Nafeez Mosaddeq Ahmed's Blog, page 7

The Crisis of Civilization - over 200,000 youtube views in 8 months!

Our documentary feature film on the end-the-world-as-we-know-it-and-the-beginning-of-the-new, The Crisis of Civilization, is still going viral! After a hugely successful festival circuit, hundreds of community screenings around the world, and national television broadcasts in the US and parts of Europe, we released the film for free online in March last year. As of this month, I'm thrilled to report that we breached the 200,000 view mark on youtube, and are getting thousands of new viewers everyday! So the Crisis film is really helping people wake up to the global challenges of the 21st century and the opportunities for transitioning to something beautiful.



If you've watched the film and want more, don't forget the book which inspired the film - A User's Guide the Crisis of Civilization: And How to Save It (Pluto/Macmillan). You can learn more about the book here, and even download the whole first chapter on climate change (which btw contains a detailed demolition of climate 'scepticism') for free.

In the meantime, Crisis director Dean Puckett has made an amazing new film called Grasp the Nettle, about his firsthand experience participating in the rise and fall of two radical social experiments in London. Check it out!

Pakistan's Rural Poor on Path to Post-Carbon Prosperity

A revised and updated version of my piece published on this blog here as 'Between Climate Catastrophe and Civilisational Renewal' was published today on OurWorld 2.0, the interdisciplinary web magazine published by the United Nations University's Media Centre.



The piece offers a comprehensive but concise round-up of the latest scientific reports on climate change - with quite scary implications; along with exploration of how the rural poor in remote Pakistan are quietly pioneering truly sustainable socio-economic and political models of local grassroots empowerment that might well hold the potential to save us all.

I hope this is a fitting way to close the working day on 21.12.12.

And with that, have a thought-provoking Christmas and an inspiring New Year!

The Great Oil Swindle: why the new black gold rush leads off a fiscal cliff

Published in Ceasefire Magazine




UPDATE: Various versions published Le Monde diplomatique, Truthout and other publications










Headlines
about this year's World Energy Outlook
(WEO) from the International Energy
Agency (IEA), released mid-November, would lead you to think we are literally
swimming in oil.




The report
forecasts that the US will outstrip Saudi Arabia as the world's largest oil
producer by 2017, becoming "all but self-sufficient in
net terms" in
energy production - a notion reported almost verbatim by media agencies
worldwide from BBC News to Bloomberg. Going even further, Damien
Carrington, Head of Environment at the Guardian,
titled his blog: "IEA report reminds us peak
oil idea has gone up in flames".




The IEA
report's general conclusions have been backed up by several other reports this
year. Exxon Mobil's 2013
Energy Outlook
projects that demand for gas will grow by 65 per cent through 2040, with 20 per
cent of worldwide production from North America, mostly from unconventional
sources. The shale gas revolution will make the US a net exporter by 2025, it
concludes. The US National Intelligence Council also predicts US energy independence
by 2030.










This last
summer saw a similar chorus of headlines around the release of a Harvard
University report by Leonardo Maugeri, a former executive with the Italian oil
major Eni. "We were wrong on peak oil", read environmentalist George
Monbiot's Guardian headline.
"There's enough to fry us all." Monbiot's piece echoed a spate of
earlier stories. In the preceding month, the BBC had asked "Shortages: Is 'Peak Oil'
Idea Dead?". The
Wall Street Journal pondered, "Has Peak Oil Peaked?", while the New York Time's leading environmental columnist Andrew Revkin took
"A Fresh Look At Oil's Long
Goodbye".

The gist of
all this is that "peak oil" is now nothing but an irrelevant meme,
out of touch with the data, and soundly disproven by the now self-evident
abundance of cheap unconventional oil and gas.




Burning our bridges




On the one
hand, it's true: there are more than enough fossil fuels in the ground to drive
an accelerated rush to the most extreme scenarios of climate catastrophe.




The
increasing shift from conventional to unconventional forms of oil and gas - tar
sands, oil shale, and especially shale gas - heralds an unnerving acceleration
of carbon emissions, rather than the deceleration promised by those who
advocate shale as a clean 'bridge fuel' to renewables. According to the CO2 Scorecard Group, contrary to industry claims, shale
gas "cannot be credited" with US emissions reductions over the last
half-decade. Nearly 90 per cent of reductions "were caused by decline in
petroleum use, displacement of coal" by "non-price factors"
rather than shale, and coal's "replacement by wind, hydro and other
renewables." To make matters worse, where natural gas saved 50 million
tonnes of carbon by substituting coal generation due its lower price, it
generated 66 million additional tonnes across commercial, residential and
industrial sectors.




In fact,
studies show that when methane leakages are incorporated into an assessment of
shale gas' CO2 emissions, natural gas could even
surpass coal in terms
of overall climate impact. As for tar sands and oil shales, emissions are 1.2  to 1.75 times higher than for conventional oil. No wonder
the IEA's chief economist Fatih Birol remarked pessimistically that
"the world is going in the wrong direction in terms of climate
change."




But while the
new evidence roundly puts to rest the 'doomer' scenarios advocated by staunch "peak
oil" pessimists,
the global energy predicament is far more complicated.




Scaling the peak




Delving
deeper into the available data shows that despite being capable of triggering
dangerous global warming, we are already in the throes of a global energy
transition in which the age of cheap oil is well and truly over. For most
serious analysts, far from signifying a world running out of oil, "peak
oil" refers simply to the point when, due to a combination of below-ground
geological constraints and above-ground economic factors, oil becomes
increasingly and irreversibly more difficult and expensive to produce.




That point is
now. US Energy Information Administration (EIA) data confirms that despite the
US producing a "total oil supply" of 10 million barrels per day (up by 2.1 mbd since January 2005)
world crude oil production and lease condensate - conventional production -
remains on the largely flat, undulating plateau it has been on since it stopped
rising in around that very year at 74 million barrels per day (mbd). According to John Hofmeister, former President of Shell Oil,
"flat production for the most part" over the last decade has
dovetailed with annual decline rates for existing fields of about "4 to 5
million bpd." 




Combined with "constant growing demand" particularly
from China and emerging markets, he argues, this will underpin higher oil
prices for the foreseeable future.




The IEA's WEO
actually corroborates this picture - but the devil is in the largely overlooked
details. Firstly, the main reason US oil supply will overtake Saudi Arabia and
Russia is because their output is projected to decline, not rise as previously
assumed. So while US output creeps up from 10 to 11 mbd in 2025, post-peak Saudi output will fall to 10.6 mbd
and Russia to 9.5 mbd.




Secondly, the
report's projected increase in "oil production" from 84 mbd in
2011 to 97 mbd  in 2035 comes not from conventional oil,
but "entirely from natural gas liquids and
unconventional sources" (and half of this from unconventional gas
including shale) - with conventional crude oil  output (excluding light tight oil)
fluctuating between 65 mbd and 69 mbd, never quite reaching the historic peak of 70 mbd in 2008 and
falling by 3 mbd sometime after 2012. The IEA also does not forecast a return
to the cheap oil heyday of the pre-2000 era, but rather a long-term price rise
to about $125 per barrel by 2035.




Thirdly, oil
prices would be much higher if not for the fact that governments are heavily subsidising fossil
fuels. The WEO revealed that fossil fuel subsidies increased 30 per cent to $523 billion
in 2011, masking the threat of high prices.




Therefore,
world conventional oil production is already on a fluctuating plateau and we
are now increasingly dependent on more expensive unconventional sources. The
age of cheap oil abundance is over.




Fudging figures




But there are
further reasons for concern. For how reliable is the IEA's data? In a series of
investigations for the Guardian and Le Monde, Lionel Badal exposed in 2009
how key data was deliberately fudged at the IEA under US pressure to artificially inflate official
reserve figures. Not only that, but Badal later discovered that as early as
1998, extensive IEA data exploding assumptions of "sustained economic
growth and low unemployment", had been systematically suppressed for political reasons according to
several whistleblowers.




