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By Robert Rapier on Oct 4, 2010 with 35 responses

Oil Infrastructure and Terrorism – Part I

In light of the recent attacks by militants on tankers carrying oil for NATO and U.S. troops, the series that I am posting this week is especially timely. When we consider the dependence of the U.S. and the western world on the Middle East, the potential for terrorism on oil infrastructure looms as a large risk hanging over our economies.

This week’s three-part report (for Part II of the series, click here) asks a specific question:

Given the strategic importance of Middle East oil to the West and its economic and technological dependence on oil: Why have pipelines in that part of the globe not been primary targets of international terrorism to date?

The report was written by Donald J. Evans, a Senior Research Fellow at the International Strategic Studies Association, and was originally published in the Global Intelligence Report.

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Is Hydrocarbon Man the Next Terrorist Target?

Guest Essay by Dr. Donald J. Evans

Daniel Yergin, in the prologue to his award winning book, uses the language of anthropology to describe what the human species became in the past century: Hydrocarbon Man. While the search continues for alternative fuels and millions are spent on research and development, modern man will continue for some time to come to be dependent on Persian Gulf oil: the strategic prize. This essay focuses on the terrorist threat to oil pipelines in the region.

The question is, given the strategic importance of Middle East oil to the West and its economic and technological dependence on oil: Why have pipelines in that part of the globe not been primary targets of international terrorism to date?

It is puzzling why terrorists have not chosen Middle East oil structures as targets. One terrorist expert puts it this way:

“Trying to find out why terrorists do what they do is a bit like trying to solve a good fictional murder in that one is dealing with the elements of motive, method, and opportunity. However, the plot is reversed. With the classic murder one starts with a victim, and has to determine the motive, methods, and opportunity involved in order to discover the perpetrator. With target selection on the other hand, the motives are known, the means can usually be estimated, and the opportunities are fairly plentiful. What one has to determine is who or what is likely to be the victim.”

Middle East oil pipelines

Oil and Gas Pipeline Infrastructure - Middle East. CLICK TO ENLARGE. Source: Energy Information Administration (EIA).

Like a good, fictional murder mystery, the task of explaining silence, why something does not happen, gives a double twist to a plot and makes solving a mystery much more complicated. Sherlock Holmes, the master detective, solved a classic murder in The Hound of the Baskervilles when he learned that the dog was silent when it should have been barking. But, it is unlikely that in the process of answering the basic question, we will find a single clue to unwrap the mystery surrounding the silence of oil terrorism in the Middle East. For unlike in Holmes’ time, it is not hounds but jackals that have captured our attention in the 21st Century drama, the non-state actors who for most members of the world-audience will always remain a mystery: terrorists.

In looking for clues, our investigation will sift the evidence found in open sources and evaluate the Middle East silence by methods, scientific and otherwise.

Although the focus is on the security of Middle East oil pipelines, globalization and the throughput character of the oil industry require brief consideration of threats to the oil infrastructure of the entire industrialized world, from Australia to the United States and from China to Turkey. In this respect, the vulnerability of oil pipelines in the United States is discussed with one eye on critics who see real danger in pointing out soft targets to terrorists’ cells with the technical means to terrorize multinational oil companies and the US public. Nevertheless, Maynard Stephens over 20 years ago did not hesitate to diagnose the Achilles heel of Hydrocarbon Man in the United States:

“Established petroleum and natural gas operations, their pipeline interties, and associated tankage and storage are the most attractive targets of dissidents. But there is no part of the industry that is immune to being seriously damaged by someone who has a little knowledge of it or makes an effort to learn its frailties. It is no wonder that security personnel and management become almost ‘paranoid’ at the thought of having attention drawn in publications to the vulnerability of the industry. . . But how does one know what dangers and threats to guard against?”

As will be shown, the dangers and threats to oil pipelines are real. The author makes no apology for calling the attention of US policy and police officials to the threat that continues to exist from individuals wanting to hamstring the United States by interdiction of oil flows with which the economy runs and the military rolls.

The Silence

While Stephens had to deal with the silence of domestic inaction, our attention turns to the silence of terrorism. For analyzing patterns of global terrorism, specifically against oil pipelines, we turn to reports on terrorism by the US Department of State. The total number of terrorist attacks between the years 1981 and 2000 declined from 429 in 1981 to 423 at the end of the millennium and a high of 666 attacks in 1987. The Middle East region saw a decline in such incidents from 45 in 1995 and 1996 to 16 in the year 2000 with a total of 199 for the period. Only North America had fewer attacks than the Middle East. During the same five-year period, business facilities were attacked on 1,842 occasions; diplomats, 200; governments, 97; military, 48 and other facilities, 571. Thus, terrorists attacked worldwide businesses twice as frequently as all other targets combined, 916.

Turning another page in the Department of State report, we discover in the year 2000, that of the total attacks (557), oil facilities were singled out only 10 times, and, of this number, none were in the Middle East! We therefore conclude, that of the 384 business facilities struck in 2000, none were leveled against oil facilities in the Middle East.

Going back further in time, we discover that terrorists infrequently attacked pipelines. From 1968 to 1979 there were 63 transnational terrorist incidents among nine Middle Eastern states: Bahrain (2), Iran (43), Iraq (4), Kuwait (10), Oman (0), Qatar (0), Saudi Arabia (3), UAE (1), and Yemen (0). These oil-producing countries are located atop huge oil reserves and astride a tangle of oil pipelines and oil shipping lanes. Of the total number of incidents five were related to the oil business and of these only two incidents involved oil pipelines or facilities. In January 1972 facilities of the Kuwait Oil Company, partially owned by US firms, were damaged twice. The second incident occurred on May 11, 1997, when saboteurs set fire to the Aramco-operated Abqaiq production center, causing $100,000 damage to a network of pipelines.

Carlos the Jackal

"Carlos the Jackal" led the terrorist attack on OPEC headquarters that killed 3 people.

