Radical Noesis - Thinking outside the box

The short answer to my question is that the heavy crude coming out of most OPEC wells does indeed indicate they are drawing much deeper. However, a couple of other issues arose from the articles McPherson recommended. First, a June 6, 2005 Bloomberg article gives some insight into how come OPEC keeps arguing that increasing their production will do little to ease the current spike in oil prices:

" Excess production by the Organization of Petroleum Exporting Countries isn't lowering prices or helping consumers because much of that crude is heavy, sour crude that refiners don't want, Iran's OPEC Governor Hossein Kazempour Ardebili said."

Heavier crude has a higher sulfur content, costs more to refine, and burns "dirtier." This means that nations trying to lower their emissions of greenhouse gases can't use the heavy crude. This then places the competition for oil resources on "sweet crude" - not oil in general.

In an article from OPEC on February 16, 2005 they note increasing demand for sweet crude in India, China, Europe and the United States. And where is the new source of "sweet crude?" According to the Bloomberg article - West Africa.

I have long known that oil (and other high-demand resources) were at the heart of much of the conflict in Africa. The competition for access has led to endless and bloody conflicts (including the Darfur genocide), and to increasing levels of corruption and poverty. The peaking of the OPEC fields places most of the oil competition in the sweet crude fields - Africa and South America (the struggles in Bolivia for example). I wrote a piece on the hypocrisy of African Aid efforts in light of the exploitation of African resources. In short, you cannot exploit someone else's resources and not have massive inequality as a result. This perspective is reiterated in an article at Oil Change called What Is Petro Politics?. The article examines the centrality of oil in US policy and some of the consequences of it. As is noted in the AfricaFocus Bulletin article:

"From Houston to Luanda, London to Lagos, Washington to Baghdad, or wherever else oil is found or sold, the nexus of oil, cash, and politics poses a fundamental challenge to democratic accountability. Campaigns for greater openness, including the global Publish What You Pay campaign, are making some headway. Still, resistance to transparency is the most common note. In the US, Vice President Dick Cheney continues to refuse to release even the names of the industry executives who advised him on the Bush Administration's energy plan."

... And stated even more crudely in China's People's Daily article United States Covets African Oil: PD Analysis - as if China doesn't.

The impacts of exploitation on Africa were noted at UNCTAD’S 9th African Oil Trade & Finance Conference where Carlos Fortin stated:"large part of the extra revenue immediately leaves the continent, as foreign companies capture much of the rent."

Perhaps part of China's Interest in Unocal stems from where the company has holdings outside the U.S. - Thailand, Indonesia, Myanmar, Bangladesh, The Netherlands, Azerbaijan; DR Congo, and the Vietnam Baku-Tbilisi-Ceyhan pipeline. In other words, they are highly active in both Asia and Africa.

Since the competition, and demand, is for "sweet crude," then increasing OPEC oil production is largely meaningless except as an emotional move to calm oil markets. According to an article by Neela Banerjee on May 16,2004 sweet crude extraction is at maximum capacity. Since the African fields only account for 8% of known oil reserves, but those are the most prized reserves, we are much further into the Peak Oil scenario than anyone is admitting. It also means that we are likely much closer to all out resource wars than most probably expected. God help Africa as they seem to be front and center in this conflict.

One potential response to this is to roll back clean air standards so that the broader (heavy crude) supply comes back into play. Unfortunately, that would only exacerbate the already out of control global warming process.

Other Resources of Interest
USGS, World Conventional Oil Resources, by basin

Emerging Markets Online, Central Africa Oil and Gas Report - pdf file

The Energy Bulletin has a number of articles related to this topic. Two of the more specific are West African Oil Gives U.S. New Security Challenge published December 17, 2004 by Nick Tattersall, and one from the Taipei Times (10/16/04) - China, India fight for African oil