Shell's Scenario Planning

Thirty years ago Peter Schwartz created at Shell Oil the first future scenario planning exercises. He later refined his work into a book, The Art of the Long View, and an amazing career working with Stewart Brand at the Global Business Network. When Peter left Shell, they continued his discipline of scenario planning and now have released two scenarios for Energy in 2050. Given that U.S. energy consumption per capita is so much greater than any other country (chart above) we need to take these scenarios seriously. The first scenario is called “Scramble” and is embodied by the ideas of our current administration and political elite along with some of the libertarians who frequent this blog.

In the Scramble world, events outpace actions. Security of energy supply and fears of losing economic ground shape decision-making. For the next 10 years, people from all walks of life join in the debate about energy and climate change. But no one seems truly wedded to action on a large scale. Governments generally choose solutions that are politically straightforward, and local. They prefer to rely on indigenous energy sources. So coal makes a big comeback in some regions, despite its higher emissions. Drivers stay with liquid fuels. With oil becoming harder to find and produce, biofuel use grows rapidly. Energy efficiency improves only gradually. Trading in emissions credits remains patchy and ineffective. Without a meaningful price, business lacks direction for technology investments to improve emissions management. In the Scramble world, no one is prepared to change the status quo. Dealing with today’s problem takes priority. By the 2020s, life has become volatile and uncertain. Energy availability is often tight. Severe weather events are blamed on a lack of previous action on climate change.

The other scenario is called “Blueprints”.

The world of Blueprints shows what can happen when actions outpace events. Groups of seemingly disconnected people in California –- venture capitalists, farmers, politicians –- collaborate around opportunities for profitable action on climate change. Publics put international pressure on governments for change. Smart investments in modern facilities improve air pollution, energy efficiency, and greenhouse gas emissions all at the same time. This isn’t a sudden outbreak of altruism. It’s a recognition of shared interests, new opportunities for profitable business, and the benefits of taking action before it’s forced by circumstances. In the world of Blueprints, local actions spread and join up –- like the C40 megacities pact of mayors and others, experimenting and sharing good practices around carbon emissions, transport and energy efficiency. During the next decade, the Blueprints world is diverse. Different parts use different approaches to promote energy efficiency, and technology development. Some choose taxes. Others use mandates. Some look for voluntary action by businesses and consumers. The most successful approaches spread.

Although Shell has never “picked” a scenario before, they vote strongly this time for the “”Blueprint” choice. Quite frankly, I don’t think we have a choice but to abandon our current Scramble for a Blueprint for a sound future.

This entry was posted in Business, Economics, Energy Policy, Foreign Policy, Innovation and tagged , , . Bookmark the permalink.

54 Responses to Shell's Scenario Planning

  1. rhb says:

    I, too, choose the blueprint version. For many reasons, the main of which is that it sounds apolitical. The only side to be taken is the one that will work to make a sustainable world for all of us.

    “Some choose taxes. Others use mandates. Some look for voluntary action by businesses and consumers. The most successful approaches spread.”

    According to Wednesday’s LA Times, Magic Johnson has already started doing this with his Canyon-Johnson development fund.

    It can be done. It should be done. But people do like to scramble.

  2. Patrick Freeman says:

    The key element to determine the scenario that prevails in the future is the quality of leadership available to help us all make the right choices. Visionary leaders are scarce, and often trampled by the herd just because they stand out from the me-too crowd and the get-mine-before-it’s-all-gone crowd.

    This leadership is needed not just at the national and international levels, but locally and among our non-governmental agencies. We have plenty of appropriate leadership at the lower levels, but very little at the top. Without real leaders, with a clear understanding of the issues and the impacts of the choices we make, we will remain where we are now, scrambling to make do and hoping for magic to fix things.

  3. STS says:


    Visionary leaders are scarce, and often trampled by the herd just because they stand out from the me-too crowd…

    Any chance you’re thinking about what happened to this guy? He certainly fits the description.

  4. Morgan Warstler says:

    Years ago there were two “asteroid disaster is about to hit earth,” movies:

    Deep Impact: The President announces that special caves will have to be built, and the government will have to have a lottery-of-fate to randomly select 800,000 ordinary American citizens to go along with 200,000 scientists, soldiers, and other officials. These 1,000,000 people will be set aside to save the population from extinction when the comet hits.

    Gross: $349,464,664

    Two months later, comes….

    Armageddon: The only man to do it, is an oil driller named Harry Stamper and his group of misfit drillers and geologists.

    Gross: $553,709,788


    This is my analysis (besides the implied – hippies have nothing to teach us, except how to take drugs)…

    We have a crisis on our hands. And you know how we know it is a crisis? Because we are fighting a war to ensure we can survive.

