to expect that exploration success will dramatically improve in the future. . . . The image is one of a world moving from a long period in which reserves additions were much greater than consumption to an era in which annual additions are falling increasingly short of annual consumption. This is but one of a number of trends that suggest the world is fast approaching the inevitable peaking of conventional world oil production.''

The reference to ''peaking'' is not a haphazard word choice -- ''peaking'' is a term used in oil geology to define the critical point at which reservoirs can no longer produce increasing amounts of oil. (This tends to happen when reservoirs are about half-empty.) ''Peak oil'' is the point at which maximum production is reached; afterward, no matter how many wells are drilled in a country, production begins to decline. Saudi Arabia and other OPEC members may have enough oil to last for generations, but that is no longer the issue. The eventual and painful shift to different sources of energy -- the start of the post-oil age -- does not begin when the last drop of oil is sucked from under the Arabian desert. It begins when producers are unable to continue increasing their output to meet rising demand. Crunch time comes long before the last drop.
''The world has never faced a problem like this,'' the report for the Energy Department concluded. ''Without massive mitigation more than a decade before the fact, the problem will be pervasive and will not be temporary. Previous energy transitions (wood to coal and coal to oil) were gradual and evolutionary; oil peaking will be abrupt and revolutionary.''

Most experts do not share Simmons's concerns about the imminence of peak oil. One of the industry's most prominent consultants, Daniel Yergin, author of a Pulitzer Prize-winning book about petroleum, dismisses the doomsday visions. ''This is not the first time that the world has 'run out of oil,''' he wrote in a recent Washington Post opinion essay. ''It's more like the fifth. Cycles of shortage and surplus characterize the entire history of the oil industry.'' Yergin says that a number of oil projects that are under construction will increase the supply by 20 percent in five years and that technological advances will increase the amount of oil that can be recovered from existing reservoirs. (Typically, with today's technology, only about 40 percent of a reservoir's oil can be pumped to the surface.)

Yergin's bullish view has something in common with the views of the pessimists -- it rests on unknowns. Will the new projects that are under way yield as much oil as their financial backers hope? Will new technologies increase recovery rates as much as he expects? These questions are next to impossible to answer because coaxing oil out of the ground is an extraordinarily complex undertaking. The popular notion of reservoirs as underground lakes, from which wells extract oil like straws sucking a milkshake from a glass, is incorrect. Oil exists in drops between and inside porous rocks. A new reservoir may contain sufficient pressure to make these drops of oil flow to the surface in a gusher, but after a while -- usually within a few years and often sooner than that -- natural pressure lets up and is no longer sufficient to push oil to the surface. At that point, ''secondary'' recovery efforts are begun, like pumping water or gas into the reservoirs to increase the pressure.

This process is unpredictable; reservoirs are extremely temperamental. If too much oil is extracted too quickly or if the wrong types or amounts of secondary efforts are employed, the amount of oil that can be recovered from a field can be greatly reduced; this is known in the oil world as ''damaging a reservoir.'' A widely cited example is Oman: in 2001, its daily production reached more than 960,000 barrels, but then suddenly declined, despite the use of advanced technologies. Today, Oman produces 785,000 barrels of oil a day. Herman Franssen, a consultant who worked in Oman for a decade, sees that country's experience as a possible lesson in the limits of technology for other producers that try to increase or maintain high levels of output. ''They reached a million barrels a day, and then a few years later production collapsed,'' Franssen said in a phone interview. ''They used all these new technologies, but they haven't been able to stop the decline yet.''

The vague production and reserve data that gets published does not begin to tell the whole story of an oil field's health, production potential or even its size. For a clear-as-possible picture of a country's oil situation, you need to know what is happening in each field -- how many wells it has, how much oil each well is producing, what recovery methods are being used and how long they've been used and the trend line since the field went into production. Data of that sort are typically not released by state-owned companies like Saudi Aramco.

As Matthew Simmons searched for clues to the truth of the Saudi situation, he immersed himself in the minutiae of oil geology. He realized that data about Saudi fields might be found in the files of the Society of Petroleum Engineers. Oil engineers, like most professional groups, have regular conferences at which they discuss papers that delve into the work they do. The papers, which focus on particular wells that highlight a problem or a solution to a problem, are presented and debated at the conferences and published by the S.P.E. -- and then forgotten.

Before Simmons poked around, no one had taken the time to pull together the S.P.E. papers that involved Saudi oil fields and review them en masse. Simmons found more than 200 such papers and studied them carefully. Although the papers cover only a portion of the kingdom's wells and date back, in some cases, several decades, they constitute perhaps the best public data about the condition and prospects of Saudi reservoirs.
Ghawar is the treasure of the Saudi treasure chest. It is the largest oil field in the world and has produced, in the past 50 years, about 55 billion barrels of oil, which amounts to more than half of Saudi production in that period. The field currently produces more than five million barrels a day, which is about half of the kingdom's output. If Ghawar is facing problems, then so is Saudi Arabia and, indeed, the entire world.

Simmons found that the Saudis are using increasingly large amounts of water to force oil out of Ghawar. Most of the wells are concentrated in the northern portion of the 174-mile-long field. That might seem like good news -- when the north runs low, the Saudis need only to drill wells in the south. But in fact it is bad news, Simmons concluded, because the southern portions of Ghawar are geologically more difficult to draw oil from. ''Someday (and perhaps that day will be soon), the remarkably high well flow rates at Ghawar's northern end will fade, as reservoir pressures finally plummet,'' Simmons writes in his book. ''Then, Saudi Arabian oil output will clearly have peaked. The death of this great king'' -- meaning Ghawar -- ''leaves no field of vaguely comparable stature in the line of succession. Twilight at Ghawar is fast approaching.'' He goes on: ''The geological phenomena and natural driving forces that created the Saudi oil miracle are conspiring now in normal and predictable ways to bring it to its conclusion, in a time frame potentially far shorter than officialdom would have us believe.'' Simmons concludes, ''Saudi Arabia clearly seems to be nearing or at its peak output and cannot materially grow its oil production.''

Saudi officials belittle Simmons's work. Nansen Saleri, a senior Aramco official, has described Simmons as a banker ''trying to come across as a scientist.'' In a speech last year, Saleri wryly said, ''I can read 200 papers on neurology, but you wouldn't want me to operate on your relatives.'' I caught up with Simmons in June, during a trip he made to Manhattan to talk with a group of oil-shipping executives. The impression he gives is of an enthusiastic inventor sharing a discovery that took him by surprise. He has a certain wide-eyed wonder in his regard, as if a bit of mystery can be found in everything that catches his eye. And he has a rumpled aspect -- thinning hair slightly askew, shirt sleeves a fraction too long. Though he delivers a bracing message, his discourse can wander. He is a successful businessman, and it is clear that he did not achieve his position by being a man of impeccable convention. He certainly has not lost sight of the rule that people who shout ''the end is nigh'' do not tend to be favorably reviewed by historians, let alone by their peers. He notes in his book that way back in 1979, The New York Times published an investigative story by Seymour Hersh under the headline ''Saudi Oil Capacity Questioned.'' He knows that in past decades the Cassandras failed to foresee new technologies, like deep-water and horizontal drilling, that provided new sources of oil and raised the amount of oil that can be recovered from reservoirs.

But Simmons says that there are only so many rabbits technology can pull out of its petro-hat. He impishly notes that if the Saudis really wanted to, they could easily prove him wrong. ''If they want to satisfy people, they should issue field-by-field production reports and reserve data and have it audited,'' he told me. ''It would then take anybody less than a week to say, 'Gosh, Matt is totally wrong,' or 'Matt actually might be too optimistic.'''

Simmons has a lot riding on his campaign -- not only his name but also his business, which would not be rewarded if he is proved to be a fool. What, I asked, if the data show that the Saudis will be able to sustain production of not only 12.5 million barrels a day -- their target for 2009 -- but 15 million barrels, which global demand is expected to require of them in the not-too-distant future? ''The odds of them sustaining 12 million barrels a day is very low,'' Simmons replied. ''The odds of them getting to 15 million for 50 years -- there's a better chance of me having Bill Gates's net worth, and I wouldn't bet a dime on that forecast.''

The gathering of executives took place in a restaurant at Chelsea Piers; about 35 men sat around a set of tables as the host introduced Simmons. He rambled a bit but hit his talking points, and the executives listened raptly; at one point, the man on my right broke into a soft whistle, of the sort that means ''Holy cow.''
Simmons didn't let up. ''We're going to look back at history and say $55 a barrel was cheap,'' he said, recalling a TV interview in which he predicted that a barrel might hit triple digits.
He said that the anchor scoffed, in disbelief, ''A hundred dollars?''

Simmons replied, ''I wasn't talking about low triple digits.''

The onset of triple-digit prices might seem a blessing for the Saudis -- they would receive greater amounts of money for their increasingly scarce oil. But one popular misunderstanding about the Saudis -- and about OPEC in general -- is that high prices, no matter how high, are to their benefit.

Although oil costing more than $60 a barrel hasn't caused a global recession, that could still happen: it can take a while for high prices to have their ruinous impact. And the higher above $60 that prices rise, the more likely a recession will become. High oil prices are inflationary; they raise the cost of virtually everything -- from gasoline to jet fuel to plastics and fertilizers -- and that means people buy less and travel less, which means a drop-off in economic activity. So after a brief windfall for producers, oil prices would slide as recession sets in and once-voracious economies slow down, using less oil. Prices have collapsed before, and not so long ago: in 1998, oil fell to $10 a barrel after an untimely increase in OPEC production and a reduction in demand from Asia, which was suffering through a financial crash. Saudi Arabia and the other members of OPEC entered crisis mode back then; adjusted for inflation, oil was at its lowest price since the cartel's creation, threatening to feed unrest among the ranks of jobless citizens in OPEC states.