With the
IEA's research under such intense US political scrutiny and interference for 12
years, its findings should perhaps not always be taken at face value.




The same
goes, even more so, for Maugeri's celebrated Harvard report. By
any meaningful standard, this was hardly an independent analysis of oil
industry data. Funded by two oil majors - Eni and British Petroleum (BP) - the report was not
peer-reviewed, and contained a litany of elementary errors. So egregious are
these errors that Dr. Roger Bentley, an expert at the UK Energy Research Centre,
told ex-BBC financial journalist David Strahan: "Mr Maugeri’s report
misrepresents the decline rates established by major studies, it contains
glaring mathematical errors... I am astonished Harvard published it."




What the scientists say




In contrast
to the blaring media attention generated by Maugeri's report, three
peer-reviewed studies published in reputable science journals from January
through to June this year offered a less than jubilant perspective. A paper
published in Nature by Sir David King, the UK's former
chief government scientist, found that despite reported increases in oil
reserves, tar sands, natural gas and shale gas production via fracking,
depletion of the world’s existing fields is still running at 4.5 percent to 6.7
percent per year. They firmly dismissed notions that a shale gas boom would
avert an energy crisis, noting that production at shale gas wells drops by as
much as 60 to 90 percent in the first year of operation. The paper received
little, if any, media fanfare.




In March, Sir
King's team at Oxford University's Smith School of Enterprise & the
Environment published another peer-reviewed paper in Energy Policy ,
concluding that the industry had overstated world oil reserves by about a
third. Estimates should be downgraded from 1150-1350 billion barrels to 850-900
billion barrels. As a consequence, the authors argued: "While there is
certainly vast amounts of fossil fuel resources left in the ground, the volume
of oil that can be commercially exploited at prices the global economy has
become accustomed to is limited and will soon decline." The study was
largely blacked out in the media - bar a solitary report in the Telegraph ,
to its credit.




In June - the
same month as Maugeri's deeply flawed analysis - Energy
published an extensive analysis of oil industry data by US financial risk
analyst Gail Tverberg, who found that since 2005 "world [conventional] oil
supply has not increased", that this was "a primary cause of the
2008-2009 recession", and that the "expected impact of reduced oil
supply" will mean the "financial crisis may eventually worsen."
But all the media attention was on the oil man's oil-funded report - Tverberg's
peer-reviewed study in a reputable science journal, with its somewhat darker
message, was ignored.




What happens when the shale boom...
goes boom?




These
scientific studies are not the only indications that something is deeply wrong
with the IEA's assessment of prospects for shale gas production and
accompanying economic prosperity.




Indeed, Business Insider
reports that far from being profitable, the shale gas industry is facing huge
financial hurdles. "The economics
of fracking are horrid", observes US financial journalist Wolf Richter.
"Production falls off a cliff from day one and continues for a year or so
until it levels out at about 10 per cent of initial production." The
result is that "drilling is
destroying capital at an astonishing rate, and drillers are left with a
mountain of debt just when decline rates are starting to wreak their havoc. To
keep the decline rates from mucking up income statements, companies had to
drill more and more, with new wells making up for the declining production of old
wells. Alas, the scheme hit a wall, namely reality."




Just four months ago, Exxon's CEO, Rex Tillerson, complained that the
lower prices due to the US natural gas glut, although reducing energy costs for
consumers, were depressing prices and, thus, dramatically decreasing profits.
This problem is compounded primarily by the swiftly plummeting production rates
at shale wells, which start high but fall fast. Although in shareholder and
annual meetings, Exxon had officially insisted it was not losing money on gas,
Tillerson candidly told a meeting at the Council on Foreign Relations: "We
are all losing our shirts today. We're
making no money. It's all in the red."




The oil
industry has actively and deliberately attempted to obscure the challenges
facing shale gas production. A seminal New York Times
investigation last year found that despite a public stance of extreme optimism,
the US oil industry is "privately skeptical of
shale gas."
According to the Times, "the gas
may not be as easy and cheap to extract from shale formations deep underground
as the companies are saying, according to hundreds of industry e-mails and
internal documents and an analysis of data from thousands of wells." The
emails revealed industry executives, lawyers, state geologists and market
analysts voicing "skepticism about lofty forecasts" and questioning
"whether companies are intentionally, and even illegally, overstating the
productivity of their wells and the size of their reserves." Though
corroborated by independent studies, a year later such revelations have been
largely ignored by journalists and policymakers.




But we ignore
them at our peril. Arthur Berman, a 32-year veteran petroleum geologist who
worked with Amoco (prior to its merger with BP), on the same day as the release
of the IEA's 2012 annual report, told OilPrice
that "the decline rates shale reservoirs experience... are incredibly
high." Citing the Eagleford shale - the "mother of all shale oil
plays", he points out that the "annual decline rate is higher than 42
per cent." Just to keep production flat, they will have to drill
"almost 1000 wells in the Eagleford shale, every year... Just for one
play, we're talking about $10 or $12 billion a year just to replace supply. I
add all these things up and it starts to approach the amount of money needed to
bail out the banking industry. Where is that money going to come from?"




Chesapeake
Energy recently found itself in exactly this situation, forcing it to sell
assets to meet its obligations. "Staggering under high debt,"
reported the Washington Post ,
Chesapeake said "it would sell $6.9 billion of gas fields and
pipelines - another step in shrinking the company whose brash chief executive
had made it a leader in the country’s shale gas revolution." The sale was
forced by a "combination of low natural gas prices and excessive
borrowing."




The
worst-case scenario is that several large oil companies find themselves facing
financial distress simultaneously. If that happens, according to Berman,
"you may have a couple of big bankruptcies or takeovers and everybody
pulls back, all the money evaporates, all the capital goes away. That's the
worst-case scenario." To make matters worse, Berman has shown conclusively
that the industry exaggerated EURs (Estimated Ultimate Recovery) of shale wells
using flawed industry models that, in turn, have fed into the
IEA's future projections. Berman is not alone - writing in Petroleum Review ,
US energy consultants Ruud Weijermars and Crispian McCredie argued
there remains strong "basis for reasonable doubts about the reliability
and durability of US shale gas reserves" which have been
"inflated" under new Security & Exchange Commission rules.




The eventual
consequences of the current gas glut, in other words, are more than likely to
be an unsustainable shale bubble that collapses under its own weight,
precipitating a supply collapse and price spike. Rather than fuelling
prosperity, the shale revolution will instead boost a temporary recovery
masking deeper, structural instabilities. Inevitably, those instabilities will
collide, leaving us with an even bigger financial mess, on a faster trajectory
toward costly environmental destruction.




So when is
crunch time? According to a new report from the New Economics Foundation out last month, the arrival of
'economic peak oil' - when the costs of supply "exceeds the price
economies can pay without significantly disrupting economic activity" -
will be around 2014/15.



Black gold, it would seem,
is not the answer to our problems.

