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US Army (discreetly) worries about peak oil

by Jerome a Paris Mon Apr 12th, 2010 at 03:06:20 AM EST

US military warns oil output may dip causing massive shortages by 2015

"By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 million barrels per day," says the report, which has a foreword by a senior commander, General James N Mattis.

It adds: "While it is difficult to predict precisely what economic, political, and strategic effects such a shortfall might produce, it surely would reduce the prospects for growth in both the developing and developed worlds. Such an economic slowdown would exacerbate other unresolved tensions, push fragile and failing states further down the path toward collapse, and perhaps have serious economic impact on both China and India."

The actual report can be found here (PDF) but the peak oil assertions are buried fairly deep inside (see p.29), and certainly not underlined in the summary... so we have a fairly schizophrenic approach here, with peak oil acknowledged but downplayed... (for the 2005 view on peak oil by the US Army, see also this report (PDF))

It looks like someone found the nuggets deep in the report, and fed them to friends in the media. Interesting times...

From the JOE report (p26):

Another potential effect of an energy crunch could be a prolonged U.S. recession which could lead to
deep cuts in defense spending (as happened during the Great Depression). Joint Force commanders
could then find their capabilities diminished at the moment they may have to undertake increasingly
dangerous missions. Should that happen, adaptability would require more than preparations to fight the
enemies of the United States, but also the willingness to recognize and acknowledge the limitations of
America's military forces. The pooling of U.S. resources and capabilities with allies would then become
even more critical. Coalition operations would become essential to protecting national interests.

"Ce qui vient au monde pour ne rien troubler ne mérite ni égards ni patience." René Char
by Melanchthon on Mon Apr 12th, 2010 at 04:57:46 AM EST
The strategy (if there is one) appears to be to downplay the reality of Peak oil (for fear of frightening the horses and leading to panic price increases now) whilst at the same time do some little belated groundwork towards preparing for that reality.  Obviously reducing private demand is key to that, but would be outside the remit of a military report.  

What is interesting is that they are beginning to accept it would impact even on military expenditure and capabilities which have been ring-fenced from all cutbacks until now.  Can you imagine the uproar if the next generation of battle tanks/fighter jets/battleships were selected based on their fuel consumption rather than increased capabilities?

War is incredibly degrading of the environment and fuel inefficient.  Can you imagine foreign policy (and military) options being evaluated based on their impact on fuel supplies and costs?  It's happening now in relation to evaluating options against Iran and Iranian control of the Hormuz.  The deterioration of relationships with Netanyahu may not just be due to continued settlement activity, but also a US refusal to play hard ball with Iran (from a Likud perspective) for precisely that reason.

notes from no w here

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Apr 12th, 2010 at 07:19:36 AM EST
Can you imagine the uproar if the next generation of battle tanks/fighter jets/battleships were selected based on their fuel consumption rather than increased capabilities?

It's all about logistics, isn't it?

The brainless should not be in banking -- Willem Buiter

by Migeru (migeru at eurotrib dot com) on Mon Apr 12th, 2010 at 07:28:01 AM EST
[ Parent ]
Always has been.  But I was thinking more of the Mail/Torygraph headlines "Army Top brass put lives at risk to save fuel" - (if a Tory Government in power.  If Labour still in power it will read: "Brown puts lives at risk to appease tree huggers").

notes from no w here
by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Apr 12th, 2010 at 07:54:14 AM EST
[ Parent ]
The US has nuclear carriers, cruisers and submarines, but no nuclear aircraft, destroyers or cargo ships, etc. Perhaps this is the reason that Obama recently was posed in front of a "Green Hornet", an F-18 that flies on bio-fuel. I wonder how many thousands of acres of farmland the Navy has under option. There is the Strategic Petroleum Reserve, but it cannot, in a crisis, both be used to keep domestic prices low and to provide oil for a long war, nor can it prevent the futures markets from going crazy. The USA used to have Naval Reserve oil fields. Teapot Dome was one, but there were many others. I had an uncle who worked at one in Hominy, Ok. when I was a child.

Perhaps the US can convince Saudi Arabia, the UAE and Yemen to build a pipeline that delivers oil from the Gulf coast to an Indian Ocean port. I recall discussion about a pipeline to the Red Sea. But, from a strict war-fighting perspective, the less oil the US imports, the less disruption a Mid East war would have on our economy. So bring on Burce's Brawny Recovery. It is a "National Security Issue".