Led by Illich Ramirez Sanchez (aka “Carlos, the Jackal”), a significant terrorist attack occurred on the Organization of Oil Exporting Countries (OPEC) headquarters in Vienna, Austria on December 21-23, 1975. The terrorist group — The Arab Revolution — seized 70 hostages, including 11 oil ministers, and barricaded themselves in OPEC offices.

Extortion was thought to be the purpose of the raid. Saudi Arabian and Iranian governments paid perhaps as much as US$50-million to the terrorists who took themselves and 42 hostages back to Algeria. Huge sums of money were transferred to a bank in Aden.

Although this attack was not against oil pipelines, the incident serves to remind us that terrorists of two and three decades ago viewed the oil industry as a profitable target, and that the jackals of today are ready, willing and able to deal in a new brand of eco-terrorism.

Definitions

Generally speaking, the petroleum industry is segmented into geological exploration and drilling, construction and operation of production facilities, crude oil transportation and gathering, crude oil refining and storage, product transportation, and retail distribution. Our interest is in the pipelines located in the first three segments and specifically those in the Middle East. Both oil and gas pipelines are found in these segments and both are implied in the single use of the word “pipelines” unless otherwise noted. This word therefore is more or less synonymous with the front-end infrastructure of the petroleum industry. As will become clear below, the term “Middle East” refers to the oil producing states surrounding the Persian Gulf and the Caspian Sea.

Many observers, writers and commentators have noted that no one definition of “terrorism” has gained universal acceptance. This paper will attempt to consistently use the US Department of State definition of terrorism in use since 1983 for statistical and analytical purposes:

“The term ‘terrorism’ means premeditated, politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine agents, usually intended to influence an audience.

The term ‘international terrorist’ means terrorism involving citizens or the territory of more than one country.

The term ‘terrorist group’ means any group practicing, or that has significant subgroups that practice, international terrorism.”

Transnational terrorism has the same meaning as international terrorism and is further defined as nonmilitary threats that cross borders and threaten either the political, social or economic integrity of a nation or the health of its inhabitants. As discussed below, inclusion of economic prosperity, dependent as it is on the flow of oil from the Middle East, in the defense policy of the United States means that significant acts of transnational terrorism will attract US forces.

Global Oil Targets

Transnational jackals do not lack oil target prey. The abundance is seen in the importance of oil in the world economy and is driven home by eye-opening statistics and spectacular claims.

The terrorism from the sky of September 11, 2001, impacted the minds of all who heard and saw the events. Since then people see the possibilities for terror everywhere. Technology is now the enemy rather than the comforter it appeared to be. Squeezed along the paths of energy systems, we are unable to escape the final destinations of flight paths, fluid tunnels, and electrical circuits. The homeland of the self seems unable to locate the off switch just beyond its reach.

The “new victims” fix their minds on vulnerability to the world’s energy systems and find themselves more curious about sources of power and light. Because the most recent and violent terrorism comes from Middle East countries, the energy coming from these countries in the form of “crude”, the precious black ooze is again of special interest as it has been periodically in each of the past three decades.

World energy consumption remained stable during the latest years reported, 1996, 1997, and 1998. The US ranks either first or second in the production of world energies: crude oil, (2); natural gas plant liquids, (1); dry natural gas, (2); coal, (2); hydroelectric power, (2); and nuclear electric power, (1). Petroleum once constituted almost 50 percent of the world’s energy; it now accounts for less than 40 percent. The difference is made up of mostly natural gas and nuclear power. Production of petroleum (crude oil and its by-products) reached an all time high of 75 million barrels per day (MMBD) in 1998. Three states accounted for 31 percent of the oil production—US, Russia, and Saudi Arabia—or 20 MMBD.

One observer of the Middle East stated, “Oil is not the only source of energy, but it has been and will remain the single most important fuel. It constituted 47 percent of world energy use in 1970 and 39 percent in 1997. And it is projected to provide 38 percent in 2020.” Another writer noted, “At the end of 1997, the market capitalization of each of the top 10 companies in the world exceeded the gross national product of over 150 of the 185 members of the United Nations.” Oil provides 79 percent of the total revenue for Venezuela, 84 percent for Saudi Arabia and 95 percent for Nigeria. Seventeen of the Fortune 40 companies of the world are in the petroleum business and the annual revenue of each company exceeds the Gross Domestic Product of half the nations of the globe. Oil accounts for 5 percent of all the commodities traded in the world, and it far outranks the commodity in second place. By any measure oil is vital to the world economy and critical to the prosperities of many nations.

The Moving Target

The processing and flow of oil from wellhead to the ultimate consumer is complicated and continuous, but points along the way may be simplified and discussed without comprising the analysis of their vulnerability to terrorist attack. Critical oil facilities in the Middle East may be summarized under four headings: crude oil pipelines, loading terminals, tankers and waterways.

Pipelines: The Middle East has three basic pipelines: the Iraqi, the Saudi Arabian and the Caspian. The Iraqi system is the “most extensive, complex and exposed to uncertainties”. Decades of conflict disrupted the area and finally closed the line that ran from near Kirkuk and divided into two 12-inch pipelines running to Haifa, Israel and Tripoli, Lebanon. A new 590-mile, 40-inch pipeline went into operation in 1977, which linked the Iraqi fields with the terminal in Dortyol, Turkey on the Mediterranean Sea. A second parallel Turkish line was constructed in 1987. Due to sanctions following the Gulf War, the Turkish lines were also closed.

As a safety measure Iraq constructed in 1977 a 42-inch “strategic pipeline” that linked Kirkuk to the Persian Gulf terminal at Fao. This “strategic line” was constructed with a reversible flow allowing oil to be directed northward to Haditha. Construction of another strategic line of 42-48 inches in diameter was started but not completed before the Gulf War. Looking for a safer alternative, larger throughput, and increased production, Iraq constructed in 1985 and 1990 two pipelines around Kuwait to Saudi Arabia. The Saudis shut down both lines when Iraq attacked Kuwait in August 1990.