The Great Oil Swindle: why the new black gold rush leads off a fiscal cliff

Published in Ceasefire Magazine


Headlines about this year's World Energy Outlook(WEO) from the International Energy Agency (IEA), released mid-November, would lead you to think we are literally swimming in oil.
The report forecasts that the US will outstrip Saudi Arabia as the world's largest oil producer by 2017, becoming "all but self-sufficient in net terms" in energy production - a notion reported almost verbatim by media agencies worldwide from BBC News to Bloomberg. Going even further, Damien Carrington, Head of Environment at the Guardian, titled his blog: "IEA report reminds us peak oil idea has gone up in flames".
The IEA report's general conclusions have been backed up by several other reports this year. Exxon Mobil's 2013 Energy Outlook projects that demand for gas will grow by 65 per cent through 2040, with 20 per cent of worldwide production from North America, mostly from unconventional sources. The shale gas revolution will make the US a net exporter by 2025, it concludes. The US National Intelligence Council also predicts US energy independence by 2030.
This last summer saw a similar chorus of headlines around the release of a Harvard University report by Leonardo Maugeri, a former executive with the Italian oil major Eni. "We were wrong on peak oil", read environmentalist George Monbiot's Guardian headline. "There's enough to fry us all." Monbiot's piece echoed a spate of earlier stories. In the preceding month, the BBC had asked "Shortages: Is 'Peak Oil' Idea Dead?". The Wall Street Journal pondered, "Has Peak Oil Peaked?", while the New York Time's leading environmental columnist Andrew Revkin took "A Fresh Look At Oil's Long Goodbye".The gist of all this is that "peak oil" is now nothing but an irrelevant meme, out of touch with the data, and soundly disproven by the now self-evident abundance of cheap unconventional oil and gas.
Burning our bridges
On the one hand, it's true: there are more than enough fossil fuels in the ground to drive an accelerated rush to the most extreme scenarios of climate catastrophe.
The increasing shift from conventional to unconventional forms of oil and gas - tar sands, oil shale, and especially shale gas - heralds an unnerving acceleration of carbon emissions, rather than the deceleration promised by those who advocate shale as a clean 'bridge fuel' to renewables. According to the CO2 Scorecard Group, contrary to industry claims, shale gas "cannot be credited" with US emissions reductions over the last half-decade. Nearly 90 per cent of reductions "were caused by decline in petroleum use, displacement of coal" by "non-price factors" rather than shale, and coal's "replacement by wind, hydro and other renewables." To make matters worse, where natural gas saved 50 million tonnes of carbon by substituting coal generation due its lower price, it generated 66 million additional tonnes across commercial, residential and industrial sectors.
In fact, studies show that when methane leakages are incorporated into an assessment of shale gas' CO2 emissions, natural gas could even surpass coal in terms of overall climate impact. As for tar sands and oil shales, emissions are 1.2  to 1.75 times higher than for conventional oil. No wonder the IEA's chief economist Fatih Birol remarked pessimistically that "the world is going in the wrong direction in terms of climate change."
But while the new evidence roundly puts to rest the 'doomer' scenarios advocated by staunch "peak oil" pessimists, the global energy predicament is far more complicated.
Scaling the peak
Delving deeper into the available data shows that despite being capable of triggering dangerous global warming, we are already in the throes of a global energy transition in which the age of cheap oil is well and truly over. For most serious analysts, far from signifying a world running out of oil, "peak oil" refers simply to the point when, due to a combination of below-ground geological constraints and above-ground economic factors, oil becomes increasingly and irreversibly more difficult and expensive to produce.
That point is now. US Energy Information Administration (EIA) data confirms that despite the US producing a "total oil supply" of 10 million barrels per day (up by 2.1 mbd since January 2005) world crude oil production and lease condensate - conventional production - remains on the largely flat, undulating plateau it has been on since it stopped rising in around that very year at 74 million barrels per day (mbd). According to John Hofmeister, former President of Shell Oil, "flat production for the most part" over the last decade has dovetailed with annual decline rates for existing fields of about "4 to 5 million bpd." 
Combined with "constant growing demand" particularly from China and emerging markets, he argues, this will underpin higher oil prices for the foreseeable future.
The IEA's WEOactually corroborates this picture - but the devil is in the largely overlooked details. Firstly, the main reason US oil supply will overtake Saudi Arabia and Russia is because their output is projected to decline, not rise as previously assumed. So while US output creeps up from 10 to 11 mbd in 2025, post-peak Saudi output will fall to 10.6 mbd and Russia to 9.5 mbd.
Secondly, the report's projected increase in "oil production" from 84 mbd in 2011 to 97 mbd  in 2035 comes not from conventional oil, but "entirely from natural gas liquids and unconventional sources" (and half of this from unconventional gas including shale) - with conventional crude oil  output (excluding light tight oil) fluctuating between 65 mbd and 69 mbd, never quite reaching the historic peak of 70 mbd in 2008 and falling by 3 mbd sometime after 2012. The IEA also does not forecast a return to the cheap oil heyday of the pre-2000 era, but rather a long-term price rise to about $125 per barrel by 2035.
Thirdly, oil prices would be much higher if not for the fact that governments are heavily subsidising fossil fuels. The WEO revealed that fossil fuel subsidies increased 30 per cent to $523 billion in 2011, masking the threat of high prices.
Therefore, world conventional oil production is already on a fluctuating plateau and we are now increasingly dependent on more expensive unconventional sources. The age of cheap oil abundance is over.
Fudging figures
But there are further reasons for concern. For how reliable is the IEA's data? In a series of investigations for the Guardian and Le Monde, Lionel Badal exposed in 2009 how key data was deliberately fudged at the IEA under US pressure to artificially inflate official reserve figures. Not only that, but Badal later discovered that as early as 1998, extensive IEA data exploding assumptions of "sustained economic growth and low unemployment", had been systematically suppressed for political reasons according to several whistleblowers.
With the IEA's research under such intense US political scrutiny and interference for 12 years, its findings should perhaps not always be taken at face value.
The same goes, even more so, for Maugeri's celebrated Harvard report. By any meaningful standard, this was hardly an independent analysis of oil industry data. Funded by two oil majors - Eni and British Petroleum (BP) - the report was not peer-reviewed, and contained a litany of elementary errors. So egregious are these errors that Dr. Roger Bentley, an expert at the UK Energy Research Centre, told ex-BBC financial journalist David Strahan: "Mr Maugeri’s report misrepresents the decline rates established by major studies, it contains glaring mathematical errors... I am astonished Harvard published it."
What the scientists say
In contrast to the blaring media attention generated by Maugeri's report, three peer-reviewed studies published in reputable science journals from January through to June this year offered a less than jubilant perspective. A paper published in Nature by Sir David King, the UK's former chief government scientist, found that despite reported increases in oil reserves, tar sands, natural gas and shale gas production via fracking, depletion of the world’s existing fields is still running at 4.5 percent to 6.7 percent per year. They firmly dismissed notions that a shale gas boom would avert an energy crisis, noting that production at shale gas wells drops by as much as 60 to 90 percent in the first year of operation. The paper received little, if any, media fanfare.
In March, Sir King's team at Oxford University's Smith School of Enterprise & the Environment published another peer-reviewed paper in Energy Policy , concluding that the industry had overstated world oil reserves by about a third. Estimates should be downgraded from 1150-1350 billion barrels to 850-900 billion barrels. As a consequence, the authors argued: "While there is certainly vast amounts of fossil fuel resources left in the ground, the volume of oil that can be commercially exploited at prices the global economy has become accustomed to is limited and will soon decline." The study was largely blacked out in the media - bar a solitary report in the Telegraph , to its credit.
In June - the same month as Maugeri's deeply flawed analysis - Energy published an extensive analysis of oil industry data by US financial risk analyst Gail Tverberg, who found that since 2005 "world [conventional] oil supply has not increased", that this was "a primary cause of the 2008-2009 recession", and that the "expected impact of reduced oil supply" will mean the "financial crisis may eventually worsen." But all the media attention was on the oil man's oil-funded report - Tverberg's peer-reviewed study in a reputable science journal, with its somewhat darker message, was ignored.
What happens when the shale boom... goes boom?
These scientific studies are not the only indications that something is deeply wrong with the IEA's assessment of prospects for shale gas production and accompanying economic prosperity.
Indeed, Business Insider reports that far from being profitable, the shale gas industry is facing huge financial hurdles. "The economics of fracking are horrid", observes US financial journalist Wolf Richter. "Production falls off a cliff from day one and continues for a year or so until it levels out at about 10 per cent of initial production." The result is that "drilling is destroying capital at an astonishing rate, and drillers are left with a mountain of debt just when decline rates are starting to wreak their havoc. To keep the decline rates from mucking up income statements, companies had to drill more and more, with new wells making up for the declining production of old wells. Alas, the scheme hit a wall, namely reality."
Just four months ago, Exxon's CEO, Rex Tillerson, complained that the lower prices due to the US natural gas glut, although reducing energy costs for consumers, were depressing prices and, thus, dramatically decreasing profits. This problem is compounded primarily by the swiftly plummeting production rates at shale wells, which start high but fall fast. Although in shareholder and annual meetings, Exxon had officially insisted it was not losing money on gas, Tillerson candidly told a meeting at the Council on Foreign Relations: "We are all losing our shirts today. We're making no money. It's all in the red."
The oil industry has actively and deliberately attempted to obscure the challenges facing shale gas production. A seminal New York Times investigation last year found that despite a public stance of extreme optimism, the US oil industry is "privately skeptical of shale gas." According to the Times, "the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells." The emails revealed industry executives, lawyers, state geologists and market analysts voicing "skepticism about lofty forecasts" and questioning "whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves." Though corroborated by independent studies, a year later such revelations have been largely ignored by journalists and policymakers.
But we ignore them at our peril. Arthur Berman, a 32-year veteran petroleum geologist who worked with Amoco (prior to its merger with BP), on the same day as the release of the IEA's 2012 annual report, told OilPrice that "the decline rates shale reservoirs experience... are incredibly high." Citing the Eagleford shale - the "mother of all shale oil plays", he points out that the "annual decline rate is higher than 42 per cent." Just to keep production flat, they will have to drill "almost 1000 wells in the Eagleford shale, every year... Just for one play, we're talking about $10 or $12 billion a year just to replace supply. I add all these things up and it starts to approach the amount of money needed to bail out the banking industry. Where is that money going to come from?"
Chesapeake Energy recently found itself in exactly this situation, forcing it to sell assets to meet its obligations. "Staggering under high debt," reported the Washington Post , Chesapeake said "it would sell $6.9 billion of gas fields and pipelines - another step in shrinking the company whose brash chief executive had made it a leader in the country’s shale gas revolution." The sale was forced by a "combination of low natural gas prices and excessive borrowing."
The worst-case scenario is that several large oil companies find themselves facing financial distress simultaneously. If that happens, according to Berman, "you may have a couple of big bankruptcies or takeovers and everybody pulls back, all the money evaporates, all the capital goes away. That's the worst-case scenario." To make matters worse, Berman has shown conclusively that the industry exaggerated EURs (Estimated Ultimate Recovery) of shale wells using flawed industry models that, in turn, have fed into the IEA's future projections. Berman is not alone - writing in Petroleum Review , US energy consultants Ruud Weijermars and Crispian McCredie argued there remains strong "basis for reasonable doubts about the reliability and durability of US shale gas reserves" which have been "inflated" under new Security & Exchange Commission rules.
The eventual consequences of the current gas glut, in other words, are more than likely to be an unsustainable shale bubble that collapses under its own weight, precipitating a supply collapse and price spike. Rather than fuelling prosperity, the shale revolution will instead boost a temporary recovery masking deeper, structural instabilities. Inevitably, those instabilities will collide, leaving us with an even bigger financial mess, on a faster trajectory toward costly environmental destruction.
So when is crunch time? According to a new report from the New Economics Foundation out last month, the arrival of 'economic peak oil' - when the costs of supply "exceeds the price economies can pay without significantly disrupting economic activity" - will be around 2014/15.
Black gold, it would seem, is not the answer to our problems.