    Jon, do you know how much powerful an argument is is too make ON YOUR PART to go wave a flag and scream that we all have to cut back on oil BECAUSE we are fighting a war!

    That’s a NARRATIVE, a story line people will react to. There are evil doers and we are heroes.

    Saving the environment is a loser pitch to a bored audience, full of junk science. BUT, cutting back on oil to help with the war, thats a winner.

    More government is loser argument (you’ll have to fight the while time). Massive tax cuts for investment is winner argument (we all agree).

    Look, why not just use the judo I’m showing you? Why swim up hill and make enemies you don’t need?

    You are making the Deep Impact, and even if my movie comes comes second, it will outperform yours.

  5. John Hurt says:

    (besides the implied – hippies have nothing to teach us, except how to take drugs)


    I hate hippies as much as the next guy, but I have to say, you sound like you could use a little help in the drug taking department.

  6. Morgan Warstler says:

    JH, I’m sure you have more than a few tricks up your sleeve, but those days are long behind me. I was just referencing the good parts of Stewie B.

  7. Patrick Freeman says:


    He did not immediately spring to mind, but I suppose a case could be made in his behalf. Certainly, being fired by Bush is a positive indicator of competence and ability.

  8. Jon Taplin says:

    Morgan-I like the Judo notion. How about a $1 per gallon “war tax” on gasoline until our soldiers are totally out of the gulf? I agree we also cut all taxes on Alt Energy investments.

  9. Rick Turner says:

    Jon, would you like to get our soldiers out of the gulf? Then in addition to supporting the buck a gallon war tax, also support the return of the draft. If the Repubs had the balls to do that (which you know they secretly desire, but rightfully fear), it would stop things over there really quickly…

    Or how about bumper stickers suggesting that all the Repub politicians sons and daughters volunteer. Hey, a prince of England went…

    Actually, mandatory service, but not as soldier-puppets but as domestic and overseas Peace Corps workers would be good for every high school grad. Infrastructure rebuilds, teaching, public alternative energy projects…you name it. A kind of mashup of the CCC and the Peace Corps…minus the CIA.

  10. Azmanon says:

    As much as I would want to believe in the “blueprint” scenario. it would take some serious evolution on the part of human consciousness to reach that path. Unfortunately we’ve been shown that evolution makes its greatest leaps following large scale catastrophic events, hence there are many ‘missing links’ in the chains that bind us to this earth.

    What each of the scenarios above deny is the existence and often need for catastrophic events and missing links in order to see significant change take place. As some have suggested before even capitalism has needed and still needs disasters and catastrophic events like war to “progress”. In the case of the Iraq war, one could argue that it too is something of a blueprint gone awry and turned into a scramble heading onto a boondogle.

    While conscious cooperation among people and sectors is possible on a small scale I fail to see how it can be implemented on a global level.

  11. Morgan Warstler says:

    How about a $1 patriot gas tax, BUT you only have to pay if you don’t have a right-flying flag attached to your car or truck. We can’t cripple average Amercians with this tax, gas prices are going to keep going up anyway – that’s a market reality.

    Our goal is shifting consumption for our own security, right? Add to this public display war garden posters at gas stations, “I NEED YOU TO USE LESS OIL,” “THE OIL IS RUNNING OUT,” and suddenly the flag is reminding you to cut down on driving. Car-pooling is proof of love of country. Cut employment taxes on tele-commuters.

    Soon every Prius will be flying a flag, and that’s our goal right?

    It is equally important that we recognize OPEC as a sinister force against our own welfare, against the global good. They are trying to keep their “windfall profits,” going by slowing down our progress in Iraq. Maybe we set profit margins on each barrel of oil OPEC nations sell, and agree with China and India begin collective buying agreements.

    One year draft service is great, but it is ONLY for “soldier-puppets” as Rick so disgustingly calls them. It is crucial to prepare youth for a world where we need to protect ourselves. There’s plenty of need for systems guys in this new military, we don’t want to have another Iraq on our hands. Learn from our mistakes.

    I know, I know your own thinking was that this patriot tax will cause us to end the war. But the truth is, the horror stories are going to keep coming. Food crisis leading to starvation. Instability is coming globally. We are a military country, we are going to continue to be a military country – hopefully a new kind of military, but the same kind of country.

    So can we agree on this kind of patriot tax, and this kind of draft?

  12. Mark Maglio says:

    A gas tax would be great, as one who rides a bike. Except that it will make everything more expensive due to transport costs and essentially act as a regressive tax… I don’t know if I can support a gas tax without something to soften the blow to folks who won’t be able to eat.

    Where I am, in Buffalo, it’s damn hard to even gross $30,000 a year with a college degree. It’s not easy to support a family with that, even with two earners.

    But if we can soften that blow with tax breaks for the poor, then yes we ought to have such a tax.