''The Saudis are very happy with oil at $55 per barrel, but they're also nervous,'' a Western diplomat in Riyadh told me in May, referring to the price that prevailed then. (Like all the diplomats I spoke to, he insisted on speaking anonymously because of the sensitivities of relations with Saudi Arabia.) ''They don't know where this magic line has moved to. Is it now $65? Is it $75? Is it $80? They don't want to find out, because if you did have oil move that far north . . . the chain reaction can come back to a price collapse again.''
High prices can have another unfortunate effect for producers. When crude costs $10 a barrel or even $30 a barrel, alternative fuels are prohibitively expensive. For example, Canada has vast amounts of tar sands that can be rendered into heavy oil, but the cost of doing so is quite high. Yet those tar sands and other alternatives, like bioethanol, hydrogen fuel cells and liquid fuel from natural gas or coal, become economically viable as the going rate for a barrel rises past, say, $40 or more, especially if consuming governments choose to offer their own incentives or subsidies. So even if high prices don't cause a recession, the Saudis risk losing market share to rivals into whose nonfundamentalist hands Americans would much prefer to channel their energy dollars. A concerted push for greater energy conservation in the United States, which consumes one-quarter of the world's oil (mostly to fuel our cars, as gasoline), would hurt producing nations, too. Basically, any significant reduction in the demand for oil would be ruinous for OPEC members, who have little to offer the world but oil; if a substitute can be found, their future is bleak. Another Western diplomat explained the problem facing the Saudis: ''You want to have the price as high as possible without sending the consuming nations into a recession and at the same time not have the price so high that it encourages alternative technologies.''
From the American standpoint, one argument in favor of conservation and a switch to alternative fuels is that by limiting oil imports, the United States and its Western allies would reduce their dependence on a potentially unstable region. (In fact, in an effort to offset the risks of relying on the Saudis, America's top oil suppliers are Canada and Mexico.) In addition, sending less money to Saudi Arabia would mean less money in the hands of a regime that has spent the past few decades doling out huge amounts of its oil revenue to mosques, madrassas and other institutions that have fanned the fires of Islamic radicalism. The oil money has been dispensed not just by the Saudi royal family but by private individuals who benefited from the oil boom -- like Osama bin Laden, whose ample funds, probably eroded now, came from his father, a construction magnate. Without its oil windfall, Saudi Arabia would have had a hard time financing radical Islamists across the globe.

For the Saudis, the political ramifications of reduced demand for its oil would not be negligible. The royal family has amassed vast personal wealth from the country's oil revenues. If, suddenly, Saudis became aware that the royal family had also failed to protect the value of the country's treasured resource, the response could be severe. The mere admission that Saudi reserves are not as impressively inexhaustible as the royal family has claimed could lead to hard questions about why the country, and the world, had been misled. With the death earlier this month of the long-ailing King Fahd, the royal family is undergoing another period of scrutiny; the new king, Abdullah, is in his 80's, and the crown prince, his half-brother Sultan, is in his 70's, so the issue of generational change remains to be settled. As long as the country is swimming in petro-dollars -- even as it is paying off debt accrued during its lean years -- everyone is relatively happy, but that can change. One diplomat I spoke to recalled a comment from Sheik Ahmed Zaki Yamani, the larger-than-life Saudi oil minister during the 1970's: ''The Stone Age didn't end for lack of stone, and the oil age will end long before the world runs out of oil.''

Until now, the Saudis had an excess of production capacity that allowed them, when necessary, to flood the market to drive prices down. They did that in 1990, when the Iraqi invasion of Kuwait eliminated not only Kuwait's supply of oil but also Iraq's. The Saudis functioned, as they always had, as the central bank of oil, releasing supply to the market when it was needed and withdrawing supply to keep prices from going lower than the cartel would have liked. In other words, they controlled not only the price of oil but their own destiny as well.

''That is what the world has called on them to do before -- turn on the taps to produce more and get prices down,'' a senior Western diplomat in Riyadh told me recently. ''Decreasing prices used to keep out alternative fuels. I don't see how they're able to do that anymore. This is a huge change, and it is a big step in the move to whatever is coming next. That's what's really happening.''

Without the ability to flood the markets with oil, the Saudis are resorting to flooding the market with promises; it is a sort of petro-jawboning. That's why Ali al-Naimi, the oil minister, told his Washington audience that Saudi Arabia has embarked on a crash program to raise its capacity to 12.5 million barrels a day by 2009 and even higher in the years after that. Naimi is not unlike a factory manager who needs to promise the moon to his valuable clients, for fear of losing or alarming them. He has no choice. The moment he says anything bracing, the touchy energy markets will probably panic, pushing prices even higher and thereby hastening the onset of recession, a switch to alternative fuels or new conservation efforts -- or all three. Just a few words of honest caution could move the markets; Naimi's speeches are followed nearly as closely in the financial world as those of Alan Greenspan.

I journeyed to Saudi Arabia to interview Naimi and other senior officials, to get as far beyond their prepared remarks as might be possible. Although I was allowed to see Ras Tanura, my interview requests were denied. I was invited to visit Aramco's oil museum in Dhahran, but that is something a Saudi schoolchild can do on a field trip. It was a ''show but don't tell'' policy. I was able to speak about production issues only with Ibrahim al-Muhanna, the oil ministry spokesman, who reluctantly met me over coffee in the lobby of my hotel in Riyadh. He defended Saudi Arabia's refusal to share more data, noting that the Saudis are no different from most oil producers.
''They will not tell you,'' he said. ''Nobody will. And that is not going to change.'' Referring to the fact that Saudi Arabia is often called the central bank of oil, he added: ''If an outsider goes to the Fed and asks, 'How much money do you have?' they will tell you. If you say, 'Can I come and count it?' they will not let you. This applies to oil companies and oil countries.'' I mentioned to Muhanna that many people think his government's ''trust us'' stance is not convincing in light of the cheating that has gone on within OPEC and in the industry as a whole; even Royal Dutch/Shell, a publicly listed oil company that undergoes regular audits, has admitted that it overstated its 2002 reserves by 23 percent.

''There is no reason for any country or company to lie,'' Muhanna replied. ''There is a lot of oil around.'' I didn't need to ask about Simmons and his peak-oil theory; when I met Muhanna at the conference in Washington, he nearly broke off our conversation at the mention of Simmons's name. ''He does not know anything,'' Muhanna said. ''The only thing he has is a big mouth. We should not pay attention to him. Either you believe us or you don't.''

So whom to believe? Before leaving New York for Saudi Arabia, I was advised by several oil experts to try to interview Sadad al-Husseini, who retired last year after serving as Aramco's top executive for exploration and production. I faxed him in Dhahran and received a surprisingly quick reply; he agreed to meet me. A week later, after I arrived in Riyadh, Husseini e-mailed me, asking when I would come to Dhahran; in a follow-up phone call, he offered to pick me up at the airport. He was, it seemed, eager to talk.

It can be argued that in a nation devoted to oil, Husseini knows more about it than anyone else. Born in Syria, Husseini was raised in Saudi Arabia, where his father was a government official whose family took on Saudi citizenship. Husseini earned a Ph.D. in geological sciences from Brown University in 1973 and went to work in Aramco's exploration department, eventually rising to the highest position. Until his retirement last year -- said to have been caused by a top-level dispute, the nature of which is the source of many rumors -- Husseini was a member of the company's board and its management committee. He is one of the most respected and accomplished oilmen in the world.

After meeting me at the cavernous airport that serves Dhahran, he drove me in his luxury sedan to the villa that houses his private office. As we entered, he pointed to an armoire that displayed a dozen or so vials of black liquid. ''These are samples from oil fields I discovered,'' he explained. Upstairs, there were even more vials, and he would have possessed more than that except, as he said, laughing, ''I didn't start collecting early enough.''

We spoke for several hours. The message he delivered was clear: the world is heading for an oil shortage. His warning is quite different from the calming speeches that Naimi and other Saudis, along with senior American officials, deliver on an almost daily basis. Husseini explained that the need to produce more oil is coming from two directions. Most obviously, demand is rising; in recent years, global demand has increased by two million barrels a day. (Current daily consumption, remember, is about 84 million barrels a day.) Less obviously, oil producers deplete their reserves every time they pump out a barrel of oil. This means that merely to maintain their reserve base, they have to replace the oil they extract from declining fields. It's the geological equivalent of running to stay in place. Husseini acknowledged that new fields are coming online, like offshore West Africa and the Caspian basin, but he said that their output isn't big enough to offset this growing need.

''You look at the globe and ask, 'Where are the big increments?' and there's hardly anything but Saudi Arabia,'' he said. ''The kingdom and Ghawar field are not the problem. That misses the whole point. The problem is that you go from 79 million barrels a day in 2002 to 82.5 in 2003 to 84.5 in 2004. You're leaping by two million to three million a year, and if you have to cover declines, that's another four to five million.'' In other words, if demand and depletion patterns continue, every year the world will need to open enough fields or wells to pump an additional six to eight million barrels a day -- at least two million new barrels a day to meet the rising demand and at least four million to compensate for the declining production of existing fields. ''That's like a whole new Saudi Arabia every couple of years,'' Husseini said. ''It can't be done indefinitely. It's not sustainable.''
Husseini speaks patiently, like a teacher who hopes someone is listening. He is in the enviable position of knowing what he talks about while having the freedom to speak openly about it. He did not disclose precise information about Saudi reserves or production -- which remain the equivalent of state secrets -- but he felt free to speak in generalities that were forthright, even when they conflicted with the reassuring statements of current Aramco officials. When I asked why he was willing to be so frank, he said it was because he sees a shortage ahead and wants to do what he can to avert it. I assumed that he would not be particularly distressed if his rivals in the Saudi oil establishment were embarrassed by his frankness.

Although Matthew Simmons says it is unlikely that the Saudis will be able to produce 12.5 million barrels a day or sustain output at that level for a significant period of time, Husseini says the target is realistic; he says that Simmons is wrong to state that Saudi Arabia has reached its peak. But 12.5 million is just an interim marker, as far as consuming nations are concerned, on the way to 15 million barrels a day and beyond -- and that is the point at which Husseini says problems will arise.

At the conference in Washington in May, James Schlesinger, the moderator, conducted a question-and-answer session with Naimi at the conclusion of the minister's speech. One of the first questions involved peak oil: might it be true that Saudi Arabia, which has relied on the same reservoirs, and especially Ghawar, for more than five decades, is nearing the geological limit of its output?

Naimi wouldn't hear of it.