The Frack Farce

Published on Huffington Post UK









The UK
government's decision to resume
fracking has been welcomed by the oil industry, and widely lambasted by
environmental campaigners. But to a large extent the debate about the potential
of shale gas in this country has completely missed the point.



While Prime
Minister David Cameron this week lauded the economic potential of the
"shale gas revolution", critics insist that fracking will escalate fossil
fuel emissions and create intractable environmental problems.




Yet neither
have acknowledged a far deeper, and arguably more fundamental question: do the
economics of shale gas really add up?




A New
York Times investigation
last year found that state geologists, industry lawyers and market analysts
"privately" questioned "whether
companies are intentionally, and even illegally, overstating the productivity
of their wells and the size of their reserves." According to the Times, "the gas may not be as easy
and cheap to extract from shale formations deep underground as the companies
are saying, according to hundreds of industry e-mails and internal documents
and an analysis of data from thousands of wells."










Early this
year, US energy consultants Ruud Weijermars and Crispian McCredie, writing in the flagship British energy industry
journal Petroleum
Review , noted a strong "basis for reasonable
doubts about the reliability and durability of US shale gas reserves"
which have been "inflated" under new Security and Exchange Commission
(SEC) rules introduced in 2009. The new rules allow gas companies to claim
reserve sizes without any independent third party audit.




The overestimation of reserve sizes is being used to obscure the dodgy
economics of fracking. The first problem is production rates, which start high,
but fall fast. In Nature , former UK chief government scientist
Sir David King, co-writing with scientists from his Oxford Smith School of
Enterprise & the Environment, noted that production at wells drops off by
as much as 60 to 90 percent within the first year.




The rapid
decline rates have made shale gas distinctly unprofitable. As production
declines, operators are forced to increasingly drill new wells to sustain
production levels and service debt. Rocketing production at inception, combined
with the economic slowdown, has driven US natural gas prices from about $7-$8 per million
cubic feet in 2008 down to less than $3 per million cubic feet today.




"The economics of fracking are horrid",
reports US financial journalist Wolf Richter in Business
Insider . "Drilling is destroying capital at an astonishing
rate, and drillers are left with a mountain of debt just when decline rates are
starting to wreak their havoc."




This year has seen some of the biggest energy companies suffer due to
the bubble economics of the shale gas boom.




Just four months ago, Exxon's CEO, Rex Tillerson, complained that the
lower prices due to the US natural gas glut, while reducing energy costs for
consumers, were depressing prices and, hence, often insufficient to cover
production costs resulting in dramatically decreased profits. Although in shareholder
and annual meetings Exxon had officially insisted it was not losing money on
gas, Tillerson privately told a meeting at the Council on Foreign Relations:
"We are all losing our shirts today. We're
making no money. It's all in the red."




Around the same time, the BG Group was forced
"to take a $1.3bn writedown in its US natural gas assets" due to the
gas supply glut, "leading to a sharp fall in quarterly and interim profits."
By November, Dow Jones reported
ongoing "negative effects in their earnings", underscoring "how
disruptive the shale boom of the past few years has been to the sector."
Similarly, another company, Royal Dutch Shell, saw its earnings fall for the
third consecutive quarter by "24% on the year", while the average
price Shell received for its North American gas fell 38 per cent.




Even Chesapeake
Energy - billed as the country's shale pioneer - in September found itself in a
crisis, forcing it to sell assets to meet its obligations. "Staggering
under high debt," reported the Washington
Post , Chesapeake said
"it would sell $6.9 billion of gas fields and pipelines - another
step in shrinking the company whose brash chief executive had made it a leader
in the country’s shale gas revolution." The sale was forced by a "combination
of low natural gas prices and excessive borrowing."




How has this
been allowed to happen? The Financial
Times' John Dizard points out that shale gas producers
have spent "two, three, four, and even five times their operating cash
flow to fund their land, drilling, and completion programmes." To sustain
this "deficit financing", too much money "was borrowed, on
complex and demanding terms. Wall Street should have provided reality checks to
the shale gas people; instead, they just provided cashier's cheques with lots
of zeroes at the end." But the bubble will continue growing due to
increasing US dependency on gas-fired power. "Given the steep decline
rates of shale gas wells, compared to conventional wells, drilling will have to
continue. Prices will have to adjust upwards, a lot, to cover not only past
debts but realistic costs of production."



So the shale gas
revolution will not usher in a new heyday of cheap oil - but it will accelerate
debt instabilities in the oil industry that might blow up in our faces.