  13. rhb says:

    The reason the draft helped end the war is because during Vietnam we came to see the futility on our tv, we read the reality of the body counts, we could hear and see the war was based on lies our own government told us and finally, we realized we did not want our children to die for the above.

    Reinstate the draft and the first person drafted who dies is on your head. Your son, your daughter, your friend – dead in a futile attempt to beat a country into submission. I’ll never vote to reinstate the draft even if Morgan is the first one drafted.

    And yes, you folks are right to recognize the hippie ideals in the blueprint approach. What you apparently don’t get, have never gotten, is that a true hippie is also a libertarian to the max. It is his/her strength and, unfortunately for the rest of us, his/her weakness.

  14. Rick Turner says:

    Irony and sarcasm, rhb…and trying to push the pendulum to set off the alarm clock. Too much of America has been brain dead for too long. Our masters in DC have gotten too good at smoke an mirrors. Time for the reality check and wake-up call to America before even more middle class citizens realize they’re bankrupt while the Bear Stearns crowd continues to buy new digs at the Plaza.

    The problem with democracy is that it takes a reasonably well educated and informed populace to do it well, otherwise it’s a sham. Ditto and even more so for political idealisms like libertarianism which really require individual thought and a big heap of personal responsibility, not qualities being nurtured in the US these days.

  15. John Hurt says:

    “What you apparently don’t get, have never gotten, is that a true hippie is also a libertarian to the max.”


  16. BobbyG says:

    “Visionary leaders are scarce, and often trampled by the herd just because they stand out from the me-too crowd and the get-mine-before-it’s-all-gone crowd.”

    March 10 feet ahead of a crowd and you’re a “leader.” March 100 feet in front and you’re a “target.”

  17. Jon Taplin says:

    Rick-I agree with the Universal service idea. Making kids take a year off to serve their country in the peace corps or as teachers aids should be requirement before entering college.

    Azmanon- I agree that crisis is perhaps the only means of spurring action. If you read deep into the Shell “scramble” scenario, they believe this laissez faire approach will lead to just the crisis you describe. So my take is, we can either get serious now or get much more serious later.

    Morgan- You are not being serious. Slogans don’t cause serious change. That’s why the whole American Flag pin meme is so dumb. Only scoundrels wear the pin to mask their crimes.

    Mark Maglio- I agree that anyone earning less than $30,000 a year should be relieved of payroll taxes in order to compensate for the increased gas tax.

    rhb- Rick’s point about national service is that you could choose to join the military or join the Peace Corps. That would be your statement of principal. But you couldn’t avoid the fact that you owe your country some service.

  18. rhb says:

    Could we also tie a tax benefit to the universal service, say to the person “you could earn a tax credit double the time served” or to the person’s immediate family if he or she chose to take it that way.

    Jon, this brings me back to the employment service in the education field that I mentioned last week. Service at a school could receive compensation via tax credits or increased length to unemployment benefits.

  19. Rick Turner says:

    How about national service either before OR after graduating from college. It would be great to have college educated young adults as National Service teachers, etc. So you’d either go in after dropping out or graduating from high school or get a four year deferment to go to college. Those going into National Service with a BA would get a higher rate of pay in service and a further deferment on student loan paybacks than would non-college educated National Service workers. Carrot and stick and everybody serves. In fact, give high school grads higher pay than drop-outs, and really put some incentives in there for folks to educate themselves. Also make allowances for those attending accredited trade schools on a full time basis. Tie it into organizations like Habitat for Humanity, too.

    It is disgusting to me to see the Bush cronies pushing the Iraq war as something their own kids are not expected to participate in. Throw those Bush daughters into boot camp and ship them off to Iraq…then let’s see how GW likes it.

  20. Jon Taplin says:

    rhb & Rick-These are both great modifications to the Universal Service idea. This week, I’ll try to start a conversation around this concept.

  21. Morgan Warstler says:

    Rick, we’ve covered this. McCain’s son serves.

    Jon, I don’t think you understood the point. I was serious. The reason to have a Patriot Tax, a War Tax, IS TO HELP WIN THE WAR.

    Was that your goal?

    Let me say it again, if you want to cut back on oil, and you want to sell people cutting back, you sell it to them as part of their own patriotism – something they believe in. Learn from Obama, now he wears the pin.

    Stop thinking people are going to or want to be like you. They don’t. But there are still very good reasons, very real reasons, people will cut back on oil.

    Why do you insist on having your cake and eating it to?

    Let me ask it as a hypothetical: If you knew for sure, 100% certainty, that a pro-war / war garden / flag pin lapel mind set was the best way to convince people to cut back on oil, would you support it?

    I want to know where your real priorities lie. I’d appreciate a thoughtful response.

  22. John Hurt says:

    The flag lapel pin is an key accessory for every partiot.