Four types of pipelines traverse Saudi Arabia: crude oil (6,400 km), natural gas (2,200 km), gas liquids (1,600 km), and petroleum products (150 km). Its oil fields are located in the Eastern Province close to the coast of the Persian Gulf. Abquiq is the major processing center for crude oil in the southern area about 40 miles south west of Dhahran. The northern area is headquartered in Ras Tanura, forty miles north of Dhahran. Most of the crude oil and refined products from the Ras Tanura refinery is delivered to tankers at Ras Tanura or Ju’aymah also on the coast. Offshore fields are at Safaniya and Zuluf. Located in Saudi Arabia is Ghawar, the largest oil field in the world.

In the early 1950s a 30-31-inch line of about 750 miles, the Trans-Arabian Pipeline (Tapline), was constructed along the border with Iraq, through Jordan, Syria and ending on the Lebanese coast south of Beirut, in Zahrani, next to Sidon. Following the Lebanese civil war, the Tapline was mothballed.

Because of the dangers of shipping oil by tankers through the Persian Gulf, Saudi Arabia constructed the 48-inch “Petroline” from Abqaiq in the Eastern Province with Yanbu on the Red Sea, a distance of 747 miles. This pipeline is known as the Iraqi-Saudi Pipeline. It and a second parallel were closed indefinitely following the August 1990 Iraqi invasion of Kuwait. Parallel to the Petroline is the Abqaiq-Yanbu natural gas liquids pipeline that serves the petrochemical plants at Yanbu. Saudi Arabia has sought alternative export routes because of conflicts and its pipelines lack adequate security.

Altogether, Saudi Arabia has about 77 oil and gas fields, 1,430 wells, and seven refineries. Its 2001 budget called for drilling 246 more wells (208 onshore and 38 offshore) at a cost of US$1-billion. Another 292 wells are planned for 2002. The Saudis were expected to earn in 2001 about US$62.6-billion in crude oil export revenues, double their 1998 revenues.

Pipelines of the Caspian Sea Basin typify the complexity of pipeline construction and the difficulties of protecting them, or from the terrorist’s perspective, how easy it might be to interrupt the flow of black gold, eg: the Caspian Pipeline of 460-miles that will connect western Kazakhstan to the Russian Black Sea Port of Novorossiysk. This pipeline will allow maximum development of the Tengiz field with potential reserves of six -to nine- billion barrels of recoverable oil. Planned production peaks at 700,000 BD in 2010. After construction and testing, the pipeline must be maintained and protected. Security of the pipeline, as noted below, will come from governmental and non-governmental sources.

Construction of the global oil and gas infrastructure will continue at a healthy and sustained rate through 2003 and beyond. One survey indicates 60,000 miles of oil and gas pipelines are in various stages of construction or planned for construction. Planned pipelines and those under construction in the Middle East total 8,092 miles. Several are more than 1,500 miles in length. What armed forces will be called upon to protect these new initiatives?

Loading Terminals: Throughout the continuous process of petroleum production and transport, oil enters storage tanks at various stages along the way, near wells, at refineries, and near seashores. Oil is moved from shore to oil loading terminals located either on shore at fixed docks reachable by oil tankers or at offshore terminals, circular moorings for one or more ships. Construction of underwater pipelines is a costly and difficult job. The pipes are made of steel and laid from special barges only in good weather. The underwater pipes are from 20 to 36 inches in diameter and made up into 39- foot lengths. It may cost more than US$1.5-million to lay a mile of underwater pipe. Oil is moved through these underwater lines by pump stations resting on floating platforms to the terminal and into large oil cargo tankers. Most oil loading terminals in the Persian Gulf are offshore in deep water where the terminals can handle supertankers. Fixed deep-water ports are located at Kharg (Iran); Khor-al-Kafka and Khor-al-Amaya (Iraq); and Mina-al-Ahmadi (Kuwait). The only terminals able to accommodate super tankers of 400,000 to 500,000 deadweight tons (DWT) are those of Iran, Kuwait, Saudi Arabia, and Oman. Controlling depths in the Mediterranean Sea are too shallow for berthing and maneuvering supertankers.

oil tanker

Crude oil tankers, as large as 500,000 DWT carry about 60% of the world's oil out of the Persian Gulf.

Tankers: Oil tankers range in size from 30,000 DWT to 500,000 DWT and their oil capacities from 200 MMBD to 3,700 MMBD. Oil tankers of all sizes carry about 60% of the world’s oil out of the Persian Gulf. Tankers at oil terminals or in the Persian Gulf and the Red Sea are vulnerable to attacks from shore batteries, small arms fire, surface-to-sea missiles, air attacks, and sea mines. To obtain an idea of possible consequences and the disruption of the flow from a multiple terrorist attack on oil tankers, no worse case scenario is better than that of the Iran-Iraqi War. Iran attacked 173 ships and Iraq did the same to 283 vessels, however oil supplies during this so-called “Tanker War” from 1980-87 were only marginally affected.

In fact, tankers large and small have not been to date favorite targets of maritime terrorism. Attacks are very difficult to execute and terrorists are at high risk. Payoffs are low; the killing of crews and large oil spills are not as spectacular as other land targets. An analysis of hijackings on high seas reveals no regular pattern and no geographical cluster. The primary danger comes to ships when they are in port where they accessible to terrorist bombing or mining. The bombing in Yemen of the USS Cole in 2000 is a recent reminder.

Waterways: Crude oil is threatened as it moves from its source in a Middle Eastern country to its ultimate destination: the consumer. Terrorists may attack pipelines on land or sea lines of communication (SLOCs). Tankers carrying crude from the Middle East are especially vulnerable at oil transit choke points around the world: Strait of Hormuz, Strait of Malacca, Bab el Mandeb, Suez Canal and Sumed Pipeline, Bosporus/Turkish Straits, and the Panama Canal. It is not only the United States and Europe, which are dependent on the oil sailing through these choke points but also countries like the Peoples Republic of China and Japan. The US Department of Energy estimates that the Middle East countries exported an average of 17.7-MMBD in 1995.This amount was 47% of the world total of 37.7-MMBD. Projections are that by 2020 these exports will reach 40-MMBD and be 60% of the world’s total.