The
worst-case scenario is that several large oil companies find themselves facing
financial distress simultaneously. If that happens, according to Arthur
Berman - a 32-year petroleum geologist who worked with Amoco (prior to its
merger with BP) - "you may have a couple of big bankruptcies or takeovers
and everybody pulls back, all the money evaporates, all the capital goes away."



Unfortunately,
in the wake of an overwhelmingly successful industry PR offensive, such questions have been largely overlooked.



The upshot is simple:
Rather than ushering in a new wave of lasting prosperity, the eventual
consequence of the gas glut could well be an unsustainable shale bubble,
fuelling a temporary economic recovery that masks deeper structural
instabilities. When the bubble bursts under the weight of its own debt
obligations, it could generate a supply collapse and price spike with serious
economic consequences.

The Frack Farce

Published on Huffington Post UK


The UK government's decision to resume fracking has been welcomed by the oil industry, and widely lambasted by environmental campaigners. But to a large extent the debate about the potential of shale gas in this country has completely missed the point.
While Prime Minister David Cameron this week lauded the economic potential of the "shale gas revolution", critics insist that fracking will escalate fossil fuel emissions and create intractable environmental problems.
Yet neither have acknowledged a far deeper, and arguably more fundamental question: do the economics of shale gas really add up?
A New York Times investigation last year found that state geologists, industry lawyers and market analysts "privately" questioned "whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves." According to the Times, "the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells."
Early this year, US energy consultants Ruud Weijermars and Crispian McCredie, writing in the flagship British energy industry journal Petroleum Review , noted a strong "basis for reasonable doubts about the reliability and durability of US shale gas reserves" which have been "inflated" under new Security and Exchange Commission (SEC) rules introduced in 2009. The new rules allow gas companies to claim reserve sizes without any independent third party audit.
The overestimation of reserve sizes is being used to obscure the dodgy economics of fracking. The first problem is production rates, which start high, but fall fast. In Nature , former UK chief government scientist Sir David King, co-writing with scientists from his Oxford Smith School of Enterprise & the Environment, noted that production at wells drops off by as much as 60 to 90 percent within the first year.
The rapid decline rates have made shale gas distinctly unprofitable. As production declines, operators are forced to increasingly drill new wells to sustain production levels and service debt. Rocketing production at inception, combined with the economic slowdown, has driven US natural gas prices from about $7-$8 per million cubic feet in 2008 down to less than $3 per million cubic feet today.
"The economics of fracking are horrid", reports US financial journalist Wolf Richter in Business Insider . "Drilling is destroying capital at an astonishing rate, and drillers are left with a mountain of debt just when decline rates are starting to wreak their havoc."

This year has seen some of the biggest energy companies suffer due to the bubble economics of the shale gas boom.
Just four months ago, Exxon's CEO, Rex Tillerson, complained that the lower prices due to the US natural gas glut, while reducing energy costs for consumers, were depressing prices and, hence, often insufficient to cover production costs resulting in dramatically decreased profits. Although in shareholder and annual meetings Exxon had officially insisted it was not losing money on gas, Tillerson privately told a meeting at the Council on Foreign Relations: "We are all losing our shirts today. We're making no money. It's all in the red."
Around the same time, the BG Group was forced "to take a $1.3bn writedown in its US natural gas assets" due to the gas supply glut, "leading to a sharp fall in quarterly and interim profits." By November, Dow Jones reported ongoing "negative effects in their earnings", underscoring "how disruptive the shale boom of the past few years has been to the sector." Similarly, another company, Royal Dutch Shell, saw its earnings fall for the third consecutive quarter by "24% on the year", while the average price Shell received for its North American gas fell 38 per cent.
Even Chesapeake Energy - billed as the country's shale pioneer - in September found itself in a crisis, forcing it to sell assets to meet its obligations. "Staggering under high debt," reported the Washington Post , Chesapeake said "it would sell $6.9 billion of gas fields and pipelines - another step in shrinking the company whose brash chief executive had made it a leader in the country’s shale gas revolution." The sale was forced by a "combination of low natural gas prices and excessive borrowing."
How has this been allowed to happen? The Financial Times' John Dizard points out that shale gas producers have spent "two, three, four, and even five times their operating cash flow to fund their land, drilling, and completion programmes." To sustain this "deficit financing", too much money "was borrowed, on complex and demanding terms. Wall Street should have provided reality checks to the shale gas people; instead, they just provided cashier's cheques with lots of zeroes at the end." But the bubble will continue growing due to increasing US dependency on gas-fired power. "Given the steep decline rates of shale gas wells, compared to conventional wells, drilling will have to continue. Prices will have to adjust upwards, a lot, to cover not only past debts but realistic costs of production."
So the shale gas revolution will not usher in a new heyday of cheap oil - but it will accelerate debt instabilities in the oil industry that might blow up in our faces.
The worst-case scenario is that several large oil companies find themselves facing financial distress simultaneously. If that happens, according to Arthur Berman - a 32-year petroleum geologist who worked with Amoco (prior to its merger with BP) - "you may have a couple of big bankruptcies or takeovers and everybody pulls back, all the money evaporates, all the capital goes away."
Unfortunately, in the wake of an overwhelmingly successful industry PR offensive, such questions have been largely overlooked.

The upshot is simple: Rather than ushering in a new wave of lasting prosperity, the eventual consequence of the gas glut could well be an unsustainable shale bubble, fuelling a temporary economic recovery that masks deeper structural instabilities. When the bubble bursts under the weight of its own debt obligations, it could generate a supply collapse and price spike with serious economic consequences.

The Frack Farce

The UK government's decision to resume fracking has been welcomed by the oil industry, and widely lambasted by environmental campaigners. But to a large extent the debate about the potential of shale gas in this country has completely missed the point.
While Prime Minister David Cameron this week lauded the economic potential of the "shale gas revolution", critics insist that fracking will escalate fossil fuel emissions and create intractable environmental problems.
Yet neither have acknowledged a far deeper, and arguably more fundamental question: do the economics of shale gas really add up?
A New York Times investigation last year found that state geologists, industry lawyers and market analysts "privately" questioned "whether companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves." According to the Times, "the gas may not be as easy and cheap to extract from shale formations deep underground as the companies are saying, according to hundreds of industry e-mails and internal documents and an analysis of data from thousands of wells."
Early this year, US energy consultants Ruud Weijermars and Crispian McCredie, writing in the flagship British energy industry journal Petroleum Review , noted a strong "basis for reasonable doubts about the reliability and durability of US shale gas reserves" which have been "inflated" under new Security and Exchange Commission (SEC) rules introduced in 2009. The new rules allow gas companies to claim reserve sizes without any independent third party audit.
The overestimation of reserve sizes is being used to obscure the dodgy economics of fracking. The first problem is production rates, which start high, but fall fast. In Nature , former UK chief government scientist Sir David King, co-writing with scientists from his Oxford Smith School of Enterprise & the Environment, noted that production at wells drops off by as much as 60 to 90 percent within the first year.
The rapid decline rates have made shale gas distinctly unprofitable. As production declines, operators are forced to increasingly drill new wells to sustain production levels and service debt. Rocketing production at inception, combined with the economic slowdown, has driven US natural gas prices from about $7-$8 per million cubic feet in 2008 down to less than $3 per million cubic feet today.
"The economics of fracking are horrid", reports US financial journalist Wolf Richter in Business Insider . "Drilling is destroying capital at an astonishing rate, and drillers are left with a mountain of debt just when decline rates are starting to wreak their havoc."