  23. John Hurt says:

    Oh, and, Morgan, what about the Pentagon institute, the National Defense University report, calling the Iraq War “a major debacle” ?

  24. Ken Ballweg says:

    Damn, now I have to buy some lapels to put one on.

  25. Ken Ballweg says:

    And, once I get those spiff new lapels, what if I wear the pin upside down? Is the international signal of distress (for we are indeed distressed) still patriotic enough?

  26. John Hurt says:

    If Hillary Clinton were a true partiot she would add in some American Flag Ear Rings©. I think she is a phony. Seriously. I don’t think she gives a flying fuck about American Flag Ear Rings©.

  27. Jon Taplin says:

    Morgan-I’m happy to declare that the Patriot gas tax is to pay for this miserable conflict in Iraq, rather than borrowing the money from the rest of the world . Whatever it takes to sell it on your side of the aisle.

  28. Rick Turner says:

    So McCain has a son serving… Who else of our Washington elite has a son or daughter serving? Let’s roll back the clock a few months and remember Mitt, who seemed to think that having his sons support his candidacy was as much a public service as being in the military… Who of the senators, representatives, cabinet members who have voted for or otherwise supported the war has kids of military service age who are not serving? Let’s see…Chelsea? Her mom liked the war well enough…before it became a barrier to being elected…

    And Morgan, are you still for the war so we can drive our gas guzzling cars? It is about the oil, isn’t it? And how much oil are we getting from Iraq? And is that why gas is crossing the $4.00 a gallon mark with no sign of slowing down? And what about our friends, the Saudis, who spend their oil-gotten gains supporting madrassas, etc.?

    We need to get the hell out of the Middle East and concentrate on making the US a wonderful place to be without the need for imported oil. Screw ’em over there. They hate us, and they’re likely to for a very long time to come. Let’s get out of their faces and work their own problems out without our interference. I have a feeling that they wouldn’t hate us so much in a few generations if we got the hell out of their affairs. Let their societies go through changes without us, and if we live our lives truly well, then others in the world will simply want to emulate a good life style. Of course if you don’t truly believe in our concept of freedom, then you’re likely to want to force it on others rather than simple setting a good example for the world.

    Somehow, I don’t think we’re setting a good example these days… We live in false freedom constrained by a corporate oligarchy that lives on greed. And it’s cracking at the very seams right now…

  29. Jon Taplin says:

    Rick- I think you’ve got the right idea. No troops on Arab lands within 18 months. We will come back to the gulf region with massive corporate investment (like we have done in Vietnam) once you guys get your shit together.

  30. Rick Turner says:

    Why should we go there with massive corporate investment when there are trillions of dollars right there in the Middle East under the control of Saudi Arabia, Dubai, the Arab Emirates, Oman, etc.? The Wahabbis (WhaHobbits?) have all the dough needed to make an earthly paradise out of the whole area, but they’d rather keep their brothers in poverty and pissed off at the West and the Israelis. It’s a giant chess game, and the suicide bombers, Palestinian rocketeers, Al Quaida, the Taliban, etc. and the pawns in the whole game. The king (sheiks) and queen (wives), the knights (Jannissaries), and bishops (Imams and mezzuins) have massive economic power and a whole lot of expendable pawns on the board in this game. It’s like playing that chess game with one side having ten times the number of pawns…

    The only way to win this one is to walk away and only come back when the playing field is level, the rules are fair, and the game is friendly. Try again in about 500 years. It’ll take that long if the entire Middle East isn’t a nuclear desert by the year 2020…because that is the end game for the End of Days crowd. The potential is very high for there to be no livable Middle East if things continue in the current direction. I’d be willing to bet that numerous nukes have destination addresses in Arabic at this point…and that “missile defense shield” for Europe is as likely to be made up of strategic offensive missiles as defensive anti-missile devices if it happens.

  31. rhb says:

    Tell it like it is. Let me hear a YEAH!

  32. Morgan Warstler says:

    Jon, maybe we really can’t even speak the same language. I’m flummoxed.

    I was serious about the flag thing. I clarified and said, a real gas tax would hurt the poor, but with something like the flag, truckers wouldn’t be taxed.

    The point of the patriot tax IS NOT to raise money for the war, it is to make people see using less gas as patriotic. To carpool for the soldiers. That flag on your car reminds you, people are dying for this flag, do you need a Hummer? Do you need drive around for fun? For vacation?

    USE LESS GAS, WE ARE FIGHTING A WAR FOR IT, is the idea. We are already paying for the war, what we are putting on the credit card is entitlements.

    Any new taxes we’d be giving back in deductions for investing in alt. energy, right?

    I’m not for new taxes, I’m for people getting us off oil. Jon, let me say it again, one can 110% support the war, and want to cut back on oil usage, you get that right?