As the Dutch said while fighting the Spanish: "It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Apr 12th, 2010 at 07:45:52 PM EST
[ Parent ]
What is interesting is that they are beginning to accept it would impact even on military expenditure and capabilities which have been ring-fenced from all cutbacks until now.

That's one way of reading it.

Another way of parsing the quote in Melanchthon's first comment is that it will take a Great Depression to cut back military expenditure (and then only maybe).

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Apr 12th, 2010 at 03:50:42 PM EST
[ Parent ]
dKos - New Deal Democrat - Will Rising Oil Prices Strangle the Recovery?

Putting the evidence together, it appears that in order to trigger a recession, there must be a large price spike that swiftly causes Oil consumption to be 4% or more of GDP. On the other hand, a very gradual price move, such as we have had since last June, causes consumers to alter their behavior in a way that results not in a recession, but enough of a slowdown in growth that Oil consumption declines and Oil prices follow, having never risen higher than 4% of GDP. That's what is suggested by Oil futures prices at the Chicago Mercantile Exchange, which remain in "contango" (i.e., prices rising as we go further out into the future), but do not reach $90 until the December 2011 contract, and the 2018 contract sells for $95.08. This suggests to me that the futures market believes that higher prices now would not be sustainable.
Nevertheless, if those other factors do not push the system back into outright deflation, barring a spike in the price of Oil prices, as of now my best guess is that more likely that the economy will slow down its growth later this year enough to cause a gradual decline in Oil prices with renewed economic growth.

Of course, he's ignoring the fact that US consumption is not the only pressure on world oil prices, but it's interesting to note that if prices rapidly rise above $3 a gallon in the US, it will short the "recovery". Nobody has yet grasped that we are going to have to do recovery an entirely new way for it to be sustainable, but right now that's un-serious DFH talk.

keep to the Fen Causeway

by Helen (lareinagal at yahoo dot co dot uk) on Mon Apr 12th, 2010 at 10:15:22 AM EST
This is an existential problem for the military.

The question is not only, will our strategic goals be crimped, but...

With cutbacks, how should we change our strategic goals?

AND, more importantly...

At what point does it all become a lost cause (ie hegemony over oil reserves fueled by those same oil reserves become an act of infinite regression)?

US military overreach is fueled by oil. Less oil = less reach. Less reach creates new strategic goals.

by Upstate NY on Mon Apr 12th, 2010 at 10:58:41 AM EST
US military warns oil output may dip causing massive shortages by 2015 | Business | The Guardian
Future fuel supplies are of acute importance to the US army because it is believed to be the biggest single user of petrol in the world. BP chief executive, Tony Hayward, said recently that there was little chance of crude from the carbon-heavy Canadian tar sands being banned in America because the US military like to have local supplies rather than rely on the politically unstable Middle East.

Chapter 3: The war - chicagotribune.com

What are the hidden costs of America's imported oil? The answer is complex. It may ultimately be unknowable. But this hasn't daunted the likes of Milton Copulos.

A tenacious economist with the National Defense Council Foundation--a right-of-center Washington think tank--Copulos spent 18 solid months poring over hundreds of thousands of pages of government documents, toiling to fix a price tag on America's addiction to global crude. He parsed oil-related defense spending in the Middle East. He calculated U.S. jobs and investments lost to steep crude prices. He even factored in the lifelong medical bills of some 18,000 U.S. troops wounded in Iraq as of March. (About $1.5 million each.)

Copulos is a highly respected analyst in Washington. And his exhaustive findings flabbergasted the Senate Foreign Relations Committee this spring.

The actual cost of gasoline refined from imported oil, according to Copulos?

Eight dollars a gallon.

When he isolated the hidden costs of Middle Eastern crude in particular, the price jumped to $11. This included a war premium that swelled the Pentagon's spending to protect all Persian Gulf oil to $137 billion a year. In a truly transparent economy, by Copulos' math, filling up Rodriguez's Jeep would run about $230.

Consumers don't dodge the bill for all these masked expenditures. Instead, they pay for them indirectly, through higher taxes, or by saddling their children and grandchildren with a ballooning national debt--one that's increasingly financed by foreigners. The result: Unaware of the true costs of their oil habit, U.S. motorists see no obvious reason to curb their energy gluttony.

"Gas isn't too expensive," said Copulos. "It's way, way too cheap."

Infinite loop - Wikipedia, the free encyclopedia

  ; Code to loop here
  jmp loop

Now where are we going and what's with the handbasket?
by budr on Tue Apr 13th, 2010 at 08:39:31 AM EST

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