This year has seen some of the biggest energy companies suffer due to the bubble economics of the shale gas boom.
Just four months ago, Exxon's CEO, Rex Tillerson, complained that the lower prices due to the US natural gas glut, while reducing energy costs for consumers, were depressing prices and, hence, often insufficient to cover production costs resulting in dramatically decreased profits. Although in shareholder and annual meetings Exxon had officially insisted it was not losing money on gas, Tillerson privately told a meeting at the Council on Foreign Relations: "We are all losing our shirts today. We're making no money. It's all in the red."
Around the same time, the BG Group was forced "to take a $1.3bn writedown in its US natural gas assets" due to the gas supply glut, "leading to a sharp fall in quarterly and interim profits." By November, Dow Jones reported ongoing "negative effects in their earnings", underscoring "how disruptive the shale boom of the past few years has been to the sector." Similarly, another company, Royal Dutch Shell, saw its earnings fall for the third consecutive quarter by "24% on the year", while the average price Shell received for its North American gas fell 38 per cent.
Even Chesapeake Energy - billed as the country's shale pioneer - in September found itself in a crisis, forcing it to sell assets to meet its obligations. "Staggering under high debt," reported the Washington Post , Chesapeake said "it would sell $6.9 billion of gas fields and pipelines - another step in shrinking the company whose brash chief executive had made it a leader in the country’s shale gas revolution." The sale was forced by a "combination of low natural gas prices and excessive borrowing."
How has this been allowed to happen? The Financial Times' John Dizard points out that shale gas producers have spent "two, three, four, and even five times their operating cash flow to fund their land, drilling, and completion programmes." To sustain this "deficit financing", too much money "was borrowed, on complex and demanding terms. Wall Street should have provided reality checks to the shale gas people; instead, they just provided cashier's cheques with lots of zeroes at the end." But the bubble will continue growing due to increasing US dependency on gas-fired power. "Given the steep decline rates of shale gas wells, compared to conventional wells, drilling will have to continue. Prices will have to adjust upwards, a lot, to cover not only past debts but realistic costs of production."
So the shale gas revolution will not usher in a new heyday of cheap oil - but it will accelerate debt instabilities in the oil industry that might blow up in our faces.
The worst-case scenario is that several large oil companies find themselves facing financial distress simultaneously. If that happens, according to Arthur Berman - a 32-year petroleum geologist who worked with Amoco (prior to its merger with BP) - "you may have a couple of big bankruptcies or takeovers and everybody pulls back, all the money evaporates, all the capital goes away."
Unfortunately, in the wake of an overwhelmingly successful industry PR offensive, such questions have been largely overlooked.

The upshot is simple: Rather than ushering in a new wave of lasting prosperity, the eventual consequence of the gas glut could well be an unsustainable shale bubble, fuelling a temporary economic recovery that masks deeper structural instabilities. When the bubble bursts under the weight of its own debt obligations, it could generate a supply collapse and price spike with serious economic consequences.

Between Climate Catastrophe and Civilisational Renewal: How the Rural Poor Might Yet Save Us All

Although governments around the world ostensibly agree that our carbon targets must aim to keep global temperatures below the 2 degrees Celsius tipping point, it's now clear that we have failed dramatically to stick to our commitments.

According to the latest report from the Global Carbon Project, the rate of growth of carbon dioxide emissions of 3.1% a year is on track to lead to a 4-6C rise by the end of the century - the UN Intergovernmental Panel on Climate Change's (IPCC) worst case scenario that would lead to an uninhabitable planet.
The report, released while the UN climate talks at Doha continue, follows a spate of studies confirming that industrial civilisation is on the edge of triggering climate catastrophe. A World Bank report, more conservatively, warned that a 4 degrees C rise this century is inevitable on our current emissions trajectory. 
Another report by PricewaterhouseCoopers (PwC) similarly concluded: "Even doubling our current rate of decarbonisationwould still lead to emissions consistent with 6 degrees [C] of warming by the end of the century" - suggesting that current emissions levels could lead to even higher global temperatures.
Many corporate and government leaders insist that humanity must simply adapt to the new conditions generated by global warming. Earlier this year, for instance, Exxon CEO Rex Tillerson argued that the "consequences are manageable... We have spent our entire existence adapting, OK? So we will adapt to this. It's an engineering problem, and it has engineering solutions."

But to the contrary, the World Bank report finds that a 4C temperature rise will mean that the human species will cross "critical social system thresholds", at which point "existing institutions that would have supported adaptation actions would likely become much less effective or even collapse."
The report rules out assumptions "that adaptation to a 4C world is possible", instead warning: "A 4C world is likely to be one in which communities, cities and countries would experience severe disruptions, damage, and dislocation... the poor will suffer most and the global community could become more fractured, and unequal than today."
Indeed, the new evidence increasingly suggests that conventional climate models, far from being too alarmist, are hopelessly out of touch with the complexity of the Earth's interconnected eco-systems.
The melt of Arctic sea ice is accelerating faster than the IPCC predicted. While those models forecast a collapse of the summer sea ice toward 2100, the University of Washington's PIOMASproject tracking actual sea ice concentrations by satellite, accurately anticipated the record low that occurred this year. Contrary to model predictions, the Arctic summer sea ice is on track to disappear completely by 2015-16.


Another comprehensive NASA study of Greenland and Antarctica concludes that there has been a nearly "five-fold increase" in the pace of ice loss "since the mid-1990s" - and a "50-percent increase in Antarctic ice loss during the last decade." Overall, the ice sheets are melting three times faster than 20 years ago - and once again, the pace of change is "fasterthan scientists expected." Concomitantly, a separate study found that sea level rise is accelerating 60% faster than the IPCC's model projections, which may be "biased low."
A UN Environment Programme report published amidst the UN summit urged the IPCC to account for the positive-feedback effect of melting Arctic permafrost, which is increasingly releasing sub-ice methane - a greenhouse gas 25 times more potent than carbon - into the atmosphere. A 3C rise in global average temperatures - which we are set to surpass - would generate a 6C rise in the Arctic. This would result in an irreversible loss of up to 85% of near-surface permafrost, releasing up to 135 gigatonnes of carbon equivalent by end of century, in turn doubling total atmospheric carbon emissions and potentially triggering a runaway warming process - a momentous possibility currently ignored by the UN models.
Arctic methane emissions have also been previously underestimated, increasing by 31% between 2003 and 2007 - a record rate which continued through 2008 and 2009. Ten times more carbon than previously thought is being emitted through methane release from melting permafrost on the Arctic Siberian coast. Worse, scientists estimate there could be far more methane underneath Antarctica's rapidly melting ice sheet than hitherto believed - as much as four billion tonnes worth.

The key lesson of this avalanche of bad news is that the failure to act decisively has irreversibly and inevitably locked in certain climate change impacts. If anything, this underscores the urgency of adapting to what we can no longer avoid, as well preventing or mitigating that which can still be avoided.
Unfortunately, while government negotiations continue to flounder, the only agencies remotely taking the climate crisis seriously are those concerned with security. And their prescription for action is decidedly narrow. Noting a future of unpredictable crises in water supplies, food markets, energy supply chains and public health systems, a new study commissioned by the US intelligence community, including the CIA, warns that the US might need to use "military force to protect vital energy, economic or other interests."

Despite the seeming intractability of our predicament, ongoing grassroots efforts to generate bottom-up change prove that all is not lost. One outstanding yet virtually unknown example can be found in what at first glance might seem the most unlikely of locations - the remote northwest Khyber Pakhtunkhwa region of Pakistan, where militant strongholds have invited ongoing US-funded counter-terror operations primarily in the form of drone strikes.
Operating in this region since 1989, the Sarhad Rural Support Programme (SRSP) has quietly pioneered a model of development suggesting a viable pathway for transition to sustainable, post-carbon prosperity. The model is based fundamentally on participation of the marginalised rural poor at all levels as planners, designers, implementers, and maintainers: grassroots communities are empowered to self-mobilise into local community organisations which then become the vehicles of building 'self help capacity', identifying the needs of households, and procuring the training, skills and resources to undertake diverse development projects.
One of the SRSP's flagship projects involves micro-infrastructure. So far, the impact has been astounding. Over 4,028small scale projects have been planned, delivered and maintained by communities themselves across the region, establishing micro-hydroelectric plants which allow communities to finance their own development - in turn generating new local jobs and service providers, clean water and sanitation schemes, farm-to-market roads, and new opportunities for small-scale agriculture. Farming communities utilise water from the hydro power plants, diverting it to fields for kitchen gardening, multi cropping and fish ponds. As the plants store rain and river water, they also provide effective disaster mitigation against monsoon rains and flooding. Through such projects, SRSP has enabled 308,540 men and women to, literally, transform their own lives.