    Can’t we agree that ANYTHING we do, even the Patriot TAX, to cut back on oil usage is good?

    To me this is a one-two-three punch, the Middle East watches the US with clarity of patriotic purpose:

    1. Cut back on oil.
    2. Massively privately invest in alternatives.
    3. Prove with our military we will not allow oil to be weaponized.

    That makes sense.

  33. Morgan Warstler says:

    “Saudi Arabia, the world’s biggest oil producer, has put on hold any plans to further increase long-term production capacity from its vast oil fields, its most powerful policymakers have said.

    In a series of statements, including one by the king himself, the kingdom has warned consumers it does not reckon there is a need for further expansion, an assumption disputed by the world’s biggest developed countries.”

  34. Jon Taplin says:

    Morgan- The Saudi statement is just flackery to cover up that they are pumping full out and don’t want to admit that they have massively overestimated their reserves.

    You and I are really quite close on two issues. We both want to reduce our dependence on Foreign oil and we both want to reduce our dependence on foreign capital. The Patriot Gas tax accomplishes both goals–raises capital to reduce borrowing and lowers the consumption of gasoline.

  35. Jon Taplin says:

    Rick- I only meant a massive investment in the sense of setting up an Intel Factory in Jordan or Palestine, where there are lots of educated workers but few high tech jobs. Thats what Intel did in Vietnam. Try to make belief in science a premioum for life to counter the Mullahs and their view of the world.

  36. Rick Turner says:

    Jon, that makes sense…but the oil rich countries import their cheap labor from places like India and Indonesia because their own citizens don’t want to dirty their hands and they want to keep the poor in the less rich Arab countries poor and pissed off for the reasons stated above. The Israelis managed to turn much of the desert into gardens with their kibbutz phase of development. Why can’t the Arabs do that as well? Is there a cultural issue? Is it un-Islamic to work hard to better one’s condition rather than spend all one’s spare (?) time in a mosque? If God helps those who help themselves, does Allah have the same policy?

    What’s interesting, though, about your suggestion, Jon, is that with the Chinese economy going the way it is, then maybe the Middle East will someday be the last bastion of cheap manufacturing labor in the world. In my industry (the music industry on the instrument products side) we’ve seen production go from the US to Japan to Korea to Indonesia to China and Vietnam. It’s kind of followed the automobile manufacturing trends. Well, the Middle East has the cheapest energy potential of anywhere in the world…they’ve got the oil, and there sure is a lot of sunlight there for the future. Why not manufacturing? Easy sea access for transportation, and as with Japan, the raw goods for manufacturing can be brought in. What’s in all those oil tankers going back? Those are “dead head runs”. Design some dual use tanker/freighters…

    But they have to get past this shit about pushing the Israelis into the sea, get past who’s who in the Muslim heritage of whatever this Sunni/Shiite conflagration is based upon, get past being jealous that their golden age is way in the past (a golden age of great tolerance…as well as the stupid Christian crusades…), and get past the issue of trying to convert the rest of the world by word or sword. And all that just isn’t going to happen in my lifetime nor those of my kids, I’m afraid.

    But I guess we can just be good Libertarians and go fight to steal the oil…and screw ’em if they don’t like it…yeah, I’m still having a hard time wrapping my head around Morgan’s philosophy on the war over there. I ask myself, “How would Morgan have gotten us into the war if he’d been president? How would he have justified it?” I see it as only having been possible to start it by our government having lied to itself and the citizens of the country. If there hadn’t been lies, there would not have been a war. That leads me to this: If the war is based on lies, we need to get the hell out.

  37. Morgan Warstler says:

    But I want the War Garden poster. War is the only valid reason I see for the government to print propaganda and rally the psyche. We do not need law, we need shame. We need those people without flags on their cars to be paying through the nose, we need people seeing the flag and being constantly aware that people are dying to protect our survival.

    I know you find the idea of cars flying flags, as we saw after 9/11, either silly or distasteful, thats what I want to tax, I want to tax it’s distaste. This country has gone to war, we should act like it.

    Jon, let me ask you this, it is a conversation I keep wanting to have, its based on the idea that Saudi Arabia is running at capacity.

    The cost of extracting a barrel of oil in the Middle East is what? Anywhere from $1.50 pb (in northern Iraq) to $5 or $6 pb in Saudi Arabia, add in the cost of finding new reserves and say $20 pb.

    Then get rid of the speculators, say 10%, and the 10% $40B profit Exxon makes on $400B revenue (Hillary and Obama are dreaming if they think they can gut that)….

    Where is that money going? Which evil player in the game is sitting on windfall profits?

    Did the cost of producing oil go up? No. Now remember from 1980-1985, Saudi Arabia cut its production from almost 10 mbpd to 3.5 mbpd (a 65% cut in production) in order to raise rates.

