Kuwait, Saudi Arabia, and oil reserves (HoweStreet.com)

Yikes! Things Just Got Worse ... what just got worse? It has to do with the claimed oil reserves in Kuwait. The article discusses a report published by Petroleum Intelligence Weekly (PIW) titled Oil Reserves Accounting: The Case Of Kuwait. Unfortunately the subscription price puts me off so I can't read the report myself.

Supposedly the report discusses details of Kuwait's claimed oil reserves. Kuwait's reported oil reserves are 99 billion barrels. Kuwait has been an oil exporter since 1946, and has a massive oil field. However it's clear the reserves have been overstated.

The PIW report is based upon data circulating within the top echelons of the Kuwait Oil Co. (KOC). KOC is the upstream arm of state-owned Kuwait Petroleum Corp. KOC has primary responsibility for conducting exploration, drilling and production from Kuwait's oil fields. The PIW report claims that Kuwait's remaining proven and nonproven oil reserves total about 48 billion barrels, or 51 billion fewer barrels than previously advertised.

That 51 billion fewer barrels of reserves represent 5% of stated world reserves. Especially troubling is I've read several articles claiming that many oil producing countries have been overstating their reserves as well. What isn't overstated is the world consumption, especially the growing consumption levels in India and China resulting from their economic expansion.

How did this come about? Well, it's not a simple matter of bravado (e.g. the stereotypical men boasting about the size of X or Y or oil fields). In this case it is about distinguishing between "proven," "probable" and "possible" reserves.

Kuwait (and others?) have stated their reserves as the sum of all three. Well, I don't know about you, but "possible" reserves doesn't sound very promising. Especially when you consider most oil wells turn up dry, even on a good day.

As I said, the oil consumption rate is known (and growing). What isn't so clear are the actual reserves. One thing that's clear is the Hubbert model which predicts the peak oil phenomenon. It's not that an oil field produces fine until one day it just fizzles to a stop. Instead it produces fine until the peak occurs, after which it's a constant struggle to get oil out.

This means the world oil situation will appear fine, but with more and more oil fields tilting to the "struggle" phase as each individual oil field peaks.

That, in a nutshell, is the peak oil phenomenon. The last several years of oil use will be characterised by a struggle to retrieve oil, and therefore the actual oil "production" will inexorably decline.

In the face of America stupidly continuing the glut of oil use and gas guzzling way of life, along with India and China rapidly expanding their oil use, this will not be pretty to watch.

I should warn you the author of the article I've linked to -- well -- he works for a financial investment company. They purport to having some investment ideas related to the scenario they describe. While I agree with the scenario, there may be some tilting of the rhetoric on their part.

We partied like it was 1999

Okay, today is December 31, 2005. A posting on Scripting News had a pointer to five years ago and I suddenly remembered what that day was like. The big concern? Remember Y2K? The fear that come midnight that night, that the whole mechanised world around us would come crashing to a halt?

I remember being in San Francisco that night and passing by someone on the street shortly after midnight, and we exchanged the observation "Well, it all seems to still be working".

Before then I'd attended a talk by my old spiritual teacher. He's one of those who study on and on about conspiracy theories, and who has moved out to the country. At his place in the country they are offering it as a community place for like-minded folk to live. The phrase "intentional community" is common in the spiritual communities, and that's the phrase he uses as well. At this talk in, oh, I think it was in 1998, he was talking about having bought a huge quantity of canned food rations, and put aside other survival supplies. And he was talking about his experience at a gasoline station, where the power suddenly went out and the station owners had to chase everybody away. The computerised store could not be operated without power, and that was the perfect analogy for what might happen in 1999 when the computers fail.

During the talk he turned to me, since he knows I'm a serious geek, and asked my professional opinion. I had to say that the scenario was certainly possible. And, it was, because it wasn't known how wide spread any computer outages might be, and what the consequences would be. However I knew very well that the computer and IT industries had been doing a lot of Y2K related work to fix the systems.

It wasn't too surprising when computer failures failed to materialize. First, there'd been a lot of Y2K work which had served to strengthen computer system reliability across the spectrum. It's not like this problem was a surprise to the computer industry, because "we" had known about it since the 1980's.

But, it's worth pondering the general issue. The Y2K nemesis did not occur, but that doesn't mean we've escaped unscathed.

First, the Unix systems that are widely spread have a 2036 problem, in that their system clocks will roll over that year. That's far enough into the future we don't have to worry about it, right? But that's what the computer industry thought in the 1980's, and then the latter part of the 1990's was a scramble to handle Y2K issues. Human nature will be to push problems off until it's a crisis.

But even more generally think about how computers have woven their way into crucial roles in society. What if there were a massive failure? Suppose it were widespread enough to prevent food or water from being shipped? Today our food comes from so far away, and in most cities there's no local farming. It wouldn't take much to cause mass starvation. But it would have to be a very interesting sort of widespread failure. The failure would have to prevent shipping for long enough that local warehouses would empty, and the few local farms would be overrun by demand.

It's a little hard to imagine what kind of failure it would have to be. Here's a few possibilities that come to mind:

Power outage: This is the most obvious, and there is a looming issue with energy resources anyway. The Peak Oil warning is that fossil fuels derived from oil will have a peak in production after which there is an inexorable decline. If the world reaches the Oil Peak and hasn't developed an alternative to fossil fuel, then shipping will be impossible. If you want an example of the result, let me remind you have the Mad Max movies.

Computer virus: It would be difficult today for a computer virus to make a widespread outage happen. There are so many entities involved with shipping food etc, that it would be hard to knock them all out. One entity might have their computers knocked out, but the others would be okay. However it's always possible the virus authors will score a big hit and knock out most computer systems in one blow. The computer virus's do show an ability to spread deeply inside corporations, even behind firewalls, and I suspect the security of systems inside firewalls isn't as secure as one might like.

A cure for this problem is to ensure there's a wide variety of computer systems in use. There is a biological analogy at play, in that the multitude of biological species means that each virus or other biological attack can damage only a few species. Each species has different vulnerabilities, and each biological agent targets a small number of vulnerabilities. There's a similar principle for computer systems, in that each computer system has specific vulnerabilities. That's partly why virus's on Windows computers can spread so quickly, is that there are so many Windows computers each having the same vulnerabilities.

Food virus: Writing about biological diversity reminded me of a threat. The farmers are specializing towards a smaller and smaller number of food species, because that's what the seed industry is providing. What if this went to a logical conclusion, and there were only one species of corn being grown, and then a virulent crop blight were to pounce on that once species? It could wipe out a whole growing season around the country, if not around the world. Eek.

The cure for that problem is to diversify food crops.

Not to worry: In general these scenarios are worst case nightmares, rather than likely events. That is, except for the Peak Oil situation which is barrelling towards us like an out of control unchecked freight train. So long as the government is hiding their head in the sand, we the people are stuck on the tracks not even aware there's danger coming around the bend.

For most sorts of events ingenuity will kick in, relief supplies will flow, and there'll be a lot of serious sounding coverage on CNN. For most disastrous events we survive, because that's what humans do.

But when the oil production peaks, if nothing has changed between now and then, well, Mad Max might look tame.