Riots as a Micro Form of Extractive Economics

Smash-up riots are a microcosm of our attitude to the Earth’s resources, which we have looted to give us ‘economic growth’ involving vast quantities of unnecessary consumer goods.

We have already consumed over half of extractable oil. I think the peak was passed in 2005-06.

What is the ethical difference between looting our planet and looting personal property constructed upon the planet? Both are selfish and unjust. Both are done for human enrichment and/or satisfaction. We have privileged personal property above virtually everything else, of course, and in doing that we only accelerate the rate at which we are extracting oil, gas, coal, iron, precious metals, rare earths and all the other finite constituents of our Earth. There’s also the soil we are destroying, the oceans we are polluting and the ancient trees we are felling.

Rioting looters may not, in most cases, make the connection between the destruction of Earth and their own behaviour, but they are on a micro scale copying – to give just a few examples — the oil companies whose activities have destroyed the livelihoods of inhabitants of the Niger delta in Africa, the cruise liners which discharge rubbish into the ocean, the mining corporations which poison water supplies as in Bolivia, the nuclear power plants which threaten future generations with radiation.

It seems that only big accidents, like the radioactivity spewing from the broken Fukushima nuclear plant in Japan and the acute rioting in England in early August, focus our attention. Once out of the headlines, it’s back to business as usual, in resource extraction and on the streets of London, until the next eruption.

Let’s look at the resource issue more closely, using oil as the example.

World oil consumption in 2011 is likely to be about 32.193 billion barrels.[1]

The US Energy Information Administration reckoned that in 2009 the world’s proven reserves of crude oil totalled 1,342.207 billion barrels. That equals 41.7 years’ supply at the consumption rate in 2011. Rising demand for oil, notably in China, India and Latin America, will shorten the already frighteningly short timeline.

Saudi Arabia and Canada are supposed to have the world’s largest oil reserves. Our assumptions about the amounts of oil in both countries are more than questionable.

Saudi Arabia has almost one-fifth of the world’s stated oil reserves, 266.710 billion barrels of the 1,342.207 billion total. Amazingly, despite thirty years of continuous pumping, and the absence of major oil finds, Saudi Arabia’s reserves in 2009 were 60% higher than in 1980. The reserves figure jumped from 172.575 billion barrels in 1989 to 257.559 billion in 1990. Similar inflation happened in other members of OPEC, the Organisation of Petroleum Exporting Countries, in the late 1980s. The main reason for the reserves inflation was OPEC’s introduction of production quotas based on each member’s stated oil reserves.

No major fields have been discovered in Saudi Arabia since the 1960s, the last of any size being the Zuluf field in 1965, which started producing in 1973 and contained between 8.5 billion and 10 billion barrels. The Ghawar field, the largest in the world, was discovered in 1948, started production in 1951, and contained between 66 billion and 150 billion barrels.[2] The field yielded over 65 billion barrels by 2010.[3] This means either that the field is almost empty, or in the best case scenario, it is about half empty.

Saudi Aramco, the state oil company of Saudi Arabia, is secretive, and if the field is nearing depletion, would want to keep this information to itself for as long as possible. There are many signs, though, that the field is in the latter stages of its life. Aramco intends to inject carbon dioxide into the field, at the rate of 40 million cubic feet a day, to reduce the viscosity of the remaining oil. The injection is due to start in the Uthmaniyah zone in 2013.[4] Carbon dioxide injection is typically a technology of the tertiary or final stage oil recovery. Water flooding, to fill the space created by the extraction of oil, is regarded as the secondary stage: the remaining crude oil floats on the water and rises nearer to the surface. Water injection in the Ghawar field began as long ago as 1964. Aramco was at pains to stress that the carbon dioxide injection programme is not because the oilfield is depleting, but to “quantify how much reserves we can recover and for the environment”. So said Saad Turaiki, vice president of Aramco’s southern area oil operations.[5]

The Saudi Gazette reported, on November 10th 2010, a speech by King Abdullah to Saudi students at universities in the United States. King Abdullah was explaining his decision, made in summer 2010, to stop oil exploration in the kingdom, so that oil wealth would be saved and passed on to future generations. “Thank God, your homeland is proceeding resolutely to a prosperous future, God willing. And what is unknown is even better,” the king told the students.[6]