    Ok, I’m saying all of this, and let me be clear so Rick will stop saying I want or expect or am promising oil will be cheaper. IT WON’T.

    But, if you assume Saudi Arabia is running at capacity, there are two ways of keeping the price from being $400 a barrel in 5 years:

    1) Refusing to let Saudi Arabia sell and keep profits past say $25 pb. Price controls for their share. We partner with Europe, China and India and with the force of military and market set their margins, and agree how much we each get.

    2) Get Iraq running the way we are – profits going to western companies – up to 12 mbpd as fast as humanly possible (and it will still take years).

    Now consider what $400 a barrel looks like in 5 years time. We’ll be serious about the tar sands, people won’t care if their coal is clean.

    So in one scenario Saudi Arabia is fronting, and we have a bigger crisis, than you have mentally dealt with… or in another, they are trying to keep even more of these “windfall profits” your side is so eager to appropriate.

  38. Jon Taplin says:

    Morgan- It has nothing to do with Windfall profits. It has to do with the limits to growth until we develop new sources of energy. Look, Bush and Cheney are putting a great deal of pressure on the Saudis to pump more–and nothing is happening. You think there is a gusher in Iraq that will suddenly come on line and drop oil prices to $60/ barrel. First, I don’t believe its there. Second, Malaki’s good friends in Tehran would keep him in the cartel to support their high oil price lifeline, which is the only thing keeping the Persians from throwing the Mullahs out of power.

  39. Morgan Warstler says:

    Jon do you read what I write?

    “Ok, I’m saying all of this, and let me be clear so Rick will stop saying I want or expect or am promising oil will be cheaper. IT WON’T.’

    How can you read that and say: ” You think there is a gusher in Iraq that will suddenly come on line and drop oil prices to $60/ barrel.”

    Iraq does have better and probably more oil than Saudi Arabia… perhaps as much as 400 Billion barrels. But the prices aren’t going to go down to $60, the problem we face is keeping oil from going to $400 a barrel. That’s why we are in Iraq.

    The second part of your issue – Malaki and Tehran. The oil contracts have already been written. The deals are done. Iran screwed the pooch. The contracts are OPEC busters. Western companies come in and pump without limit and get to keep a full %, they don’t get paid a fixed amount for services on a fixed amount of output.

    Malaki just asked Petraeus to ASSURE Western Oil companies they can come invest in oil infrastucture and know it will be protected by the US military – for years into the future. That’s Malaki.

    This means more coming out of the ground, because the incentives are get as much out fast while the 20 year contracts are in play. This cuts into the margins Saudi Arabia & Iran get to keep, OPEC will be screwed. You should cheer this as an end to an anti-competitive system.

    We simply must stave off $400 a barrel oil. It will KILL US.

  40. Jon Taplin says:

    Morgan- I must have missed the coverage of the passage of the Iraq Oil Law that you assure me has already been done. Can you send me the link to the announcement of this?

  41. Morgan Warstler says:

    1. This is the law:

    2. Time lines, assurance of military force:

    “There’s an element of physical security that relates, that’s so obvious it doesn’t really bear discussion at great length,” Nelson said. “More important is you have confidence you have a system of laws and a system of fiscal stability that’s going to be together for not only the 6,7,8,9 years that it takes from the time you start up working in a venture to the time you have significant production and through that 30-year period you really need to get the returns back.”

    3. Cancel the old non-western contracts:

    “WASHINGTON, April 21 (UPI) — All of the oil deals signed by Saddam Hussein have been “canceled” and the companies must bid for the fields again, the Iraq Oil Ministry spokesman says.”

    4. Hand out all the new contracts… who’s the BIG winner?

    WASHINGTON, April 14 (UPI) — Iraq’s Oil Ministry has approved 35 companies it will allow to bid for soon-to-be announced tenders to develop oil and gas fields.

    The largest oil companies in the world — ExxonMobil, Shell, BP, Conoco Phillips, Chevron — all qualified, as did firms of a variety of sizes and nationalities.

    The announcement Monday on the ministry’s Web site is a major move that could bring foreign oil companies en masse into Iraq since the third-largest oil sector in the world was nationalized three decades ago.

    “Qualifying Firms (alphabetical by country):

    — Australia: BHP Billiton; Woodside.

    — British: BG International; BP; Premier.

    — Canada: Nexen.

    — China: CNOOC; CNPC; Sinochem; Sinopec.

    — Denmark: Maersk.

    — France: Total.

    — Germany: Wintershall BASF Group.

    — India: ONGC.

    — Indonesia: Pertamina.

    — Italy: Edison; ENI.

    — Japan: Inpex; Japex; Mitsubishi Corp.; Nippon.

    — Korea: Kogas.