''I can assure you that we haven't peaked,'' he responded. ''If we peaked, we would not be going to 12.5 and we would not be visualizing a 15-million-barrel-per-day production capacity. . . . We can maintain 12.5 or 15 million for the next 30 to 50 years.''

Experts like Husseini are very concerned by the prospect of trying to produce 15 million barrels a day. Even if production can be ramped up that high, geology may not be forgiving. Fields that are overproduced can drop off, in terms of output, quite sharply and suddenly, leaving behind large amounts of oil that cannot be coaxed out with existing technology. This is called trapped oil, because the rocks or sediment around it prevent it from escaping to the surface. Unless new technologies are developed, that oil will never be extracted. In other words, the haste to recover oil can lead to less oil being recovered.
''You could go to 15, but that's when the questions of depletion rate, reservoir management and damaging the fields come into play,'' says Nawaf Obaid, a Saudi oil and security analyst who is regarded as being exceptionally well connected to key Saudi leaders. ''There is an understanding across the board within the kingdom, in the highest spheres, that if you're going to 15, you'll hit 15, but there will be considerable risks . . . of a steep decline curve that Aramco will not be able to do anything about.''

Even if the Saudis are willing to risk damaging their fields, or even if the risk is overstated, Husseini points out a practical problem. To produce and sustain 15 million barrels a day, Saudi Arabia will have to drill a lot more wells and build a lot more pipelines and processing facilities. Currently, the global oil industry suffers a deficit of qualified engineers to oversee such projects and the equipment and the raw materials -- for example, rigs and steel -- to build them. These things cannot be wished from thin air or developed quickly enough to meet the demand.

''If we had two dozen Texas A&M's producing a thousand new engineers a year and the industrial infrastructure in the kingdom, with the drilling rigs and power plants, we would have a better chance, but you cannot put that into place overnight,'' Husseini said. ''Capacity is not just a function of reserves. It is a function of reserves plus know-how plus a commercial economic system that is designed to increase the resource exploitation. For example, in the U.S. you have infrastructure -- there must be tens of thousands of miles of pipelines. If we, in Saudi Arabia, evolve to that level of commercial maturity, we could probably produce a heck of a lot more oil. But to get there is a very tedious, slow process.''
He worries that the rising global demand for oil will lead to the petroleum equivalent of running an engine at ever-increasing speeds without stopping to cool it down or change the oil. Husseini does not want to see the fragile and irreplaceable reservoirs of the Middle East become damaged through wanton overproduction.

''If you are ramping up production so fast and jump from high to higher to highest, and you're not having enough time to do what needs to be done, to understand what needs to be done, then you can damage reservoirs,'' he said. ''Systematic development is not just a matter of money. It's a matter of reservoir dynamics, understanding what's there, analyzing and understanding information. That's where people come in, experience comes in. These are not universally available resources.''

The most worrisome part of the crisis ahead revolves around a set of statistics from the Energy Information Administration, which is part of the U.S. Department of Energy. The E.I.A. forecast in 2004 that by 2020 Saudi Arabia would produce 18.2 million barrels of oil a day, and that by 2025 it would produce 22.5 million barrels a day. Those estimates were unusual, though. They were not based on secret information about Saudi capacity, but on the projected needs of energy consumers. The figures simply assumed that Saudi Arabia would be able to produce whatever the United States needed it to produce. Just last month, the E.I.A. suddenly revised those figures downward -- not because of startling new information about world demand or Saudi supply but because the figures had given so much ammunition to critics. Husseini, for example, described the 2004 forecast as unrealistic.
''That's not how you would manage a national, let alone an international, economy,'' he explained. ''That's the part that is scary. You draw some assumptions and then say, 'O.K., based on these assumptions, let's go forward and consume like hell and burn like hell.''' When I asked whether the kingdom could produce 20 million barrels a day -- about twice what it is producing today from fields that may be past their prime -- Husseini paused for a second or two. It wasn't clear if he was taking a moment to figure out the answer or if he needed a moment to decide if he should utter it. He finally replied with a single word: No.
''It's becoming unrealistic,'' he said. ''The expectations are beyond what is achievable. This is a global problem . . . that is not going to be solved by tinkering with the Saudi industry.''

It would be unfair to blame the Saudis alone for failing to warn of whatever shortages or catastrophes might lie ahead.
In the political and corporate realms of the oil world, there are few incentives to be forthright. Executives of major oil companies have been reluctant to raise alarms; the mere mention of scarce supplies could alienate the governments that hand out lucrative exploration contracts and also send a message to investors that oil companies, though wildly profitable at the moment, have a Malthusian long-term future. Fortunately, that attitude seems to be beginning to change. Chevron's ''easy oil is over'' advertising campaign is an indication that even the boosters of an oil-drenched future are not as bullish as they once were.

Politicians remain in the dark. During the 2004 presidential campaign, which occurred as gas prices were rising to record levels, the debate on energy policy was all but nonexistent. The Bush campaign produced an advertisement that concluded: ''Some people have wacky ideas. Like taxing gasoline more so people drive less. That's John Kerry.'' Although many environmentalists would have been delighted if Kerry had proposed that during the campaign, in fact the ad was referring to a 50-cents-a-gallon tax that Kerry supported 11 years ago as part of a package of measures to reduce the deficit. (The gas tax never made it to a vote in the Senate.) Kerry made no mention of taxing gasoline during the campaign; his proposal for doing something about high gas prices was to pressure OPEC to increase supplies.
Husseini, for one, doesn't buy that approach. ''Everybody is looking at the producers to pull the chestnuts out of the fire, as if it's our job to fix everybody's problems,'' he told me. ''It's not our problem to tell a democratically elected government that you have to do something about your runaway consumers. If your government can't do the job, you can't expect other governments to do it for them.'' Back in the 70's, President Carter called for the moral equivalent of war to reduce our dependence on foreign oil; he was not re-elected. Since then, few politicians have spoken of an energy crisis or suggested that major policy changes are necessary to avert one. The energy bill signed earlier this month by President Bush did not even raise fuel-efficiency standards for passenger cars. When a crisis comes -- whether in a year or 2 or 10 -- it will be all the more painful because we will have done little or nothing to prepare for it.

Peter Maass is a contributing writer. He is writing a book about oil.
A Polluter's Feast
Bush has reversed more environmental progress in the past eight months than Reagan did in a full eight years


What can you say about the environmental record of an administration that seeks to test pesticides on poor children and pregnant women? That argues in court that a dam is part of a salmon's natural environment? That places a timber lobbyist in charge of the national forests and an oil lobbyist in charge of government reports on global warming? That cuts clean-air inspections at oil refineries in half, allows Superfund to go bankrupt and permits the mining industry to pump toxic waste directly into a wild Alaskan lake?
Only this: It's about to get even worse.

Since President Bush was sworn in for a second term, he has not only continued his unprecedented assault on the environment -- he's intensified it. In recent months, the administration has opened up millions of acres of pristine land to developers, allowing them to log and mine without leaving behind "viable populations" of wildlife. It allowed the import of methyl bromide, a cancer-causing pesticide that was due to be banned this year under an international accord signed by Ronald Reagan, and it scrapped plans to regulate lead paint in home-renovation projects, placing millions of children at risk for brain damage. And on August 8th, taking advantage of solid Republican majorities in both houses of Congress, Bush signed into law his long-stalled energy bill, a grab bag of industry favors that provides $10 billion in oil, gas and coal subsidies while exempting Halliburton and other polluters from environmental laws. The measure approves oil exploration in marine sanctuaries, greenlights drilling on millions of acres of public land in the Rocky Mountains and Alaska, fast-tracks sixteen new coal-fired power plants and provides cradle-to-grave subsidies for new nuclear reactors. In a grotesque fit of petro-nuclear synergy, the bill even funds research into refining oil -- using atomic radiation.

The administration's aim is to roll back four decades of environmental progress -- to an era before the Endangered Species Act of 1973, the Clean Water Act of 1972, the Clean Air Act of 1970 and the National Environmental Policy Act of 1969. "These laws were all started under President Nixon," notes Sen. Lincoln Chafee, a Republican from Rhode Island. "The environment has always been something that Republicans have been proud of -- but this administration sees it differently." Others put it even more bluntly. "In the eyes of this administration," says Marty Hayden, legislative director of Earthjustice, the legal arm of the Sierra Club, "Ronald Reagan was an environmental extremist."

Indeed, Bush has undone more environmental progress in the last eight months than Reagan dreamed of in his full eight years in office. "Their goal is to take us back to where we were in the Eisenhower administration," says Buck Parker, Earthjustice's executive director. "Back to a time when the energy industry had free rein, citizens had no input and there were no environmental laws to be enforced."

A review of the damage already done in the second term reveals that the Bush administration has gutted environmental protections across the country, from Alaskan rain forests to the Gulf of Mexico:

Fouling The Air Nowhere is the administration's contempt for the environment more evident than in its about-face on mercury, a potent neurotoxin that causes brain damage in as many as 600,000 children a year. The Clinton administration, declaring the pollution a "threat to public health," ordered coal plants to slash their mercury emissions by ninety percent by 2008. But in March, the EPA implemented a new rule -- entire sections of which were drafted by industry lobbyists -- that allows three times the emission of the Clinton rule and delays implementation of the cleanup until 2030. "I don't think what the EPA is doing is pro-business," says Attorney General Peter Harvey of New Jersey, one of thirteen states suing to overturn the rule. "I think it's anti-humanity."

Drilling The West The administration is approving so many new permits for oil and gas drilling -- more than 6,000 last year alone -- that it can hardly keep pace with the paperwork. In February, the Bureau of Land Management brought aboard five "volunteer" consultants -- whose salaries are paid in full by industry -- to help with the rubber stamping. "What's next?" asks Johanna Wald, director of land programs for the National Resources Defense Council. "Hiring poachers as park rangers?" The energy bill goes even further, allowing federal authorities to open public lands to drilling without even considering alternative uses such as hunting and ecotourism. "You are supposed to find the best use of the land," says Kevin Curtis, vice president of the National Environmental Trust. "But the energy bill basically says, by statute, that oil and gas drilling is the best use of that land." As a result, millions of acres are sure to follow the fate of Jonah Field in Wyoming, where energy companies have turned the once-untouched desert into a Mad Max subdivision of drilling platforms, polluted ponds and pipelines. "The Bush policy is drill, drill, drill at all costs," says Gov. Bill Richardson of New Mexico. "Those of us who want to protect sensitive ecosystems have no voice in this debate."