King Abdullah’s comments reinforce the circumstantial evidence that Saudi Arabia’s oilfields have passed their peak. If this is the case, it would be logical to save oil for coming times of scarcity and high prices. The energy investment banker Matthew R Simmons, in his 2005 book Twilight in the Desert: the coming Saudi oil shock and the world economy, concluded that Saudi Arabia’s fields were in decline, but his arguments were not universally accepted. Mr Simmons accidentally drowned in his hot tub, at home in Maine, in August 2010. That was the verdict of Maine’s Chief Medical Examiner, who noted that Mr Simmons, aged 67, suffered from heart disease.[7]

Canada has the world’s second largest reserves of crude oil according to the US Energy Information Administration. In 2009 those reserves were estimated at 178.092 billion barrels, or 13.3% of the global total. Canada is a newcomer to the oil reserves leader board. In 2003 its oil reserves were just 4.858 billion barrels. What accounts for the massive increase? Answer: the oil sands of northern Alberta, regions of bituminous sands that can be processed into usable oil – but the extraction and processing themselves consume huge quantities of energy.

Richard Heinberg, in his web book Searching for a Miracle: ‘Net Energy’ Limits and the Fate of Industrial Society[8] explains the impact of Energy Return on Energy Invested, or EROIE. This ratio summarises the energy input required to obtain one unit of energy output. The world’s largest oilfield, Saudi Arabia’s Ghawar, has yielded an EROIE of 100 to 1, according to Heinberg’s calculations. The global average EROIE for crude oil is some 19:1. As new oilfield discoveries wane, oil companies seek to drill in more challenging places, like the deep waters of the Gulf of Mexico, the Arctic shelf of Alaska, and northern Siberia. Very large amounts of energy are expended in securing oil from hostile and marginal environments. The oil sands of northern Alberta were regarded as marginal until the ‘00s. Their ROIE is between 5.2:1 and 5.8:1, Heinberg suggests. That is still a positive return, but has severe economic implications. As the energy demands of finding and extracting fossil fuels grow, the proportion of energy returned to the economy will fall. Put another way, the energy industries will themselves absorb escalating amounts of the energy extracted to power the world.

Oil shales are a case in point. The manufacture of usable oil from shales, fine-grained sedimentary rocks with high levels of organic matter, results in serious environmental harm, such as carbon dioxide emissions to groundwater and surface water pollution, as well as returning a low EROIE ratio, typically in the range 1.5:1 to 4:1, according to Heinberg, although the very complexity of the technology means that EROIE figures are fuzzy. From an environmental point of view, the exploitation of oil shales is similar to the adulterated drugs that heroin addicts use when nothing better is to hand. China, Brazil and Estonia all use the dirty technology of oil shale extraction, and several pilot projects are running in the USA.[9] When oil companies start drilling oil shales, it is because all the easily extractable oil has gone.

Canada’s oil sands may not be quite as energy-hungry as oil shales, but it is sobering to note that nearly one-seventh of the world’s current oil reserves are in the form of bituminous sands in northern expanses of the Canadian state of Alberta.


[1] International Energy Agency forecast made on 13th October 2010: the IEA predicted 88.2 million barrels a day, which over a year is 32.193 billion barrels.

[2] Saudi Arabia oilfield data from ‘Saudi Arabia: an attempt to link oil discoveries, proven reserves and production data’ by Sam Foucher, www.theoildrum.com, 3rd January 2008, accessed 12th November 2010. The paper includes oilfield estimates from Petroconsultants, Colin Campbell, Matthew Simmons, Fredrik Robelius and others.

[3] ‘Aramco pride at ‘pampered’ Ghawar’, http://www.upstreamonline.com, 8th April 2010.

[4] ‘Aramco pride at ‘pampered’ Ghawar’, op. cit.

[5] Reported in ‘Aramco pride at ‘pampered’ Ghawar’, op. cit.

[6] ‘New oil fields saved for future generations: King’, www.saudigazette.com.sa, 12th November 2010.

[7] ‘Matthew Simmons, who said global crude production has peaked, dies at 67’, by Edward Klump and David Wethe, www.bloomberg.com, 9th August 2010.

[8] Available on http://richardheinberg.com, dated 12th November 2009, accessed 12th November 2010.

[9] ‘Oil shale economics’, Wikpedia, updated 9th October 2010, accessed 12th November 2010.

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