    — Malaysia: Petronas.

    — Netherlands: Shell.

    — Norway: StatoilHydro.

    — Russia: Gazprom; Lukoil.

    — Spain: Repsol.

    — United States: Anadarko; Chevron; Conoco Phillips; ExxonMobil; Hess Corp.; Marathon; Occidental Petroleum.”

    5. Here’s the immediate upside:

    Iraq’s Oil Ministry will not unveil the list of oil and gas fields that will be put to tender. Iraq wants to increase production from the current 2.4 million barrels per day to 6 million bpd in the short term. Its plan is to increase production of currently flowing fields and develop those fields discovered but not producing. There is not expected to be any exploration blocks included in the tender.

    6. Then there’s the Kurds getting to do their own thing:

    “BAGHDAD, April 15 (UPI) — Iraqi media reports say Baghdad has agreed to the Kurdish region’s oil deals and stance on a draft oil law in exchange for a delayed vote on oil-rich Kirkuk.

    Meetings in Baghdad between a delegation from the Kurdistan Regional Government and the central government have been taking place, and although there is no official confirmation, Azzaman, Sotal Iraq and the Voices of Iraq news agency have reported the agreement.

    An agreement on funding for the Peshmerga, the Kurdish security forces, has reportedly also been reached.”

    “Rochdi Younsi, Middle East analyst for the business risk firm Eurasia Group, said if such a deal is realized it will harm the credibility of Shahristani and only delay a row over Kirkuk. And it could be a move by Prime Minister Nouri al-Maliki to shore up needed political support.”–_reports/1290/

    It strikes me that MoveOn, Obama and Hillary are the reason that Western oil companies are getting to LEASE the fields. We need political progress!!! They certainly didn’t intend it, but the road to heaven is paved with bad intentions.

  42. Rick Turner says:

    Morgan, I’ve never even hinted at the price of oil going down significantly, and I don’t think it should. Given the sales of Toyota Prius, I’d say that while many of the buyers are primarily making a political statement by going to hybrids, those cars do indeed go twice as far on a gallon of gas as most cars on the road, and that means that people are voting for energy efficiency with their pocketbooks.

    What I’m saying is that we should get the hell out of the Middle East and let them bathe in the oil we shouldn’t need. There are plenty of reasons to scale way back on burning or exploding oil products in our engines including reduction of air pollution and yes, the dreaded greenhouse gasses you don’t believe in; saving of oil for “higher purposes” like making high quality polymers…yeah, plastic; and one of the biggies, of course, is decoupling ourselves economically from a whole lot of people who basically hate our guts and are bleeding us dry of our hard earned cash. Forget about terrorists beating up on us, our friends, the Saudis, are doing a terrific job of it economically, and they know it. They’ll also string us along and if we get too close to energy independence, you’ll then see the price of oil drop in order to keep us hooked. I say break off the game and try something new…or old even.

    For instance, what we’re dealing with really is BTUs…not specifically oil. If solar hot water heaters…virtually ancient technology…were put on every south facing rooftop in the US, imagine how much oil, natural gas, and electricity now used for the stupid reason of heating water, would be saved. A BTU saved in one area is now available for another. I’d love to see a study of how many BTUs could be saved per day using nothing more advanced than solar hot water heaters everywhere that they would work. I’d be willing to bet it would have a noticeable effect on the cost of electricity and gas at the pump.

    Then give manufacturers of plug-in hybrids the kind of leg up given to the nuclear power industry in the 1950s. A plug-in hybrid with an electric range of 50 miles working on electricity alone would take care of my driving needs a good 90% of the days I drive.

    So those are two scenarios I see as eminently achievable within five years. Cut the addiction to Middle East oil, and then let the Middle Easterners…Arabs, Persians, whomever…work their shit out. Encourage the Shells and Exxons, etc. to understand that they aren’t just in the oil business anymore, but in the energy business. Sure, let them see profits from non-oil energy. Arco was once a major player in the solar electricity panel manufacturing business, so someone there knew the real game at one point. But they got out…too soon. But we have to disentangle ourselves from being one-down in the world to people who basically don’t like us, never will, but are willing to take our dough…

    And I still do not think that warring on nations who haven’t attacked us is right. 9-11 was about Osama bin Laden, not Saddam Hussein. In a world where I can identify my own car in a Google Earth photo on my computer, it does not make sense to me that someone can hide for years in the mountains of Afghanistan/Pakistan/Iraq without our wily spies having a clue as to where he and his support network might be. If I can ID my own car via satellite or airplane photos available to anyone in the world, then I’m sure that someone in Langley could read the title of the paperback novel on my dashboard from a long way up.

    So we’re in the wrong war at the wrong time in the wrong place…and it’s got to be because the powers that be in Washington want it this way for personal profit, not our betterment.