Polluting The Water Even as oil and gas interests get permission to drill on wild lands, the energy bill exempts most of the industry's 30,000 annual projects from the Clean Water Act -- allowing petrochemical runoff from well pads to bleed into creeks, rivers and aquifers. The bill also exempts one of Halliburton's most profitable practices from the Safe Drinking Water Act. Called hydraulic fracturing, the technique boosts the yield of oil and natural gas by injecting a toxic stew of benzene, polycyclic aromatic hydrocarbons, sodium hydroxide and MTBE into the ground. "Fracing" earns Halliburton $1.5 billion a year -- twenty percent of its total energy revenues -- but also contaminates groundwater. "The exemption is just a piece of pork for Halliburton," says Eric Schaeffer, former director of the EPA's Office of Regulatory Enforcement, who quit in 2002 to protest the administration's pandering to industry. "It's astonishing to think that that kind of thing can go unchallenged."

Logging The Forests Mark Rey -- the former timber lobbyist now in charge of the Forest Service -- bragged to a gathering of timber executives last December that the administration would double the amount of logging on public lands in its second term. By May, it had scrapped the Clinton-era regulation known as the "roadless rule," which placed nearly a third of all national forests off-limits to industry. The Forest Service has already mapped roads into 34 million acres. The logging won't come cheap: Last year alone, taxpayers spent nearly $49 million to carve roads into the Tongass National Forest in Alaska, the world's largest intact temperate rain forest. In return, the federal treasury collected less than $800,000 in royalties from industry.

Killing The Fish The energy bill lifts a twenty-five-year moratorium on oil exploration off the East Coast, allowing industry to conduct a new "inventory" of oil and gas reserves -- a maritime version of shock and awe that will pummel the ocean floor with massive acoustic waves and disrupt marine sanctuaries. Bush has also proposed turning 3,500 idle oil rigs in the Gulf of Mexico into offshore fish farms to offset losses in traditional fishing -- a move that will actually increase the agricultural pollution that's responsible for the decline in fishing in the first place.

Nuking The Future In June, Bush became the first president to visit a nuclear plant since 1979, when Jimmy Carter toured Three Mile Island after America's worst atomic accident. "It is time for this country to start building nuclear power plants again," Bush declared, lauding nuclear power as "environmentally friendly" and "one of America's safest sources of energy." To spur construction, the energy bill grants up to $6 billion in tax credits to new nuclear plants -- subsidies traditionally reserved for windmills and other green energy sources. The bill will also reimburse power companies up to $2 billion if their nuclear projects are delayed by citizen opposition and force taxpayers to foot the bill for any American Chernobyls. "We're going back to the 1950s -- nuclear power is good for you," says Curtis of the National Environmental Trust. "But if it's such a great source of energy, then why do they have to do so much to remove all the risks for industry?"

One thing's for certain: there are more rollbacks to come. The energy bill cleared the Senate only after the administration dropped its most controversial provision: opening up the Arctic National Wildlife Refuge to drilling. But even before Bush had signed the measure, Sen. Pete Domenici, chair of the Senate Energy Committee, vowed to resurrect the drilling plan in September by tacking it onto the budget bill, which is immune to filibuster. That would effectively lower the number of votes required for Senate passage from sixty to fifty. "We're going to fight it like hell," says Curtis, "but there just aren't fifty-one votes."

The legislature isn't the only branch going along with Bush's environmental assault. Because most of the administration's rollbacks take place behind the scenes, in a series of bureaucratic nips and tucks to existing rules, they are subject to challenge in federal court. But thanks to Bush's effort to stack the bench with anti-regulatory ideologues, the judiciary isn't proving to be much of an obstacle. In July, the D.C. Circuit Court of Appeals upheld the EPA's decision not to regulate carbon-dioxide emissions. And in August, Judge Janice Rogers Brown, one of the reactionary justices confirmed as part of the Senate deal that defused the "nuclear option," refused to block implementation of Bush's mercury rule.

Public outrage has forced the administration to give up a few of its wildest schemes: "blending" raw sewage into drinking water, for example, or exempting 20 million acres of wetlands from the Clean Water Act. But most of Bush's efforts to gut the nation's environmental protections are so incremental, they go unnoticed by the public -- even when they have far-reaching consequences. In August, the Forest Service quietly adjusted the numbers it uses to weigh the benefits of logging vs. tourism, slashing the "recreational value" of the forests by $100 billion. The EPA went a step further: Under its old cost-benefit formula, the agency valued each human life saved from toxic pollution at $6.1 million. But thanks to a new rule, the cost of polluting people to death has plummeted: Under Bush, your life has officially been devalued by $2.4 million.

(Posted Sep 08, 2005)

Was It Global Warming?
As the planet heats up and storms grow stronger, Katrina could be a sign of the coming destruction


In 2002, the Pentagon began exploring the national security implications of global warming. Military brass commissioned a report, subtitled "Imagining the Unthinkable," that forecast the impacts of an abrupt change in the Earth's climate. It's a grim scenario: Prolonged droughts in northern Europe and the United States lead to acute food and water shortages, while typhoons and hurricanes devastate low-lying regions like Bangladesh. Africa is crippled by disease and famine; southern Europe is flooded with millions of refugees; in the Persian Gulf, Chinese and U.S. naval forces square off over access to Saudi oil fields. "Every time there is a choice between starving and raiding," the authors of the study point out, "humans raid."
When the report was made public last year, it was widely criticized as unnecessarily alarmist. Global warming couldn't inspire that much chaos, could it? But after witnessing the devastation wrought by Hurricane Katrina -- the bloated bodies, the toxic sludge, the rapes and looting, the bureaucratic failures, the political cowardice and finger-pointing -- the Pentagon scenario seems less far-fetched. Katrina showed us the colossal force of a pissed-off climate, reminding us of how powerless we are in the face of it. The storm was a natural disaster, to be sure -- but it was also a vision of our possible future.

For years, climate skeptics and fossil-fuel hacks argued that global warming was a fantasy of tree-huggers and blue-state hypocrites. But scientific evidence that the planet is indeed heating up has become so overwhelming that even noted skeptics like Ronald Bailey, editor of Global Warming and Other Eco-Myths, have converted. After reviewing the latest satellite temperature data confirming a warming trend, Bailey wrote, "Anyone still holding onto the idea that there is no global warming ought to hang it up."

Instead of denying the issue, some skeptics have switched tactics: They now argue that life on a hotter planet will be no big deal. "It's not the warming itself that we should be concerned about," Fred Singer, the dean of global-warming skeptics, argued at a power-industry conference last year. "It is the impact. And what is the impact on agriculture? I'd say it's positive. What's the impact on forests of greater levels of CO2 and higher temperatures? It helps them grow, so it's good. What is the impact on sea level? Nothing. It will not raise sea levels. What is the impact on recreation? It's good and bad. You get, on the one hand, maybe a little less winter sports; on the other hand, you get more sunshine and maybe better beach weather." Rather than cutting carbon-dioxide emissions, statisticians like Bjorn Lomborg argue, it would be cheaper to simply adapt to climate changes as they come. To hear the skeptics tell it, preparing for the consequences of global warming is no more difficult than nailing an extra sheet of plywood on the roof.

Hurricane Katrina should put an end to this happy delusion. The failure to prepare adequately for a hurricane slamming into New Orleans, the most predictable of natural disasters, demonstrates just how vulnerable we are to the kind of climate chaos imagined in the Pentagon report. As for adaptation being cheaper than cutting CO2 emissions, that is a tricky argument to make when the cost to clean up and rebuild after Katrina alone could run as high as $200 billion -- by far the most expensive disaster in U.S. history. A full-fledged energy revolution, on the other hand, could be a source of jobs and inspiration that would make the Silicon Valley boom look like a bake sale.

I'm not suggesting that solar panels would have saved New Orleans or that Katrina was caused by global warming in any direct sense -- devastating hurricanes are nothing new on the Gulf Coast. Overbuilding in hurricane-prone areas, as well as the destruction of protective wetlands, are the biggest reasons for the increasing destructiveness of hurricanes. But greater sea-surface temperatures in the Gulf can also contribute to their intensity: Hurricanes are essentially heat engines, powered by the difference in temperature between the top of the sea and the air above the storm. "I think it's a safe bet that the next hundred years are going to have more Category 4 and 5 hurricane strikes than the last hundred years," says Kerry Emanuel, a hurricane expert at the Massachusetts Institute of Technology. "But we're not used to thinking on those time scales, and that's part of the problem."

The larger problem with seeing global warming as a harbinger of better beach weather is that it assumes that the climate is a steady, balanced system. And it has been -- recently. For most of history, however, the climate has been wildly unstable. During the Younger Dryas, a climatic event that ended about 11,500 years ago, Greenland's temperature warmed fifteen degrees Fahrenheit in less than ten years. That's like going to sleep one night in Alaska and waking up in Costa Rica. Many researchers believe that greenhouse gases may be one factor pushing the system out of balance. "You might think of the climate as a drunk," writes Richard Alley, a paleoclimatologist at Pennsylvania State University. "When left alone, it sits; when forced to move, it staggers." Every ton of carbon dioxide we dump into the atmosphere is another kick in the drunk's ass.

New Orleans will rise again. The toxic mud will be washed away, the levees will be rebuilt, the evacuation plans will be revamped. But if that's all that happens -- if Katrina is seen as simply a random act of God, or Mother Nature, and does not wake us up to the dangers we face in an overheated climate -- then we are in deep trouble. The real message of Katrina is not that big winds blow down houses. It's that on the Greenhouse Planet, we all live in New Orleans.

(Posted Sep 22, 2005)

Tuesday, September 27, 2005

The Party's Over: Oil, War, and the Fate of Industrial Societies
by Richard Heinberg (Author)

Most depressing book I have ever read., May 3, 2004
Reviewer: Donald N. Hilton from Jacksonville, Fl USA
I'm sure that the economists would debate just about every point made by Mr. Heinberg in this (end of the world as we know it) book but the author offers justification and factual evidence for almost every claim made.