Part II picks up with an analysis of potential threats.

  1. By Optimist on October 5, 2010 at 6:26 pm

    I don’t believe stating oil shortages can(and will likely) happen is fear-mongering, it’s just a fact of modern life. Can anyone really argue that we would be much better off limiting ourselves to such exposures? Humans are reactive and not proactive for the most part. So, it seems highly unlikely we will do anything about it, except blow hot air, until crunch time comes.

    Pardon, my ignorance, but what do you expect? The entire species should adjust their lifestyles according to a crisis that currently only exist in your (and fellow disciples of the church of Peak Oil’s) imaginations? And if we humor you, where do we draw the line?

    The alternative interpretation is simply this: being reactive is being realistic. May not be what your MBA professor wanted to hear, but there it is. Let’s wait for oil to actually be scarse (i.e. expensive), before we start acting as if it is.

    We should be asking our leaders why it’s America’s duty to protect Saudi Arabia from attack when China is their #1 customer. If a bunch of Saudi’s bring down Chinese skyscrapers, will we really ask our sons to give their lives defending the Wahabbi nation? What if oil hits $250 a barrel and KSA reneges on its oil deals with China?

    Sorry, post-Carter’s disaster-in-a-sweater that’s what the cowards in the White House do. We, the voters, don’t seem to mind, do we? Case in point: what was our response to being attacked by 15 Saudis on 9/11? Beg King Abdullah for more oil, of course.
    What, you think China will offer to take over our leadership position on that?

    …and raw material sources synthesized completely from agriculture…

    Sorry, David, much as I love farmers, I don’t think they are the solution here. We should be finding cheap feedstocks (i.e. not food) that we add value to as we convert them to fuel. Wastes. Sewage sludge. Micro- or macroalgae. Leave the farmers to provide our food.

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  2. By jp on October 4, 2010 at 1:24 pm

    Intriguing article. I find it interesting that nearly all of the references to attacks on either shipping or piping of oil products were in fact either state-sponsored or against US interests. There is no mention however, that it would seem the majority of “terrorists”, as commonly defined in the United States, seem to come from this area (or be trained here), AND, from there it would not seem a large leap to say they also receive FUNDING from this area. Is there no discussion about the very real possibility that due to being funded by a majority of these countries, doing damage to the MAJOR source of income would bring 2 things, a large and crushing financial blow to their (the terrorists) income source, and a very hostile home country which would then have a real reason to hunt them down. On the contrary, for the home country to cut off funding (perhaps a sort of “tax” on the safety of the pipelines/transportation), they would then expose themselves to a rash of attacks on their own property (both infrastructure and the population). Either way, it doesn’t sound like a pleasant situation, but unless something throws this catch 22 out of balance, I don’t see many terrorist attacks within the oil production systems until they’ve been paid for and distanced from the source.

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  3. By savro on October 4, 2010 at 1:42 pm

    jp said:

    Intriguing article. I find it interesting that nearly all of the references to attacks on either shipping or piping of oil products were in fact either state-sponsored or against US interests. There is no mention however, that it would seem the majority of “terrorists”, as commonly defined in the United States, seem to come from this area (or be trained here), AND, from there it would not seem a large leap to say they also receive FUNDING from this area. Is there no discussion about the very real possibility that due to being funded by a majority of these countries, doing damage to the MAJOR source of income would bring 2 things, a large and crushing financial blow to their (the terrorists) income source, and a very hostile home country which would then have a real reason to hunt them down. On the contrary, for the home country to cut off funding (perhaps a sort of “tax” on the safety of the pipelines/transportation), they would then expose themselves to a rash of attacks on their own property (both infrastructure and the population). Either way, it doesn’t sound like a pleasant situation, but unless something throws this catch 22 out of balance, I don’t see many terrorist attacks within the oil production systems until they’ve been paid for and distanced from the source.

    JP,

    Your theory about oil-producing states being a major financial backer of terrorist activities is in fact discussed in a few sections later on in this essay. That portion will likely be the final segment (Part III) that RR will post.

    I already read through the entire report during my review for RR. One line that caught my eye along the lines of what you posted, which reportedly came from a Western oil executive, was, “Terrorism? Who’s going to blow up their own pipeline?”

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  4. By Perry on October 4, 2010 at 1:49 pm

    Australia set for ‘rare earths’ boom

    http://www.google.com/hostedne…..dd6446.171

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  5. By Benny BND Cole on October 4, 2010 at 1:51 pm

    Worthy column fodder, but in general I am very skeptical about the motives of the terrorism industry. As a taxpayer, I fear the terrorism industry more than terrorism.

    Sheesh, in my youth, we faced a Soviet Union that had 2 million men in uniform, huge tank forces, a blue water navy, faster jets than ours, ICBMs, a KGB, and the entire appartus of a major nation at its disposal. That was a real threat.

    Now, we are supposed to be ever-afraid of a very loose confederation of a few hundred poorly trained terrorists, armed with rifles and home-made bombs.

    Let’s get a grip. Yes, there will be terrorist attacks. Practically speaking, there are so many targets, we cannot protect them all. Almost anywhere people congregate is a target. Almost all infrastructure is a target.

    But remember, 30,000 Americans die every year in automobile accidents. Another 18,000 a year in plain-vanilla gunshots.

    Since 9/11, 300,000 American have died in roadside carnage, and 180,000 in gunshots.

    Are you campaigning for more highway safety, or gun control?

    Keep perspective. The terrorism industry wants your money.

    Fear-mongering is not a noble pursuit.

