Tomgram: Michael Klare, The Coming World of "Peak Oil Demand," Not "Peak Oil" | TomDispatch

Michael Klare, The Coming World of "Peak Oil Demand," Not "Peak Oil"

In a Greater Middle East in which one country after another has been plunged into chaos and possible failed statehood, two rival nations, Iran and Saudi Arabia, have been bedrock exceptions to the rule.  Iran, at the moment, remains so, but the Saudi royals, increasingly unnerved, have been steering their country erratically into the region’s chaos. The kingdom is now led by a decrepit 80-year-old monarch who, in commonplace meetings, has to be fed his lines by teleprompter.  Meanwhile, his 30-year-old son, Deputy Crown Prince Mohammed bin Salman, who has gained significant control over both the kingdom’s economic and military decision-making, launched a rash anti-Iranian war in Yemen, heavily dependent onair power.  It is not only Washington-backed but distinctly in the American mode of these last years: brutal yet ineffective, never-ending, a boon to the spread of terror groups, and seeded with potential blowback.

Meanwhile, in a cheap-oil, belt-tightening moment, in an increasingly edgy country, the royals are reining in budgets and undermining the good life they were previously financing for many of their citizens.  The one thing they continue to do is pump oil -- their only form of wealth -- as if there were no tomorrow, while threatening further price-depressing rises in oil production in the near future.  And that’s hardly been the end of their threats.  While taking on the Iranians (and the Russians), they have also been lashing out at the local opposition,executing a prominent dissident Shiite cleric among others and even baring their teeth at Washington.  They have reportedly threatened the Obama administration with the sell-off of hundreds of billions of dollars in American assets if a bill, now in Congress and aimed at opening the Saudis to American lawsuits over their supposed culpability for the 9/11 attacks, were to pass. (It would, however, be a sell-off that could hurt the Saudis more than anyone.)  Even at the pettiest of levels, on Barack Obama's recent arrival in Saudi Arabia for a visit with King Salman, they essentially snubbed him, a first for a White House occupant. All in all, a previously sure-footed (if extreme) Sunni regime seems increasingly unsettled; in fact, it has something of the look these days of a person holding a gun to his own head and threatening to pull the trigger. In other words, in a region already aflame, the Saudis seem to be tossing... well, oil onto any fire in sight.

And in a way, it's little wonder.  The very basis for the existence of the Saudi royals, their staggering oil reserves, is under attack -- and not by the Iranians, the Russians, or the Americans, but as TomDispatch energy specialist Michael Klare explains, by something so much larger: the potential ending of the petroleum way of life.  Tom

Debacle at Doha 
The Collapse of the Old Oil Order 
By Michael T. Klare

Sunday, April 17th was the designated moment.  The world’s leading oil producers were expected to bring fresh discipline to the chaotic petroleum market and spark a return to high prices. Meeting in Doha, the glittering capital of petroleum-rich Qatar, the oil ministers of the Organization of the Petroleum Exporting Countries (OPEC), along with such key non-OPEC producers as Russia and Mexico, were scheduled to ratify a draft agreement obliging them to freeze their oil output at current levels. In anticipation of such a deal, oil prices had begun to creep inexorably upward, from $30 per barrel in mid-January to $43 on the eve of the gathering. But far from restoring the old oil order, the meeting ended in discord, driving prices down again and revealing deep cracks in the ranks of global energy producers.

It is hard to overstate the significance of the Doha debacle. At the very least, it will perpetuate the low oil prices that have plagued the industry for the past two years, forcing smaller firms into bankruptcy and erasing hundreds of billions of dollars of investments in new production capacity. It may also have obliterated any future prospects for cooperation between OPEC and non-OPEC producers in regulating the market. Most of all, however, it demonstrated that the petroleum-fueled world we’ve known these last decades -- with oil demand always thrusting ahead of supply, ensuring steady profits for all major producers -- is no more.  Replacing it is an anemic, possibly even declining, demand for oil that is likely to force suppliers to fight one another for ever-diminishing market shares.

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