Since I was born, the population of the world has grown from two billion to almost seven billion and this population explosion corresponds exactly with our industrialized society's almost total dependence on oil and coal for food production, transportation, heating and cooling our homes, manufacturing products and transporting them to market and just about everything else the US and other advanced nations do.

All of this growth has been happening because we have been discovering more oil than we are currently using. This will end within 5 or 10 years and all the readily available oil on earth will be gone within 30 years. Oil shale (organic marlstone) is not the answer because it takes more energy to get the oil from the stone than the end product plus you wind up with more waste that the raw materials you started with.

If we had started planning for this when OPEC shut down our supply in 1973 and part of 1974 in retaliation for our support of Israel during the Arab-Israei war, much of the coming crisis could have been avoided but we all remember what happened to President Carter when he started talking about conservation. Reagan was elected and no politician since has followed Carter's path. Now it is time to pay.

The author gives us two ways to cope with the upcoming crisis: We can join the international community and try and make the transition from fossil fuels to other sources as smoothly as possible or we can continue to try and maintain our priviledged status even as our civilization falls. The United States currently has 5% of the world's population and the majority of the weapons of war.

Since we are at war right now in Iraq and Iraq is supposed to have the second highest oil resources in the middle east, I believe the choice has already been made.

If my father was a member of "The Greatest Generation", I am ashamed to admit I am a member of the worst generation. I pray that Mr. Heinberg is wrong but I am afraid that my children and grandchildren will hate each and every one of us "baby boomers" who wasted all these resources and left them nothing.

Apocalypse Now?, March 8, 2004
Reviewer: Mark A. Bennett from San Diego, CA USA
Proponents of the "Peak Oil" theory argue that global oil production will "peak" (meaning that one half of all known reserves will have been recovered) at some point between 2000 and 2010, and afterwards production will irrevocably decline, never to rise again. However, the demand for oil will continue to rise and the spread between falling supply and rising demand will rapidly grow, as no adequate alternative energy source will be available to cover the shortfall. Doomsday will then be at hand. The price of petroleum, and petroleum-related products (i.e., just about everything) will skyrocket; transportation, communications, agriculture, indeed, every major industry in the world, will sputter to a standstill; the world economy will stagger and collapse; civil authority will dissolve; and the noisy, messy experiment that was industrial civilization will expire in a world-wide bloodbath, or "die-off," that will reduce the human population by 90 percent, or more, and will leave the planet devastated, ruined, and, quite possibly, dead.

It would be easy to dismiss this apocalyptic vision as alarmist nonsense if only the "Peak Oil" proponents weren't so bloody convincing. By and large, they are a sensible, reasonable-sounding group of Cassandras, who dispense their grim forecasts as soberly as the subject allows. Virtually all of them rely upon the pioneering work M. King Hubbert, a research geophysicist who, in the mid-1950s, created a model to estimate the productive life of energy reserves. In 1956 Hubbert used his model to predict that oil production in the continental United States would peak sometime between 1966 and 1972. U.S. oil production did , in fact, peak in 1970 (and has declined by 50 percent since), and Hubbert and his forecasting model, dubbed "Hubbert's Peak," passed into the arcane lore of petroleum geologists. Other petroleum scientists have refined Hubbert's model and have applied it to global petroleum reserves. Although results differ depending upon the variables used by different researchers, the consensus is that the "Hubbert Peak" of worldwide oil reserves will occur sometime between 2004 and 2007. In other words, as I sit at my keyboard writing this review the high noon of petroleum-based industrial civilization may have come and gone, and the whole human enterprise may be inexorably descending into twilight and darkness. Sic transit gloria mundi - with a bullet.

If the Cassandras are right, and the end of the world is imminent, it has received remarkably little coverage in the conventional media, although the internet hosts many excellent websites that the curious or concerned citizen may consult to learn as much as he or she would like about the post-petroleum world to come. Recently this state of affairs has started to change, and several good books have been published on "Peak Oil" and its consequences. First among these, is Richard Heinberg's "The Party's Over," a sober, detailed contribution to the literature, which clearly and fluently describes the fossil fuel bender the industrial world has been on for the past 100 years, and what we can expect to follow from it. Although Heinberg does his best not to induce white-knuckled panic in his reader, the picture that emerges from his book is absolutely frightening, particularly the notion that, at this late date, we can do nothing to prevent the catastrophe from occurring. At best - that is, if the entire human race sets aside all its disputes and immediately mobilizes its combined efforts to solve this one problem - the scale of the catastrophe might be reduced. At worst, in 50 to 100 years time, the greatest disaster in human history will have taken place, and the relatively few survivors of this disaster will dwell in a stateless, Hobbesian world that will make present-day Liberia look like Shangri-La.

Or so the argument runs. Perhaps Heinberg and the other "Peak Oil" prophets are wrong. Perhaps Hubbert's model is defective and world oil production will not peak tomorrow, or next week, or next year. Perhaps the USGS's estimate of world oil reserves is correct and the peak of production will not occur until 2020. Perhaps a previously overlooked, gigantic new field, the equivalent of three or four Saudi Arabias, will be discovered and delay the peak until the early years of the 22nd century. Perhaps. But the point is, Heinberg et al. will inevitably be right someday. Someday, worldwide production of cheap, high-grade crude oil will peak, and the longer that peak is delayed, the more horrific the following decline will be, unless the nations of the world take immediate action to prevent the disaster. This preventive action will entail much more than just developing an adequate replacement for cheap petroleum; although, as Heinberg makes clear, no alternative currently on the drawing board appears to be sufficient. Rather, if we are to avoid the catastrophic consequences of "Peak Oil" we will have to drastically rearrange our affairs - politically, economically, socially. Or, to be blunt, capitalism, certainly as it is currently practiced, will simply have to go. Unfortunately, it is difficult to conceive of a socio-economic system less capable of dealing with the coming crisis than neo-liberal capitalism. But there it is.

Of course, if Heinberg and the other proponents of Peak Oil are right, time has already run out for Petroleum Man, and there is little that can be done to avert doomsday. We shall see. This morning (March 5, 2004) the front page of USA Today warns that record gasoline prices will continue to rise, and there is a likelihood of gas shortages this summer. The "Nation's Newspaper" also reports that the loss of 2.1 million jobs in the USA during the last three years appears to be permanent. Both of these developments fit neatly into the predictions of "Peak Oil." One thing is certain: we live in interesting times. Anyone who wants to learn just how interesting these times are is well advised to read and ponder "The Party's Over." We've been warned. Will we act?

Monday, September 26, 2005

The Battle to Rebuild
In a fierce cultural storm, the future of the Lower Ninth is buffeted by race and politics.
By Evan Thomas and Arian Campo-Flores

Oct. 3, 2005 issue - The Lower Ninth was going under, again. Floodwaters from Hurricane Rita had breached the levee along the Industrial Canal, inundating the poor New Orleans neighborhood that is, or was, home to 40,000 African-Americans. The levee had been patched after it failed in Hurricane Katrina, but not well enough. Cedric Richmond, the president of the Black Caucus in the Louisiana State Legislature, suggested that more than bad luck was at work. "For whatever reason," he told NEWSWEEK, "they didn't put the same effort into fixing the Industrial Canal as they did into the 17th Street Canal." The 17th Street Canal borders a largely white, middle-class area.

Richmond did not spell out what he meant by "for whatever reason," but the implication was clear enough. It is simply assumed by many residents of the Lower Ninth that the powers that be of the city of New Orleans would just as soon never rebuild the ward, and that the reasons have as much to do with race and class as they do with geography. The Lower Ninth is mostly below sea level; it is also 98 percent black, very poor and crime-ridden.

Conspiracy theories abound in the Lower Ninth. It is taken as a given that, during Hurricane Betsy in 1965, the city blew up a levee and intentionally flooded the ward in order to save the mostly white and tourist-friendly French Quarter. This is an urban legend, but it indicates the depth of resentment felt by people who historically have been left behind. They have some reason to be suspicious. Finis Shelnutt, who owns a number of businesses near the French Quarter (including a bar named after his wife, former Bill Clinton paramour Gennifer Flowers), does not hide his feelings about the Lower Ninth. Sitting on his bicycle, draped with Mardi Gras beads, he told NEWSWEEK that he is already talking to Florida investors about building high-rises in the French Quarter that can withstand Category 5 hurricanes. And what about the Lower Ninth? "Give it to us, and we'll turn it into golf courses. I heard that in Gaelic, 'Katrina' means 'to purify'," said Shelnutt.

The Lower Ninth is only a part of New Orleans. The city is a patchwork of rich and poor, black and white, dry and wet areas. But it is generally true that the better-off, white-populated neighborhoods are on higher ground, while the poorer areas where many African-Americans live were underwater after Katrina. Many people want to build a smaller New Orleans less prone to flooding. But others see in these plans a plot to drive out blacks from their homes and sacrifice their cultural heritage. Some see the hurricane as a chance to rebuild inner-city neighborhoods without the crime and despair; others want to turn those blighted parts of the city into flood plains (or golf courses). For understandable reasons, the debate is somewhat tortured and, so far, mostly conducted in private or in code. But it has already started to burst out in the open over the future of the Lower Ninth.

It is not hard to paint a discouraging picture of the ward. The poverty rate, 36 percent, is three times the national average. About 30 percent of its residents older than 18 have no high-school diplomas, compared with 13 percent nationally, according to Census data. Measured by murder rates, the Lower Ninth is 15 times more dangerous than New York City. On the other hand, almost 60 percent own their homes, compared with 46 percent in the rest of the city. The houses are tiny and often ramshackle and, after Katrina, covered with grime. The trees are mostly dead. But the Lower Ninth has its own life (R&B legend Fats Domino lives there), and it is home. "Growing up in that culture, no matter what negative things people said about it, there was a warmth, a feel, a heart about it. It was close-knit," says Angela Winfrey-Bowman, 45, who was brought up in the Lower Ninth.

The city powers have big plans for the restoration of New Orleans, but the Lower Ninth is not in them. Over regular dinners in Baton Rouge restaurants like Gino's, an Italian eatery featuring recently transplanted musicians from the Big Easy, the heads of law firms and tourist businesses and conservation groups have been meeting with big real-estate developers. These men have started to outline a vision of a smaller, more upscale Crescent City.