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  6. By savro on October 4, 2010 at 1:57 pm

    Perry,

    We’d appreciate it if you would try a little harder not to derail discussions by posting off topic news. Feel free to start a new thread on the article you posted here or mention it in the earlier thread that was already discussing the subject.

    Thanks,

    Sam

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  7. By Optimist on October 4, 2010 at 2:03 pm

    I don’t know. I guess, in a sense 9/11 has protected us from some terrorism, because it seems that (some in) the Al Qaeda leadership wants to top 9/11 when they strike again. In that regard: Is an attack on oil infrastructure going to be that spectacular? Sure, it would produce a HUGE fire. But the victim count would presumably be relatively low (a few unlucky oil workers).

     

    What makes terrorism terrifying is the idea that it could happen anywhere, to anybody. The main objective of the terrorist is to instill that fear in the target population. An attack on oil infrastructure does not make everybody worry that it could happen here. Strategically speaking then, it would seem that at most attacks on oil infrastructure might be part of a series of attacks, but not the main thrust.

     

    JP, I don’t know if the terrorists reason that way. Osama bin Laden (ObL) most likely gets the bulk of his funding from individuals in Saudi Arabia that share his beliefs regarding Islam, and restoring it to what they consider its rightful place in the world. ObL seems quite keen to rid Saudi Arabia from its current rulers, a step that would most likely throw the country into chaos, and have severe negative financial implications for his backers. From where I sit, it would appear these individuals are quite prepared to “take one for the team”.

     

    And the world of funding gets ugly quickly. Remember ObL was once trained (and funded) by the CIA to fight the Russians in Afganistan. Is that excellent training perhaps part of the reason we can’t find him now? Or how about our man, Saddam Hussein, who was funded by the US to stand up against Iran? Once we knocked over Hussein, the impact on Iran would seem quite predictable, won’t it? Today one might ask: Can we have Hussein back?

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  8. By Wendell Mercantile on October 4, 2010 at 2:11 pm

    The pipelines are extremely vulnerable since it is impossible to protect or guard from attack a pipeline along every kilometer of its length. A single terrorist using an RPG with a shaped-charge warhead could easily punch a hole in one. Send out many terrorist with RPGs to be used simultaneously on several pipelines, and one could cause major disruption.

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  9. By paul-n on October 4, 2010 at 3:01 pm

    Who’s going to blow up their own pipeline?”

    That is a good question, and while it would seem illogical to do so, I can see one very good reason for doing just that, or at least, your neighbour’s pipeline.

    It seems that whenever oil supplies from the middles east appear threatened, the oil price goes up.  It is a clear, short term benefit, to have some incidents happening every now and then, to keep a “terror premium” in the oil price.  Long term , it makes the area appear an unreliable supplier, but they are such a big one, that the rest of the world doesn’t have much choice, at present.

    That said, I am with Benny about the “terrorism industry”, -it has created a whole new bureacracy (Dept of Homeland Security), forced us to spend billions an airport security, surveillance equipment etc etc.  Some people are doing very well out of all this, mostly at taxpayer expense.

    We are sacrificing our freedom to protect our freedom.

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  10. By Wendell Mercantile on October 4, 2010 at 3:59 pm

    That is a good question, and while it would seem illogical to do so…

    It also seems illogical to us to walk into a market, train station, or airport terminal wearing a vest filled with TNT or C4 and blow one’s own self up in order to meet 72 virgins — but it happens.


    it has created a whole new bureacracy (Dept of Homeland Security), forced us to spend billions an airport security, surveillance equipment etc etc.

    Benny~

    I too agree about the industrial-political-security bureaucracy that has sent mega-bucks to some companies. But no one forced us to do it. That was an over reaction to September 11th, and the need for our politicians to show they were “on top of the situation” by doing something. We chose to spend billions and change our lifestyle — in other words, we allowed the terrorists to win, instead of “carrying on” as the Brits did during the London Blitz in WW II. As long as we keep spending those billions and make people take off their shoes before they get on a jetliner, the terrorists have no need to attack again.

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  11. By Brent on October 4, 2010 at 4:59 pm

    I’m with Benny on this one.

    Those who would give up Essential Liberty to purchase a little Temporary Safety, deserve neither Liberty nor Safety.

    -Ben Franklin

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  12. By Benny BND Cole on October 4, 2010 at 6:45 pm

    Thanks, Brent.

    The US media, political structure, and terrorism industries have found yardage in hyping terrorism. Peak oil types love anything that suggests terrible shortages could happen.

    Sadly and ironically, the hype plays into terrorist hands, making them appear much larger and scarier than they are, and providing free PR for recuitment of deranged, lost souls. Terrorism is largely PR stunts, however heinous.

    Fear-mongering is, of course, a staple of US politics on both sides of the aisle.

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  13. By OD on October 4, 2010 at 9:17 pm

    I don’t believe stating oil shortages can(and will likely) happen is fear-mongering, it’s just a fact of modern life.

    Can anyone really argue that we would be much better off limiting ourselves to such exposures? Humans are reactive and not proactive for the most part. So, it seems highly unlikely we will do anything about it, except blow hot air, until crunch time comes.

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  14. By paul-n on October 4, 2010 at 11:32 pm

    OD, Talking about oil shortages is not fear mongering, IMO.  Now the “War on Terror”, and things like the “terrorism alert” issued for all of western Europe yesterday, well, that’s a different story.

    And before that it was the Y2K thing, and before that, there was the cold war, and before that…

     

    The oil thing is, in my opinion, primarily an economic problem.  If you are a business that relies on a supply input (and it could be anything from material goods to computer programming) and you have to procure a good portion of it from unreliable suppliers, and a potentially shrinking supply at that, and  outbid other people in the process, you would be looking pretty hard at how to make your business less dependent on that input.  Instead the approach has been to look hard at how to secure a piece of that shrinking pie.

    This is a graph of world oil net exports, that is what is available to buy on the open market (crude, condensate, liquids) The US currently imports 12mbd, which is fully 28% of the world market.  And look at where the bulk of it comes from.  