It is no surprise that in all the districts where SRSP programmes operate, militancy is not a problem. Enfranchised communities who are economically independent, producing their own energy, water and food, are resilient to radicalisation. The same cannot be said of other less fortunate communities. Over the last decade Pakistan has faced overlapping economic, energy and environmental crises. Rocketing unemployment and widening inequality has been compounded by electricity blackouts and government ineptitude in responding to natural disasters. Militants exploit those in need of assistance by penetrating vulnerable areas, broadening their support base by providing services, and ultimately recruiting to their cause. As such crises escalate, their exacerbation of militancy illustrates not only the deep-seated interconnections of multiple civilisational crises, but also the futility of knee-jerk military responses which, focusing on symptoms, tend only to make matters worse.
Yet the success of grassroots projects like the SRSP's proves that solutions do exist. If SRSP programmes were scaled up throughout the northern areas of Pakistan, they might well do more to ameliorate militancy than conventional approaches, by addressing the root-cause issues most central to Pakistani citizens. Equally, by focusing on sustainability at the micro-level, these programmes offer a model of economic empowerment that is sustainable precisely by being both clean, cost-effective and linked to the specific needs of local households - rather than the narrow interests of large foreign corporations.
The potential should not be underestimated. The SRSP is part of a larger Pakistani civil society network - the Rural Support Programme Network (RSPN) - which has operated across Pakistan for the last 30 odd years. The RSPN has had a staggering success rate - mobilising 4 million Pakistani households through local community organisations, providing skills training to nearly 3 million, and bringing approximately 30 million people out of poverty. Across the rural areas where the programme operates, the fundamental model is the same - empowering locals to become the vehicles of their own emancipation; scoping local energy, economic, health and education needs; and providing the training and learning to allow them to source, design and deliver projects accordingly. 

So successful is this model, it has been widely replicatedin developing countries. In 1994, the UN Development Programme asked RSPN's founding chairman - Nobel Peace Prize nominee Shoaib Sultan Khan - to set-up pilot projects in Bangladesh, India, the Maldives, Nepal and Sri Lanka. The success of those pilots led Indiato begin scaling-up a countrywide programme inspired by Khan's model that will reach out to 300 million rural poor.
The only caveat is that the RSP model does not bring quick wins for conventional development targets. Time-scales for success are long-term - as long as 15 years in some cases. The upshot, though, is that they bring a form of real grassroots sustainability that lasts. As energy and food prices rise alongside unemployment rates and inequality, this is a model that even more privileged communities in the North could learn from.
While governments dither at lofty international negotiating tables, it is not too late for communities and philanthropists across North and South to work together, pool collective resources, and begin mobilising grassroots projects such as these. Doing so will not only spur us further along the rocky road of civilisational transition, it will increasingly force our political leaders to realise that if they want to remain relevant in the emerging post-carbon era, they need to keep their ears to the ground.

The Myth of the Free Press: Why You Should Ignore the Fake "Free Speech" Naysayers

Published on Huffington Post
When pundits and editors and politicians over the next few days and weeks insist that Leveson's recommendations should be ignored because they endanger the sacred principle of freedom of the press, ask yourself one simple question. 

Whose payroll are they on? 

Invariably, they are either on the payroll of large corporate media conglomerates dependent on advertising revenue from big business, or they're keen to cosy up with the same large corporate media conglomerates. 

Many are probably working for the very newspapers that have demonstrably committed crimes with impunity, made-up stories with no accountability, and protected power from meaningful scrutiny. Those who claim we have a free press that needs defending from the scary mitts of Big Government-backed 'statutory regulation' miss the point entirely. 

We don't have a free press. 

We have a press that has become increasingly co-opted by narrow vested interests whose only real goal is to maximise their revenue streams at our expense. 

They will try to convince you, the public, that what they sell us is in our interest. 

They are wrong. 

In his seminal book Tell Me Lies: Propaganda and Media Distortion in the Attack on Iraq , University of Bath sociologist, Professor David Miller - a co-founder of the media monitoring group Spinwatch - brought together a diverse array of senior journalists and correspondents exposing how the British media systematically legitimised the government's propaganda that led us into the 2003 Iraq War on the basis of the myth of WMDs. Not only that, but our media has - for the most part - whitewashed the humanitarian disaster our intervention created in Iraq, and downplayed the instability and resentment it generated throughout the region. Which is why, even now, most people aren't aware that the war was responsible for the deaths of over one million Iraqis according to the most robust scientific studies. 

The Iraq case is not an isolated example. Drawing on his 20 years plus experience as a political journalist, Peter Oborne - chief political commentator at The Telegraph and former political editor at The Spectator - observed how he "saw again and again journalists and politicians entering a conspiracy against the readers" - and that people who tried "to report objectively and fairly were frozen out." Far from playing a key role in exposing political scandals, the media has often done the opposite - deliberately ignoring the MPs expenses scandal for years until leaks of information made it impossible to do so. Similarly, on the issue of "British complicity in torture" in the aftermath of Iraq and Afghanistan, "many British newspapers remained silent." 

The press has also often targeted some of society's most vulnerable groups - with asylum seekers, foreigners, ethnic minorities, and Muslims in particular often being the subject of inaccurate and even flagrantly false reporting, as documented in my submission to the Leveson Inquiry. 

But why is this? 

No, it's not a conspiracy - though that doesn't preclude the possibility of powerful media moguls, politicians, and police officers from colluding as they did in the News International scandal. 

As a report by the House of Commons Select Committee on Communication concluded in 2008, the increasing corporate concentration of media ownership in the UK is the real danger to press freedom. The Committee warned that "if media ownership becomes too concentrated the diversity of voices available could be diminished." 

The other problem is that, with corporate-dominated ownership structure, much of the British press cannot function as societal watchdogs hungry to investigate and report real news - many of our newspapers are, instead, giant big business machines whose principal aim is to maximise profits through increasing circulation and advertising revenues. The dependence on the latter, in particular, means that newspapers find themselves increasingly subjected to the whims and sways of the corporate advertisers who are, ultimately, their primary means of subsistence - something like 60 per cent of their total income. This is another structural incentive for newspapers to avoid stories that might challenge the very vested interests that fund them. 

Unfortunately, those same vested interests that tend to dominate the media actively seek to co-opt politicians too - to make sure that government policy aligns, rather than undermines, their goals. In this context, the existing system of 'self regulation' under the umbrella of the Press Complaints Commission (PCC) is laughable - given that the PCC is "run by the newspaper Editors" themselves, as one tabloid journalist candidly told British filmmaker Chris Atkins in a secret interview. 

It's a closed circle. With the government actively promoting public relations materials to the media amounting to counter-terrorism propaganda, it is deeply worrying that increasingly the press uncritically rehashes official PR spin in its reporting. A study by Cardiff University found that 19% of the articles in the British press came wholly or mostly from public relations material. This means that the heavy reliance on the wires and other media (about (47% of press stories rely wholly or mainly on wire copy) is, in effect, a conduit for further PR influence on news. Worse, "60% of press articles and 34% of broadcast stories come wholly or mainly from one of these 'pre-packaged' sources." Journalists now produce "three times as much copy as they did 20 years ago." 

So when these detractors insist that we need to overlook demands for 'statutory regulation' to protect our free press, remember that much of the press largely functions not to hold power to account, but to protect power from scrutiny. 

And when they insist that fake and fabricated news stories, along with gross invasions of privacy and targeted criminal harassment of everyday citizens are in the public interest because the public pays for these stories, remember that we only pay because there is nothing else to pay for. 