One of the most ambitious plans, called Operation Rebirth, is aimed at creating a "vital center" of New Orleans. Pres Kabacoff, a well-known local developer, spoke to NEWSWEEK about re-creating New Orleans as "an Afro-Caribbean Paris." In addition to building a movie studio, new museums and a light-rail line, he wants to tear down the poor and almost entirely black Iberville housing project (situated close to the French Quarter) and replace it with low-rise, mixed-income, racially diverse housing. Such plans are "very sensitive politically," he readily acknowledges, but he had an earlier success story replacing run-down tenements with mixed-income housing in the Lower Garden District.

In most restoration plans, the Lower Ninth would be yielded back to the swamp. "It doesn't make sense to rebuild a home that's eight feet below sea level," says Tom Leonhard, Kabacoff's partner. The flooding from Rita is likely to harden such convictions. But such talk makes Alden McDonald uneasy, if not indignant. A successful self-made businessman, McDonald, who is black, asks why the Lower Ninth should be treated differently from some vulnerable areas where whites live. "Does it make sense to build in Biloxi, Miss.? They have less protection than we do. So who's to say what should be rebuilt? I think it shouldn't be just a group of people who think they know what's best for everyone." Though McDonald is chairman of the New Orleans Chamber of Commerce, he has not been invited to any of those dinners with local developers.

Local politicians are already vowing to block any plan that does not include rebuilding traditionally black areas. "You want to come buy a neighborhood?" says Black Caucus leader Richmond. "That's fine. We don't have to give you city services or a permit to build." He points to efforts to redevelop the Iberville housing project, first into a stadium, then a new city-hall building. "Neither of those went very far," he says, not just because of lack of funding, but because the development would have displaced poor black people.

Last week New Orleans Mayor Ray Nagin sounded like a man caught in the middle. An African-American, Nagin is a former corporate executive who was elected mayor two years ago with the support of the city's mostly white business elite. In New Orleans's complex racial mix, he represents the middle-class "Creole" blacks. At a public meeting last week with members of the city council and state legislature, Nagin suggested that the Lower Ninth would be the last part of the city assessed for damage, in part because the area was still full of muck and debris. There was a notable murmur of disapproval in the crowded room; was Nagin signaling, some wondered, that the Lower Ninth would not be rebuilt? Another lawmaker drew applause by pointedly emphasizing that "all of New Orleans" should be included in any restoration plan.

The defenders of the Lower Ninth may get some support from Washington. Though President George W. Bush has not been specific, he has spoken repeatedly of rebuilding New Orleans. Thanks to the widespread view that the federal government dragged its feet responding to Katrina, some members of the city council sense that they can force Bush to fund a massive expansion of social spending in areas like the Lower Ninth. The national Democratic Party may also want to ride into the rescue. Louisiana is a Red State where the Democratic Party is still alive. In the narrow re-election of Democratic Sen. Mary Landrieu in 2002, the black vote in New Orleans was crucial. The Democrats are not going to want to shrink that vote.

Is there a middle ground? New Orleans does not have to shed population to grow smaller. The Big Easy is fairly spread out. In New York, the population density is 10 times greater; in Paris, 30 times. "Density is good, density is healthy," says developer Kabacoff. "It's what makes the transportation system work." By building medium- and high-rises on the dry ground, New Orleans could become home again for tens of thousands of people, of all races and incomes, scattered by Katrina's winds and waves. In the meantime, however, the Lower Ninth will be a tense battlefield of racial politics.

With Sarah Childress, T. Trent Gegax and Daren Briscoe

© 2005 Newsweek, Inc.
Fighting Canada's secularist tide

Lorne Gunter
National Post

Monday, September 26, 2005

Canada's religious right has had a tough time of it in recent years. For the past decade, conservative Christians have watched as first human rights tribunals, then courts and finally Parliament have drawn an increasingly tighter circle around traditional values and religious beliefs in an attempt to banish such attitudes from public life.

The reaction by Christians has been an almost dream-like disbelief: This can't be happening. Sanity and reason will once again prevail before things go seriously wrong. The truth shall set us free.

It took this year's debate on gay marriage to jar the religious right into the realization that the truth is a weakling, no match for the ingrained biases of the Canadian establishment or the spin of well-funded special interest groups. If the religious right wants change, it now knows it will have to abandon its cultural isolation, stop preaching only to the converted and engage in the muck and mire of day-to-day politics.

Despite the paranoid fantasies of the editors at The Globe and Mail and the Toronto Star, and producers at the CBC and CTV, Canada's Protestant Evangelicals and conservative Catholics have almost no concerted political clout.

They nominate a candidate here or manage to have a spokesman invited onto a public affairs show there. They helped Stockwell Day upset Preston Manning as leader of the Canadian Alliance in 2000. Yet in the general election that followed, and the one after that, their influence was negligible.

Having the strength to swing nominations or leadership contests within a party is one thing, but only when Christians have the power to sway elections will they get themselves heard on Parliament Hill.

Some leaders of the religious right are good at inciting their supporters to send mass e-mails and faxes, and make tens of thousands of phone calls to MPs and provincial legislators. Still, in our Westminster system, with its rigid party discipline, pressuring backbenchers is an almost entirely useless exercise.

In order to have influence, you have to show yourself indispensable to a government's re-election. In order to do that, you have to be adept at one or more of the three mainstays of modern politics: fundraising, manipulating media coverage and getting out the vote. So far, the religious right in Canada has not demonstrated any particular talent at any of these.

It has managed in recent years, through rallies and letter-writing, to raise its profile just enough to make itself a convenient bogeyman for its enemies, but not enough to ensure that parties treat its policy objectives with respect. Last year, Paul Martin was able to get away with calling evangelical candidates in the general election "scary." This year, while the Conservatives maintained steadfast opposition to gay marriage, they are also ran away from every other socially conservative policy. They tried hard at their Montreal policy conference last March to squelch all debate on moral issues, and party leaders worked diligently to have delegates take no stand whatever on abortion.

So far, the religious right in Canada has been all light and no heat.

When analysts wonder, "Can the religious right ever play a major role in this country?," the unspoken addendum is always "as they do in the United States?"

And if that is the question, then the answer is no. They lack the numbers and the mechanisms to force change in the way they've done south of the border.

Still, they can become much more influential than they are now.

In the United States, somewhere between 15% and 20% of the voting age population are self-identified evangelicals, fundamentalists, Pentecostals and conservative Catholics or Baptists. In Canada, the number is 10% at best. Still, if Canadian Christians want clout proportionate to even that low number, they would do well to emulate some of the Americans' lessons.

Our religious conservatives are today where the U.S. movement was two decades ago. They have finally accepted that if they are to save any of the values they cherish, they must become fully engaged in politics.

But they have almost no understanding of how best to channel their newfound concern into productive political action. They sound noisy alarms claiming that the country is going to hell in a hand basket, which fall largely on deaf ears with a population that is economically comfortable and that, for decades, has been soothingly reassured that tolerance and diversity are the most important virtues; moral certainty is apparently the only divisive force Canadians have to fear.

Canada's Christian conservatives have their Pat Robertsons and Jerry Falwells and Garner Ted Armstrongs -- what they lack is their own version of Christian Coalition founder Ralph Reed. They have their charismatic preachers who can rail against the deterioration of Canadian society, preachers who might even whip up a desire in their followers to confront Christianity's opponents on the secular battleground of partisan politics. What is missing is someone, like Reed, who is as comfortable in the political backrooms throughout the week as he is in the nave on Sunday morning.

It was Reed, who in the Reagan and George Bush Sr. eras taught the nascent religious right how to poll, canvass, recruit, raise money and get out the vote. It was Reed who took the alarmism of groups such as the Moral Majority (MM) and marshalled it into an effective political movement.

It is ironic, perhaps, that at the very moment when evangelical Christianity is enjoying its greatest influence in American politics in a century, the groups that gave birth to the religious right -- MM, the Christian Coalition, Focus on the Family, Promise Keepers, etc. -- have lost some of their prominence. Donations and memberships for most of them are off their mid-1990s highs.

But in a way, their decline is a mark of their success. As their ideas and goals have become mainstream in American politics, their reason for being has diminished. In the 2004 U.S. presidential race, the get-out-the-religious-vote effort was done from within the Republican party, not by separate Christian groups. Christians in the United States are now established players. They no longer rely on agents and power brokers.

American Christian conservatism has gone through three stages in the past 20 years, from raising the alarm to marshalling their forces to capturing the mainstream. Canadian Christians are just now entering Stage One.

Our Christians, too, will have fewer mechanisms to build their influence -- no citizen-initiated referenda, for instance. Caps on third-party spending and advertising during campaigns will make it much harder for them to get their message out, as well. And our Parliamentary system of government also makes it much harder to convince individual representatives to vote according to the desires of voters back home than hew to the line laid down by party bosses. Moreover, our laws permit human-rights witchhunts that anti-Christian activists exploit to silence the religious right here to an extent undreamed of in the U.S.

Not even Bill Clinton's administration threatened to take away churches' tax-exempt status if they did not conform to the official line on gay rights. Revenue Canada has vowed to do just that to Canadian churches.

Canada's Christian right faces a steeper uphill battle for much smaller prizes than its American equivalent. Too soon to tell how far it will get. It has only just begun to climb.

© National Post 2005

Wednesday, September 21, 2005


a storyteller’s look at the New Era

by Ricardo

Copyright © 2005 by Author


What is the Phantom Industry? Look around you. You are standing in the middle of it. It is the ultimate economic phenomenon of our epoch, a sociopolitical entity that employs and benefits, in one way or another, as much as 80% of the American workforce and has branches and outposts throughout the world.

It has a brief but storny history.


1. In the Beginning

The U. S. Constitution was ratified before the Industrial Era came into existence. To all intents, the Republic’s overall political structure was implemented in the days of agricultural quasi-feudalism, which goes to show that the economy, though a powerful factor in a country’s makeup, does not have to dictate how we the people should live and be governed, at least not all the time.