     

    And here is where it goes;

    full article at the oil drum here; http://europe.theoildrum.com/n…../6994#more

    Because the exporting countries have both rising consumption, and (generally) declining production, net exports have already peaked, and they peaked before the price peaked or the economy collapsed.   If anyone had spare capacity, why would they idle it when prices were at record levels?  In my opinion, for the US, it does not matter most how much oil is actually produced, it is how much is actually available to buy.

    So if the US (or any importing country)cannot increase its own production, or reduce its consumption, then it must outbid China and India for a larger share of a shrinking market.  Faced with that choice, do you put your efforts into getting more of the available exports, developing domestic production/alternatives, or reduce consumption, by various means?  In my opinion, being an oil importer is a mug’s game – it’s the equivalent of someone who has to live by doing casual labour for cash – you don’t really know if it will always be there, and how much you’ll get.

     

    The fear mongering comes when people predict that oil shortages will lead to war, mad max etc.  It will lead to economic pain, for sure, but whether that will lead to war and other things, well, what evidence is there for that?  It’s not as if the last depression ended in war, now is it?

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  15. By David on October 5, 2010 at 1:00 am

    Paul N,

    Couldn’t it be said that if businesses realize this problem, but they are instead investing money into government, etc. to secure the shrinking bit of the pie, that maybe that the pie of oil is really the only game currently?

    If US industry made a massive switch to the alternative energy from sunlight/wind, and raw material sources synthesized completely from agriculture, if technologies could actually support them, it just seems that business already knows they aren’t cost effective currently. If they were cheaper than oil, then yes, there would be a massive competitive advantage to switching to them.

    I think the fact we are not switching does NOT imply that replacement technologies aren’t being hashed out, but that none of those technologies are at the level of providing what oil does at the same level of expense or less.

    Ie., I think if these technologies were far enough long, business would have adopted them long ago because it would give them a advantage in the market place.

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  16. By OD on October 5, 2010 at 1:46 am

    Now the “War on Terror”, and things like the “terrorism alert” issued for all of western Europe yesterday, well, that’s a different story.

    But if there was no warning and an attack did happen, the public would be enraged. It’s a lose-lose situation.

    Instead the approach has been to look hard at how to secure a piece of that shrinking pie.

    We have seen a few cases of large corporations trying to limit their exposure. Walmart & their suppport of hybrid semis & using less fuel in general, fedex buying electric trucks, just to name a couple. We even have the gov. offering incentives to purchase electric vehicles. This process is just extremely slow and will continue to be so until it becomes a critical issue. It doesn’t help that the majority of the general public have no idea a crisis is slowly forming.

    The fear mongering comes when people predict that oil shortages will lead to war, mad max etc. It will lead to economic pain, for sure, but whether that will lead to war and other things, well, what evidence is there for that? It’s not as if the last depression ended in war, now is it?

    I can’t tell if you meant this whole paragraph to be in jest, or just the last sentence. In any case, I prefer to watch Mad Max on tv and not live it!

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  17. By paul-n on October 5, 2010 at 2:14 am

    Hi David,

     

    I’m not so sure it is a problem so much for the industry/business sector as it is for the people as a whole.  Keep in mind that non-transport uses for oil are a minor part of oil consumption. There are high value industrial uses for oil (plastic, petrochemicals etc) and I am not suggesting a change away from those.  Given that most oil use is for transport, and half of the transport use is in private vehicles, it is not just up to business to change things.

     

    Sun and wind are alternative sources of electricity, not replacements for oil (except for places like Hawaii and Florida that still use oil for electricity)

    And agreed that the repalcement technologies do not provide the same level of convenience that oil does, or even when they do (e.g. ethanol) they are not scalable to replace current oil consumption.

    Agreed also that there is no advantage to business (or even individuals) to adopt these expensive alternative fuels (which can include expensive electric vehicles).

    And there is the problem – it would be to the advantage to the country, but at the level of the business or individual, it is not, or not yet, and that is why change has not happened to any real extent. But all the money that leaves the country for imported oil, has still left the country.

    So if alternatives are not going to be embraced rapidly and/or at a large scale, then the usage needs to be reduced.  If per capita oil usage can be reduced to something close to what western Europe uses today, i.e. half,  then the US can get by just on oil from US, Canada and Mexico. Even if it can be reduced by just one quarter, to what Australia uses per capita, you make a huge difference in the dependence on imported oil.  

    Now, that may be an ambitious goal, but I see lots of low hanging fruit – there is much inefficient/unproductive oil use. Oil is still being used to produce electricity where it need not be.  Oil is still being used for heating oil where it need not be.  Over zealous emission regulations on diesel engines have meant that most carmakers do not bother to sell them here, and most light trucks, which are prime candidates for diesels, are not offered with that option.  There is a lot of efficiency to be had right there.

    And of course, many people drive larger vehicles than they need to, and drive more than they need to.  The desire the vehicle to do everything has led to the minivan and SUV.

    Some intelligent rule changes to the neighborhood electric vehicles would help too.  Make a new class of car that has appropriate safety requirements, that can be used on roads with limits up to 45 or 55mph.  These can be built much lighter and are good candidates for affordable electric cars.  I actually see these being very applicable to many country towns, where not being able to go on a freeway is no problem as there aren’t any.

    And some intelligent (and that is the key word) investment in transit projects, which then leads to some urban consolidation also makes a difference.  I say intelligent because most projects being done are cadillac systems that are so expensive that hardly any projects get done, and then they often politically influenced as to how/where they get done.  Calgary, Alberta, built its light rail system in the early 80′s very cheaply, but very smart.  They weren’t obsessed with having the most sexy system of all elevated or underground trains, they often used existing rail right  of ways, etc.  They put space in the medians of a major road so they could extend the line along there when growth justified it.   The system has the highest ridership in north America and transports 1 in 10 Calgarians, every day.  Their average operating cost is $0.27 per passenger trip.

