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Second response to whistleblower allegations from Ian Cronshaw, head of the IEA energy diversification division

November 13, 2009

As you can see in my previous post below, I specifically asked Mr Cronshaw if the IEA would provide some clarification on the alleged differences of opinion regarding achievable oil production targets within the organization. This was his reply:

Again all I can say is we continue to note that to achieve the output levels needed to meet the demand projected we need considerable investment in exploration and development, investment which we see as essential to energy security, and affordable energy, and investment that we are worried is not happening at the pace needed. This has of course got worse since the global recession. We have said this loudly and often, I don’t know how often we can say this. This is not about peak oil, but about investment. We also note that under almost any forseeable scenario, OPEC increases market share and absolute oil output, with consequences for energy security. The reference scenario is unsustainable, in the truest sense of that word.

Ian’s response does not directly address the main issue that I raised. However, reading between the lines he is clearly saying – with an undertone of frustration – that any bickering within the IEA is irrelevant because we are heading for a global crisis of epic magnitude by 2030 as long as investment in exploration and development fails to reach adequate levels. If I understand correctly his emphasis in this context does seem to be on meeting the demand projected rather than a policy of demand destruction, but perhaps that isn’t even relevant here.

Ian’s point that more investment is an absolute requirement and is not happening at the pace needed is absolutely crucial. Why the lack of investment? Investment will only happen if it is profitable to do so. As oil becomes more scarce the price goes up but it also becomes more expensive to recover. The figure to watch out for is the cost of bringing a barrel of oil out of the earth in any specific location. The ratio of the cost of a barrel of oil and the cost of extracting a barrel of oil keeps shifting and investment shifts along with it.

What’s becoming more and more obvious is that our way of life, the economic system, is being exposed at last for what it is – a pyramid scheme. The economic system places the accumulation of private wealth above all other priorities and considerations. This is the glorification and institutionalization of Greed. It has facilitated the vast accumulation of our collective wealth into a small number of hands in no small part through the mass exploitation of fossil fuels and through institutions such as corporations and banks over a relatively short period of time.

In the long run it is profitability that we must question as a form of overriding authority. We do need investment, particularly in development of alternative energies, and it will not in all likelihood be profitable. That which benefits us collectively is seldom profitable. Take the example of schools, national health care and public transportation. If these services are managed properly and treated as services to people rather than businesses for profit then they tend not to profitable. Profit from business benefits the few, public services benefit the many. They are not compatible so long as profit is accumulated privately.

Herein lies the clash between the need to preserve and protect our world – the real world of mankind and the planet we depend on for life – and the need to protect this artificial world of self-motivated proftiteering. This in my opinion is the essence of our time.

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