Influenced by Karl Marx, historians found they had to classify Capitalism as an epoch unto itself, confusing, as is their ghastly habit, politics with reality, economy with history, and the joy of scientific honesty with the paycheck. Originating in the Age of Industry, Capitalism was merely an economic system requiring many hands to be productively employed by relatively few companies. Once hired, most employees were asked to perform simple, mindless, repetitive tasks. Under Capitalism, large firms rather than individual specialists took it upon themselves to produce and deliver to the so-called consumer anything and everything, from the basic staples to luxuries.

The end of that ponderous era came in sight once the first assembly line was set in motion by Henry Ford in the early years of the Twentieth Century.

Some analysts anticipated gleefully new possibilities and prospects. Others, less tediously optimistic, pointed out that automating production of goods might leave many folks without a job. To offset everyone’s fears, the optimists maintained that mechanized labor was going to create a lot of spare time for everyone which they could use to improve their spiritual standards, take long gratifying vacations in exotic regions, learn to appreciate art more, vote, and so on, and Santa Claus would eventually show up to pick up the tab.

In the end, neither view proved valid. Reality hardly ever lives up to people’s, much less economists’, expectations. Even though scientific fortunetelling differs from the traditional version in that more people pretend to take it seriously, the methods and the end result are similar. The lingo-ridden vagueness of prediction is resorted to in order to safeguard the fortuneteller against exposure as a fraud. Some forecasts come true periodically (albeit hardly ever two in a row from the same source) to prevent the layman’s complete dismissal of the entire field.

World War One created a great, if mostly artificial, demand for many more hands in the workplace. Military supplies had to be produced in large quantities. Even before it was over, though, drastic political changes occurred everywhere, most notably in the Russian Empire. The most radical group of people ever to convene on that country’s territory seized and maintained power against tremendous odds, making a wild, ill-informed, and monstrously misguided attempt to humanize the Age of Industry, already a thing of the past then, by introducing (supposedly) some basic Christian values to it. Greedy as radicals always tend to be, they had no desire to share their power with anyone, and I mean anyone, including God, whom they cheerfully decided to exclude God from the equation. Their mistake (indeed, everyone’s mistake today, almost a century later) was to expect Christian ethics to work without the Ultimate Judge of Such Matters, much as if one were to expect a high-speed train, finely designed and assiduously assembled, to work without electricity. Nevertheless, the Socialist Revolution in Russia forced certain folks elsewhere to examine their own conduct. Unless they wanted more revolutions, they had better mend their ways and start treating the workforce as if it were composed in some degree of sentient human beings. It was already too late. It was no use. Whether oppressed and exploited, or appeased and unionized, most of the workforce had to be laid off. Machines were faster, cheaper, more precise and, having no immortal souls, less cumbersome.

The downfall, known in the U.S. as the Great Depression, came on top of many panicky decisions and annoying results. Resurrected by World War One, the Age of Industry was still grotesquely alive but could not go on unless products were purchased, consumed, and purchased again: hard to accomplish with half the consumers out of work and half the newspapers suggesting, with irritating consistency, that Socialism might be a healthy alternative after all.

(The onslaught of ideological nuances so befuddled the period’s thinkers, it never occurred to any of them that Socialism, and even Communism, however Utopian, were Capitalism’s siblings rather than antipodes, since they, too, were thoroughly industrial, required employment of many, discouraged individual thinking, and were just as eager to sacrifice fuzzy numbers at the altar of the Gross National Product. It does not make much difference in the long run whether a few dozen corporations are running the show, or just one (i.e. the Federal Government), and how many of them are state-owned. As for the peculiar treatment by the Soviets of their own population, why, you wouldn’t expect folks who have openly renounced God to behave charitably. One can govern with promises, handouts, and some guns, or promises, no handouts, and a lot of guns. It is strictly a matter of preference and has little to do with the economy.


2. Once the Dust Had Settled

The period immediately following World War I was anything but rosy. The machines were taking over. France, in her own salacious way, alleviated some of her economic problems by bleeding Germany (World War One reparations, etc.), but Germany and England were hit very hard indeed. Unemployment rates skyrocketed everywhere. As oftentimes is the case, governments around the globe proposed tough measures and took none. The debates went on until the famous market crash put and end to them.

Some politicians and businessmen spent the following couple of years trying to pick up the pieces of an era long gone by, the one Henry Ford had sent packing, to no avail. There was no way for the average consumer to obtain an income other than by hiring himself out to someone who could use a pair of hands and, in some special cases, a brain. It was an impasse. Only a portion of the workforce could be employed, but the entire country had to have an income to be able to purchase the results of employment.

Franklin Delano Roosevelt, Teddy’s distant relative and, some years later, Stalin’s good friend and drinking buddy, was the one who decided the situation was, well, unacceptable. A man of wit and considerable political courage, he deviated from his immediate predecessors’ laissez-faire approach by actively seeking, and eventually finding, a sensible solution.

Redistribution of wealth was out of the question. It generally is. Folks will not part voluntarily with anything that might conceivablybenefit others.

Roosevelt looked at the tax revenue and decided to make good use of that. He could not simply give the money away: governments, if they wish to be taken seriously, must never indulge in direct charity. Instead, he explained that the country was in dire need of railroads, highways, bridges and such (which was true), and that his administration was quite eager to compensate those willing to construct same.

This new approach soon became an integral part of the economic picture. Those who produced the basic staples and so on were taxed; the resulting funds were transferred to those who produced the improvements. Simply put, it was a well-organized attempt to find a meaningful occupation for everyone. The New Deal (as the new approach was dubbed) was, in fact, a noble idea. Little by little, the outdated conventions of the Industrial Age would fall away, 20% or so of the workforce would easily provide the food, clothes, and shelter for everyone, whether employed or not, allowing the rest of the country to work on various improvements and innovations. Sooner or later, anyone would be able to take as much time as they wished to find and realize themselves in any of the numerous available fields. Those still uncertain about their true vocation would be given enough public assistance to be able to afford passable living conditions.

Thus the Republic was going to show the world a healthy alternative to humanity’s unrealized and seemingly unattainable dream (i.e. Communism, Star Trek style). A superior alternative, too, since there was seemingly no need for gory social experiments, radical leaders, or incongruous ideologies.

But there was Germany, and there was France, and there was Japan, and there was World War Two.

The capture of Czechoslovakia by German troops was pointedly ignored. The division of Eastern Europe between Hitler and Stalin, who reckoned they had their own economic experiments to conduct, was also ignored, although there was less flippancy this time around. German planes rained bombs on London. The English started paying attention. France was, of course, occupied, but since the cafés were active, the Metro still functional, and the Opera performed more regularly than it does today, everyone decided that it was okay. Then came Hitler’s invasion of Stalin’s territories. Some people looked up from their desserts. The Japanese attack on Pearl Harbor was, in fact, covered by the press.

As it progressed, the new World War confused and frightened almost everyone. The Age of Industry had to be rescusitated once again. Millions of hands were once again needed at plants and factories everywhere. The New Deal was put on hold indefinitely.


3. Once the Dust Had Seettled Once More

When it was all over and the shock wore off and the tragedy of the 400,000 dead was somehow accepted, America found herself in a state of mindless euphoria. Some years later, the ephoric fog lifted, revealing a new challenge and a new and amazing field in which some folks could now make a living.

Computers looked very promising at first, the way Ford’s assembly line had looked promising earlier. Some economists objected, realizing that just as Ford’s innovation had done millions of laborers out of a job, so would the computer relieve (interesting word) multitudes of clerks (a lot of whom would have been factory workers in a different epoch: the rapid proliferation of so-called office jobs was the first postwar echo of Roosevelt’s New Deal, distorted and rendered meaningless; pencil pushing is easier, to be sure, than bridge and railroad construction). Then someone had the bright idea to let the democratic (or was it Communist?) principle take over: share and share alike. Instead of replacing a thousand workers with one mainframe machine and one operator, why not give each of them a terminal? Later on, the concept was further improved by introducing every clerk to his or her own Personal Computer. Now every dozen clerks required a technician to maintain their computers for them, and every five technicians a supervisor to oversee the maintenance and attend to the employees’ morale.

The difference between the New Deal and this was that computers, when all is said and done, offer just one type of activity to those who wish to be important outside of the production of basic staples. Called upon to solve the problems of many, the new industry quickly hit the limit of usefulness and continued to expand into the murky area where production is replaced by something called, in lawyers’ lingo, work creation, ceasing to be a genuine industry and attaining phantom qualities far quicker than the economists, who always need a century or two to adjust to new ideas, expected.

The long-awaited new era was introduced painlessly and smoothly. Unfortunately, while inaugurating it, its advocates (or those at the helm, or whoever the hell’s job it was or should have been to provide justification and encouragement) neglected to toss in some new standards to go along with it. The code of ethics created specifically for the Age of Industry and inapplicable in any other era still prevails today. Relics of an epoch long gone by are still present in every aspect of our quite modern, and quite different, lives.

Each new epoch inherits some of the previous one’s customs and mores. Feudalism cheerfully adopted aspects of slavery. The Age of Industry gladly accepted the slavery and the clan mentality from the feudal lords. Nevertheless, every historical interval should have its own notions of such matters as honor, propriety, courtesy, education, and so on. Throughout history, each epoch knew enough about itself to be able to face facts when the going got tough. Except one.


4. Defining Factors

Our epoch appropriated the Industrial values and mores in toto simply because, what with all the wars, revolutions, bootleggers, Al Capone, atonal music, corny paintings and cornier politics, affirmative and alternative action, and what not, it did not have enough time to work out any new standards. As a result, we still view ourselves as members of Capitalist society. Nothing could be further from the truth.

A child of Industry, Capitalism concerned itself mostly with production of goods. Look around you, city dweller. How many people do you know who actually produce anything tangible? We are told repeatedly that our generation has witnessed the Informational Revolution. How many well-informed people live in your building? We are told that the service sector is vital to our economy. But the idea that 20% of the population producing and delivering the goods (not really – a great deal of the goods is actually produced outside the Republic, in places that can be called industrial or democratic only in a coquettish context) while the remaining 80% are involved, in one way or another, in the service sector is, well, absurd. An estate that employs twenty laborers and eighty servants is not bad or inefficient. It is insane. The Phantom Industry is, apart from other things, aggressively anti-Capitalist. It resents competition and finds the idea of private enterprise distasteful. The truly enterprising spirit will seek to increase the quality of his product to get ahead of the competitors. The Phantom Industry’s idea of good business is to increase the promotional campaign’s mesmerizing effect by pasting up the entire world with vulgar advertising. Millions of brainwashed zombies, opening zombie wallets, purchasing zombie products with zombie money. The zombie CEO smiles at the zombie shareholders, and somewhat obsequiously they smile back. It works.