    Basically, they did smart engineering, not political grandstanding, and achieved 80% of the results for 20% of the cost.

    What I see is everyone wanting 100% solutions, be it transit, alternative fuels, electric vehicles, etc and that just won’t work, or not at a cost that is practical.

    But we don;t need 100% replacement, eliminating offshore imports is the goal (50% reduction) and even halving them would be enough, in the short term, 

    The real problem is that America has never (outside of WW2) had to make do with less of anything, and everyone seems to see making do with less oil as a negative change.  It is a change, but it need not be negative, and to remove the worry about being dependent on OPEC oil, well that’s a positive.

    The alternative fuels cannot replace the oil used (or imported) today, but combined with pragmatic efficiency measures, it can make a big dent.  And with about $292bn spent per year in offshore imports, that’s a huge plus for the domestic economy.

     

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  18. By paul-n on October 5, 2010 at 2:33 am

    OD,  Yes, it is good to see the Wal marts and the like doing stuff, there is much more that can be done, and a $1-2bump in the price of fuel would bring on an avalanche of fuel saving projects.  For many companies, and many people, right now, it’s just too cheap to be worth spending any money to change it.

    With my last paragraph, I am hoping that there is no war for oil.  What is more likely is a war because of recession, where some people/countries are more inclined to do desperate things because there back is against the wall, or a predatory country sees a weakened neighbour.  I Think Mad Max will stay where he belongs.

    What I would like to see is a “war-like” effort on reducing oil use, but, without a war, what will motivate the country?  High fuel prices, >$5/gal would, but the people and government would freak – they always prefer to reduce price instead of reduce consumption.  

    Quite frankly, the government could save all the money it is wasting on solar and wind subsidies (there is no shortage of electricity) and get serious on oil efficiency – there is a much better payoff in doing so.  Wind and solar may be sexy, but no amount of them will reduce oil imports, and they have used the money that could.  Any gov funded (energy) project should be evaluated first and foremost by how will it reduce oil usage.  If it doesn’t, it doesn’t mean the project can;t go ahead, it just doesn’t get gov funding, that’s all.  And for things that do get funded, there has to a serious, businesslike approach taken – the political approach that has been taken may buy votes, but it hasn’t saved much oil!

     

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  19. By Perry on October 5, 2010 at 8:35 am

    We should be asking our leaders why it’s America’s duty to protect Saudi Arabia from attack when China is their #1 customer. If a bunch of Saudi’s bring down Chinese skyscrapers, will we really ask our sons to give their lives defending the Wahabbi nation? What if oil hits $250 a barrel and KSA reneges on its oil deals with China? We should ask ourselves now if it’s worth a nuclear war to protect these people, because things can get nasty in a hurry. A lot of these countries making oil deals with the Chinese have a history of reneging. Only, this time the deals are with state owned companies. And China has the means to enforce these deals.

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  20. By Kit P on October 5, 2010 at 8:38 am

    “I don’t believe
    stating oil shortages can(and will likely) happen is fear-mongering,
    it’s just a fact of modern life.”

     

    Then you would be
    wrong. Disruption of energy supply occur frequently because of
    events like major accidents, ice storms, and hurricanes. We deal
    with them. For those who are prepared, it is just a minor
    inconvenience. .

     

    Unfortunately, we
    have to deal with ‘minor inconvenience’ when we do not build and
    maintain our energy infrastructure.

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  21. By OD on October 5, 2010 at 10:00 am

    What I would like to see is a “war-like” effort on reducing oil use, but, without a war, what will motivate the country? High fuel prices, >$5/gal would, but the people and government would freak – they always prefer to reduce price instead of reduce consumption.

    They would freak, but I believe eventually that panic would lead to the motivation to finally do something about it, unless of course prices collapse again. It will probably take several of these boom & bust cycles before any serious effort is made.

    The US can’t involve itself in another war effort until we get the troops out of Afghanistan & Iraq, and I personally don’t see that happening anytime soon.

    Perry also makes a good point. If our piece of the shrinking pie is being eaten up by China, they should be protecting their investment, not the US.

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  22. By OD on October 5, 2010 at 10:07 am

    Then you would be wrong. Disruption of energy supply occur frequently because of events like major accidents, ice storms, and hurricanes. We deal with them. For those who are prepared, it is just a minor inconvenience.

    Since you seem to have the belief that oil production will not peak, this reply is not surprising.

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  23. By mcain6925 on October 5, 2010 at 1:24 pm

    Two semi-random thoughts on the question:

    Others have mentioned funding as a reason.  At least in the case of Middle East terrorists, it is probably also important that the organizations (as opposed to the individual low-level bombers and such) have political goals.  And in most cases, the goal is to replace the political power structure of existing states with something that puts the terrorists, or terrorist-approved organizations, in charge.  Reality rears its ugly head: how long will your regime remain in power once the general population realizes that you are the reason the oil revenues stopped?

    Most Middle Eastern countries with large oil infrastructures also have authoritarian governments with active “secret police” organizations.  It is not easy being a terrorist in such countries.  On occasion we read about the Saudi authorities capturing a terrorist cell with plans to launch attacks within the Kingdom; how many others are quietly picked up and done away with and we never hear about it?  Iran doesn’t have a problem with terrorists.  Iraq didn’t have one until the US deposed the dictator and did away with the secret police.

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  24. By Benny BND Cole on October 5, 2010 at 8:58 am

    Michael Cain: Exactly right. The loose conferation of terrorists, a pitiful crew of perhaps a few hundred misfits, poses no threat to oil pipelines.

    The USA is vulnerable to oil cut-offs for other reasons, as we witnessed in the OPEC 1970s days. The world is vulnerable to extremely poor management of oil thug states, and that would lead to higher oil prices (not shortages–price rations supply).

    That said, I have long supported much higher USA gasoline taxes,and some subsidy of domestic liquid fuel production for security and economic reasons.