It is not in the public interest to have a press capable of running riot in the deliberate manufacture of false news which serves the interests of power. It is in the public interest to have a press which the public can hold to account when it fakes news in the interests of power, and which can thus counterbalance its overwhelming dominance by corporate conglomerates. 

The battle lines have been drawn. 

It is now up to us, the public, to stand up and make it absolutely clear to our government: we don't want politicians, or police, or media moguls, to be able to criminally collude in the fabrication of news to serve themselves. We want an independent system of regulation that will force the press to deliver what we demand: real news, in the public interest.

Israel's War for Gaza's Gas

Published in Le Monde diplomatique
"It is clear that without an overall military operation to uproot Hamas control of Gaza, no drilling work can take place without the consent of the radical Islamic movement." Moshe Ya'alon, Israeli Deputy Prime Minister and Minister of Strategic Affairs


Over the last decade, Israel has experienced a growing energy crisis. Between 2000 and 2010, Israel's power consumption has risen by 3.5 per cent annually. With over 40 per cent of Israel's electricity dependent on natural gas, the country has struggled to keep up with rising demand as a stable source of gas is in short supply. As of April, electricity prices rose by 9 per cent, as the state-owned Israeli Electricity Company (IEC) warned that "Israelis may soon face blackouts during this summer's heat" - which is exactly what happened.
The two major causes of the natural gas shortage were Egypt's repeated suspension of gas supplies to Israel due to attacks on the Sinai pipeline, and the near-depletion of Israel's offshore Tethys Sea gas fields. By late April, a trade deal that would have continued natural gas imports from Egypt into Israel collapsed, sending the Israeli government scramblingto find alternate energy sources to meet peak electricity demands. Without a significant boost in gas production, Israel faced the prospect of debilitating fuel price hikes which would undermine the economy.
By late June, Israel was tapping into the little known Noa gas reserve in the Mediterranean off the coast of Gaza. Previously, Israel had "refrained from ordering development of the Noa field, fearing that this would lead to diplomatic problems vis-à-vis the Palestinian Authority", according to the Israeli business daily Globes . The Noa reserve, whose yield is about 1.2 billion cubic metres, "is partly under the jurisdiction of the Palestinian Authority in the economic zone of the Gaza Strip" - but Houston-based operator Noble Energy apparently "convinced" Israel's Ministry of National Infrastructures that their drilling would "not spill over into other parts of the reserve."
But the Gaza Marine gas reserves - about 32km from Gaza's coastline - are unmistakeably within Gaza's territorial waters which extend to about 35km off the coast. Israeli negotiations with the Palestinian Authority (PA) over the gas reserves have stalledfor much of the last decade since their discovery in the late 1990s by the British Gas Group (BG Group). The main reason for the failure of negotiations was Israel's demand that the gas should come ashore on its territory, and at below market price.
Estimated at a total of 1.4 trillion cubic feet, the market value of the reserves is about $4 billion. On 8th November 1999, the late Yasser Arafat signed a 25-year deal on behalf of the PA, granting 60 per cent rights to BG Group, 30 per cent to Consolidated Contractors Company - a Palestinian private entity linked to Arafat's PA - and finally only 10 per cent to the PA's Palestine Investment Fund (PIF).
At first, BG Group signed a memorandum with Egypt to sell them Gaza's gas through an undersea pipeline in 2005. But the 'man of peace', former Prime Minister Tony Blair - official Middle East envoy of the Quartet - intervened to pressure BG Group to instead sell the gas to Israel.
One informed British source told journalist Arthur Neslen in Tel Aviv at the time: "The UK and US, who are the major players in this deal, see it as a possible tool to improve relations between the PA and Israel. It is part of the bargaining baggage." The gas would be piped directly onshore to Ashkelon in Israel, but "up to three-quarters of the $4bn of revenue raised might not even end up in Palestinian hands at all." The "preferred option" of the US and UK is that the gas revenues would be held in "an international bank account over which Abbas would hold sway" - effectively circumventing Hamas-controlled Gaza.
One of the first things Hamas did after winning elections was to reject the PA's agreement with BG Group as "an act of theft", before demanding a renegotiation of the agreed percentages to reflect its inclusion.
Operation Cast Lead launched in December 2008 was directly, though not exclusively, motivated by Israel's concerns about the Blair-brokered gas deal. Upon assessing the prospects for accessing Gaza's gas, Deputy Prime Minister Moshe Ya'alon - also Minister of Strategic Affairs and a former IDF Chief of Staff - advocated a year before Operation Cast Lead that the gas deal "threaten's Israel national security" as long as Hamas remains in power. "With Gaza currently a radical Islamic stronghold, and the West Bank in danger of becoming the next one, Israel’s funneling a billion dollars into local or international bank accounts on behalf of the Palestinian Authority would be tantamount to Israel’s bankrolling terror against itself", Ya'alon wrote for the Jerusalem Center for Public Affairs. "It is clear that without an overall military operation to uproot Hamas control of Gaza, no drilling work can take place without the consent of the radical Islamic movement."
So why Operation Pillar of Defence, and why now? On 23rd September, Israel and the PA announced the renewal of negotiations over development of Gaza's gas fields. But Hamas, still in control of Gaza, stood in the way of these negotiations. Both the PA and Tony Blair "hope to have control of the marine area and levy its own fees and taxes" in partnership with Israel, reported Offshore-technology .
Exactly a week before Israel's assassination of Ahmed Jabari, the head of Hamas' military wing, Israel's ongoing energy crisis was in full swing, with the "cash-strapped Israel Electric Corp" - suffering from a short-fall of 1.5 billion shekels - planning to sell a total of 3 billion shekels of government-backed bonds as early as December.
Then on 12th November, the PA announced that the Palestinians would formally seek admission to the UN General Assembly as a non-member observer state on the 29th. If granted, the status would add weight to the Palestinian bid for statehoodencompassing the West Bank, Gaza and east Jerusalem - pre-1967 territorial lines which would formally impinge on Israel's ambitions to de facto control and unilaterally exploit Gaza's largely untapped gas resources.
Simultaneously, Israel faced another complication from Hamas. Israeli peace negotiator Gershon Bashkin reports that a proposal he drafted for a long-term ceasefire agreement between Israel and Hamas was on the verge of being accepted by senior Hamas officials, including Ahmed Jabari. On the morning of the 14th - just two days after the PA's announcement concerning its UN bid - a revised version was being assessed by Jabari and was due to be sent to Israel.  Hours later, Jabari was assassinated on Netanyahu's orders. "Senior officials in Israel knew about [Jabari's] contacts with Hamas and Egyptian intelligence aimed at formulating the permanent truce, but nevertheless approved the assassination", Bashkin told Ha'aretz .
With Israel facing a race for independence from the PA, and a permanent truce with Hamas, the prospects of fully exploiting Gaza's gas resources looked slim - unless Israel could change the political and security facts on the ground through brute force. The strike on Jabari appears to have been designed precisely to provoke a response from Hamas that would justify such military action.
Indeed, Hamas has its uses.  Ya'alon's fellow Deputy Prime Minister Silvan Shalom once criticised Shimon Peres in a high-level Cabinet meeting back in 2001, for advocating "negotiations" with Arafat. "Between Hamas and Arafat, I prefer Hamas", said Shalom, explaining that Arafat is a "terrorist in a diplomat's suit, while Hamas can be hit unmercifully… there won't be any international protests." (Ha'aretz, 4/12/2001)
By unleashing Hamas' rage this November, Israel was able to justify an offensive designed at least in part to begin engineering conditions conducive to its control of Gaza's offshore gas reserves. But this is just the beginning - many analysts note that Israel is preparing the ground for a wider military assault against Iran. The tentative ceasefire announced on the 21st is, therefore, highly tenuous. If the ceasefire is breached, a military ground operation is still on the cards.
With over 140 dead in Gaza, compared to five in Israel, Operation Pillar of Defence has vindicated those in Palestine who think violence against Israel is the only option left.
But then again, perhaps that's the idea.