It might be possible to prove that the current state of affairs is somehow okay, just as it was possible 150 years ago to prove that slavery was somehow okay, if it weren’t for the fact that the service sector employees, who are busier than an average nineteenth century tycoon ever was, working long hours and producing so-called services, weren’t so burdensome. Not to the economy – after all, the economy will restructure itself around almost anything you toss it – but to the ecosphere.

Whoever committed us to the automobile culture – Benz, Ford, or Robert Moses – could not possibly have envisioned the resulting mess. The initial idea was to shorten the gainfully employed citizen’s trip to the workplace to ten minutes. As soon as mass production of cars took off, though, cities began to spread out to compensate for the private car’s considerable speed, and the congestion did the rest. Instead of an hour’s walk to work, it is now an hour and a half’s ride, with the hapless rider stuck in a ridiculous pose behind the plastic steering wheel, inhaling fumes and getting more disgruntled by the minute. Because most car buyers tend to purchase on credit (credit, incidentally, is a way of mortgaging one’s freedom) cars they cannot afford, the merest scratch or dent can depress them for months, marring even the ridiculously few vacation days the Phantom Industry still allows them to take.

In larger cities, in addition to the auto traffic, millions of people use trains and buses, shuttling between home and workplace. While immeasurably more fuel-efficient than the automobile, our urban mass transit is overburdened by millions of commuters whose work could just as easily be performed from home or, for that matter, not performed at all.

Millions of offices across the nation are illuminated and air-conditioned every day. Bulky airplanes roar into the skies, carrying Phantom Industry employees to conferences that, for some flimsy reason, cannot be conducted over the phone. Thousands of hotels receive guests who are neither tourists nor explorers. Business travelers (Phantom Industry, for the most part) outnumber tourists in the air – five to one? Seven to one?

Because the service sector is anything but an exciting place to be and hardly more than a sinecure masquerading as tangible business, the average clerk’s self-esteem does suffer a great deal.

Case in point: What does one tell one’s children when they ask what their important-looking parents do all day? The truth, i.e. nothing meaningful, is hardly a good reply when you’re facing your own children or the mirror. "You wouldn’t understand, honey. It’s too involved," is something one will fall back on sooner or later. Most children vaguely suspect that anything too involved must be meaningless. Inexperienced and lacking in basic knowledge as they are, children are known occasionally to possess, and make excellent use of, unfiltered wisdom. No matter. Sooner or later the little buggers will learn! They are, after all, future employees of the Phantom Industry. Today’s education standards, computer games and TV will leave them unfit for anything else.

Case in point: However skeptical and naïvely sarcastic they may be, our children already know and are resigned to the fact that the most important thing in the world, in the short run, anyway, is to have a job. The entire rentier class has been stigmatized to a point where a fairly well-educated and amicable person is reluctant to admit he or she has no permanent occupation for fear of being ridiculed as a useless freeloader. The great downfall of art can be at least in part attributed to the fact that the once glorious group of individuals who did nothing all day but attend exhibitions, visit the opera, and read books has all but ceased to exist, leaving all artistic and semi-artistic matters to the ill-informed and corrupt whim of Phantom-Industry sponsored and trained professional critics.

Case in point: The personal computer has been bought by, and is put to good use in, every school in the nation. They have yet to figure out how to use it as a teaching tool. Some of the banners and clip art look real cool, though.

Unreasonably loud, absurdly inflated, firmly entrenched in every civilized country on the planet (while the so-called developing countries dream of it and are oftentimes quite murderously jealous of those who already have it), the Phantom Industry requires astronomical amounts of energy to sustain itself. It is a wonder how Islamic dictators, who own most of the energy sources, still manage to keep all of the resulting wealth to themselves instead of sharing some of it with their subjects. The current state of affairs benefits them, not us. If we used the resources sensibly, they would not have the money to buy our weapons and technology to threaten us and their own people with. In that sense, they are far more pragmatic than the Western leaders.

But goodness gracious, what is to be done, one will ask, picking one’s molar cavity with a greasy fork? That, one will explain, is how the world is. We cannot change it. Better stick to what we know and not bother about the rest, right?


5. We Do Not Have That Luxury

Well, something had better be done before a real disaster (say, an ecological one; a major city wiped out by a flood, or half the crops destroyed by reckless genetic engineering and acid rain) does it for us. Catastrophic climate changes around the globe can no longer be doubted. The annual amount of floods, earthquakes, and typhoons is on record and can be compared to the previous decades and centuries. Ice is melting where until recently it had been sitting in its pristine glory for millions of years. Species are disappearing by the thousand. Our rivers, lakes, seas and oceans are contaminated. Researchers that still keep finding evidence to the contrary are invariably sponsored by the Phantom Industry (or in some cases by the panicking oil indusry faced with the very real possibility of having to dig so deep for whatever’s left of fossil fuels on this planet that the costs just might exceed the profits pretty soon). One may very well wonder whether any other type of funding is still available today.

Someone has to take the initiative. It does not have to be the Government (although it is, in fact, the Government’s job). As a matter of fact, it is everyone’s responsibility to examine one’s goals and ideals, if any, and take a closer look at the current economy crisis: a relic of an age long gone by.

The avalanche of layoffs by New York’s large companies not immediately involved in production of basic staples is symptomatic. When in order to save money a large corporation suddenly finds it can go on as usual without half its personnel, it is not unreasonable to ask what that hapless half was doing being on the payroll in the first place. Does kicking them out mean anything in terms of services provided? Exactly what kind of services would have to be cut, if any?

The problem with today’s business school is that it endeavors to teach disciplines rooted firmly in the middle of the Nineteenth Century, an epoch in which, for various reasons, year-round employment was the norm. It was wrong even then, and it is no less absurd today than the jus primae noctis was in the Middle Ages – only we are just as accustomed to our ways as the nobleman and the serf were to theirs, and take the consequences as a matter of course.

In addition to being useless and annoying, the Phantom Industry is also meddlesome as no mother-in-law can ever hope to be. Genuine industries degenerate rapidly when they fall under its obsessive control. In architecture, nothing particularly beautiful or magnificent has been built anywhere in the world since World War Two. No great operas or symphonies have been composed. No great painters discovered. In literature, the handful of excellent authors have found their way into print despite the Phantom Industry’s wishes (running into a feisty independent publisher first, as a rule). The formidable scientific progress we habitually associate with our epoch does not exist. The vast majority of the inventions we utilize today are part of the Nineteenth Century’s legacy – the automobile, the train, the airplane, the streetcar, the refrigerator, the telephone, sound and image recording, etc. As for the computer, the binary method of mechanized calculation was invented by Leonardo da Vinci whose feudal superiors allowed their talented protégé prolonged time-offs.

Solutions can only be sought once the problem is defined. Let us try to define it.

The primary requirement of the Industrial Age was that 90% of the able male population be continuously employed. That is neither possible nor indeed reasonable today. Those who doubt this need only to look at their own careers. The illusion of ubiquitous employment, created by the Phantom Industry, is shattered instantly when an employee is asked to explain what it is he does for a living. Those who are lucky to have meaningful jobs are still able unabashedly to inform you that they are a farmer, a doctor, an architect, an editor, or an artist. Most people employed by the Phantom Industry will tell you they are in something, some branch or field the rest of the Republic could easily, and would rather, do without.


6. Seeking Solutions

However, if we were determined to burst the non-producers’ bubble and tell everyone in the Phantom Industry they could keep their current salaries and stay home, we would not be able to do so without wrecking their self-esteem and inviting mass suicides, riots, marches of gratuitous protest and random displeasure, and all other kinds of civil unrest.

The trick, then, is to find or create occupations for everyone that are more useful than damaging. Sounds a lot like the New Deal, doesn’t it? If it does, it is perhaps everyone’s responsibility to prevent this new New Deal from degenerating into a new Phantom Industry.

If in the process of introducing the country, and the world, for that matter, to a New Era (almost a hundred years late, and let us pray there are no distractions this time around) one would have to tell the automobile companies to turn their attention on the sorry state of the country’s railroads instead of trying to come up with yet another tank-like jalopy design; if millions of people, after deforesting the suburbs and finding, to their surprise, little satisfaction in owning plywood palaces with low ceilings and leaky Jacuzzis, have to be told that the little gardening they so lovingly do from time to time should become their primary occupation rather than hobby; if, in order to satisfy the rather large group of people who will be happy with neither gardening, farming, nor railroad construction, we have to build more schools, ski resorts, and opera theatres; if, in order to make TV a source of good entertainment rather than the monotonous brain-numbing tool for the perpetually bored, we have to ban advertising and introduce every company infesting the airwaves to the pay-per-view concept; then so be it.

Private gardening and small-time farming done by great numbers of well-paid citizens would render most genetic engineering of crops meaningless, incidentally solving that problem as well. Organic food for everyone!

Locally grown organic food would also solve the problem of obesity so many people are currently concerned about. With a little exercise and red wine, most folks can process any amount of food. It is how the food is grown and stored that opens the door to unsightly problems.

There is a number of concepts we have inherited from the Age of Industry that we should certainly keep. The symphony orchestra is one. Tourism is another.

I am far from suggesting that the idea of mass gardening and farming is the ultimate solution to our more immediate problems. For all I know it may be another trap that must be avoided at all costs, another way to replace production with work creation. Solutions, however, should be sought. New fields of activity need to be explored that will offer us occupations worthy of human beings, jobs that will allow us to keep our dignity.


7. State of the Union

The lawn is neatly trimmed, the plywood palace freshly renovated, the roads clean. There is the mall, the movies, and the train station. The sun is shining. Why is everyone so depressed? Small wonder. Farmland without farmers cannot be anything but depressing. One’s thirty-year mortgage depending on the well-being of the Phantom Industry is a harrowing proposition.

Such is the mess. The New Era is here. What we do about it is largely up to us.