    I am dismayed at the constant scare-mongering in some parts of the energy blogosphere.

    The last thing we need to spend money on is our military-foreign policy-terrorism complex, which has become coprolitic and parasitic.

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  25. By mac on October 5, 2010 at 8:10 pm

    Perry,
    Please see previous post,

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  26. By paul-n on October 5, 2010 at 8:20 pm

    Mac, 

    You haven’t done a previous post on this thread.

     

     

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  27. By mac on October 5, 2010 at 10:03 pm

    Paul,

    I meant to say “”prior” posting, as in previous discussion.

    If you want me to make a comment that conforms to the subject of this post about terrorism, I’ll simply say this: “I don’t like it” (terrorism)

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  28. By OD on October 5, 2010 at 10:45 pm

    The alternative interpretation is simply this: being reactive is being realistic. May not be what your MBA professor wanted to hear, but there it is. Let’s wait for oil to actually be scarse (i.e. expensive), before we start acting as if it is

    .

    Is oil not expensive now? It’s closing in on $83 per barrel at the moment. How many billions are going out of this country everyday to support our overabundant lifestyles? The cheap oil is already scarce.

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  29. By Wendell Mercantile on October 5, 2010 at 11:36 pm

    Is oil not expensive now?

    OD,

    Apparently not. I walk to work and I see about the same number of big SUVs carrying only one person on the streets that I saw when oil was less that $50/barrel.

    Actually, it’s quite a bargain. My car is a Jetta TDI that gets about 50 mpg. I can buy a gallon of diesel fuel for $2.99 and use that fuel to go 50 miles. That’s a fuel cost of about $0.06 per mile. My car weighs about 3200 lbs + weight of the PAX. When you think about, burning $0.06 of fuel to move a ton and half over a distance of one mile isn’t bad.

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  30. By paul-n on October 5, 2010 at 11:45 pm

    Mac, 

     

    I think it is good to make comments that conform to the subject – that is, after all, why we have multiple subjects.  If you and Perry both register and sign in, then you can use the Private Messaging feature of the CER forums for things like that – it actually works very well.

     

    @ OD

    It depends on what your definition of “expensive” is.  Yes it costs more than it used to, but is it expensive?  Compare it to the alternatives for transport fuel – ethanol, electricity (for an electric car), LNG/CNG and all the equipment required to store it.  Compared to any of the alternatives, (except methanol), oil is still the cheapest, and that is why it has been so hard to reduce its consumption.  Other than water, i think you will find it harder to buy any other liquid, (fuel, food or other) at a retail price, that is cheaper than gasoline.

    If something is still the “cheapest”, then, in my book, it is not “expensive” .  And if you think oil is “expensive” at current prices, then I think you should not hold out too much hope of it becoming “cheaper” anytime soon.

    I do agree that the cheap oil is scarce, at least on this continent, and that is why we should be expecting and prepared to pay lots more for it in the future.  When you are bidding against other buyers for the same product, the cost of production is irrelevant, it is then what the buyer is willing and/or able to pay.  In the US that upper limit has not yet been established, but I think that people will (grudgingly) pay more than double what they are today to keep driving – though I think they will then drive less and likely a smaller/more efficient vehicle, but most will keep driving – they have no other choice, and so have no other choice but to pay whatever it costs.

    There is the potential for a lot more money to leave the country yet.

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  31. By rrapier on October 6, 2010 at 2:48 am

    Michael Cain: Exactly right. The loose conferation of terrorists, a pitiful crew of perhaps a few hundred misfits, poses no threat to oil pipelines.

    Yet they brought down the World Trade Center. I wouldn’t think a pipeline attack would be as complex an operation as that.

    RR

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  32. By Brent on October 6, 2010 at 9:26 am

    To those that say that oil is expensive.  It is not.  A gallon of milk is more than a gallon of petrol.  Bottled water is more than petrol.  The fact is that driving may soon be a luxury regardless of how we choose to act.  I feel it is naive to simply hand-wave electric cars into existence and assume that they will be cost competitive with what consumers are currently paying.  What makes a poor american more deserving of driving a car than a poor person in any other nation?  It seems logical that if you are wealthy you should be able to drive a vehicle in any nation.

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  33. By OD on October 6, 2010 at 1:49 pm

    Compare it to the alternatives for transport fuel – ethanol, electricity (for an electric car), LNG/CNG and all the equipment required to store it.

    Not sure I agree with that. Most of the reports I have read about electric cars, put the cost per mile around 3 cents whith a high of 6 cents per mile, while gas is roughly 10 cents per mile if the price per gallon is $3. Of course if you’re wrapping the extra cost of the electric car into that, then yes you are probably right.

    Can’t agree about CNG, at least for my state. CNG was going for around 90 cents per GGE last time I checked, although our state subsidity for NG has expired, so that would be 50 cents more per GGE now, still far cheaper than gasoline though. I can drive across my state now, and not have to worry about whether I can find another CNG filling station. If we weren’t moving soon, I would seriously look at a CNG car.

    Gosh, never thought I’d see the day when $83 barrel oil would be considered cheap.

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  34. By mac on October 6, 2010 at 3:02 pm

    “If we weren’t moving soon, I would seriously look at a CNG car.”

    Of course you would. Ben Cole has mentioned this a number of times, I remember just a few years ago the number on CNG vehicles worldwide was 5 million, It has now doubled to over 11 million today. (within about 3 years)

    India is planing to make a new locomotive running on a combination of CNG and diesel (95% CNG and 5% diesel. (combo) There is already a train in S, America running on Nat Gas,

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  35. By paul-n on October 6, 2010 at 3:24 pm

    Yet they brought down the World Trade Center. I wouldn’t think a pipeline attack would be as complex an operation as that.

    It certainly wouldn’t be, but then they are operating in their home country, or a neighbouring country, and have a greater risk of being found out.  The group would lose its local support fairly quickly, I would think.  

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