  43. Morgan Warstler says:


    Relying on the conspiracy assumptions about the power of “them,” does you no good. There is no they, there isn’t. I can’t say it any other way. There are incredibly rich people, but they tend to be new money and do things like go on Dancing With The Stars. Or they are actors or athletes, or tech guys – all new money. And most money is new money. At least in this country. Which is why this country is the most just (see Rawls). There are incredibly smart men, who for some reason you call evil or stupid, like Cheney or Rove or Bush, and I mean in the best way (really I’m just explaining it the best I can), but the same guys the left HATES with a passion. I wish I could wave a magic wand, and make you believe this: Believing in “them” is like thinking those smart guys are dumb or evil, it requires a forced narrative that doesn’t easily fit reality, so the explanations become wilder and wilder.

    I do know for sure George Bush uses an “aw shucks,” personae to present himself in the press. I also know for sure Obama’s handlers do the same thing. But you can do that too. Tomorrow, you can effect a personal rhetorical strategy that allows people to take you for granted, and you will achieve more with them, it is textbook influence theory.

    Solar and BTU – I keep saying this but you don’t believe it or internalize it (see above), but it is a fact. IT TAKES A SHIT TON OF OIL TO MAKE A SOLAR PANEL. Here:

    “The efficiencies on solar panels are poorly understood, mostly because of the “lag”
    inefficiencies in economic costing of oil-based energy (used to make solar panels), a lag
    which makes oil cheaper than it would be if it were priced at its energy utility.

    But to make this clear in energy terms: it takes more energy to make a solar panel right now
    than it develops during its useful lifetime. So we won’t be able to use the energy derived
    from solar panels to make more solar panels. Right now it’s a losing game.”

    This is old 2005 data, but its from a liberal so I thought you might buy it. Solar is good stuff, but you are NUTS for imagining that there is some easy transition, that doesn’t equal millions of our people suffering and dying.

    You don’t want to confront the simple basic idea, that with today’s technology to service us, the earth is overpopulated, and you could be losing billions of souls in your lifetime.

    The only way we can survive is new tech THAT DOESN’T YET EXIST. We really have an asteroid coming at this planet, and it ISN’T global warming (get over it) – it is massive starvation as a population over built on cheap fossil fuels fights and claws to survive when there aren’t any more.

    We are the answer we have been waiting for. American business, American entrepreneurs are the earth’s best shot of survival. And if our cost of conversion to new tech is held hostage by the Middle East, “while they just figure their shit out” we won’t be able to convert to nuclear, solar, wind or anything else. And then they will all die too. We are the heroes. We have to save the world. Thats the narrative.

  44. Rick Turner says:

    Morgan, are you talking photovoltaic or the much simpler hot water heating solar panels? I have a feeling you missed much of my point… I was talking mostly about hot water…as in running in black pipes in a solar collector on a roof. This is ancient technology at this point, and the collectors last for decades and decades if they’re half way decently made. This is such an easy transition step as to be foolproof. It can save BTUs which can then go elsewhere in our energy feeding frenzy.

    If you’re going to save the world, you might want to try saving your neighborhood first, and if this is your virtual neighborhood, I don’t see you convincing many citizens here that you’ve found the way to save us.

    BTW, I do not disagree re. overpopulation. Among myself and my several partners, we’ve basically reproduced ourselves and no more. If I had to do it all over again, I might not go that far, but I don’t feel too guilty about a 1:1 birthrate. In the great scheme of things, a 1:1 ratio goes to negative population growth as some young ones die early…

    I don’t think wacko conspiracy theories are the issue. But Texas oil men who can only think in terms of oil and their raptor pals in the Middle East, men who shuffle back and forth without even breathing heavy between “public” service and military/industrial complex jobs with vested interests in the war machine, and politicians who are beholden to corporations feeding at the public welfare trough…well, this isn’t a conspiracy theory, it’s the top echelons of our government.

  45. Jon Taplin says:

    Morgan- Here is some food for thought from a friend who is one of the smartest energy analysts I know.

    “There is an interesting story on the front page of today’s WSJ regarding the ability, or inability, of Saudi Arabia to bring additional oil production on stream. They have a new field, Khurais, scheduled to come on stream next year which should take their capacity to 12.5 million barrels a day from the current 11 million a day. The Saudis have said they don’t need to do more for world oil supply, and the truth as I see it is, they can’t. Or can’t easily or inexpensively bring more production on. The “easy” stuff has been found and the existing reserves are complex in their geology and require highly technical (horizontal drilling) and expensive (water injection) development techniques. It’s estimated that it costs Aramco $16,000 to bring one additional barrel of daily production on stream. You better have a certainty of high prices to incur a cost like that.

    This is occurring as the International Energy Agency is predicting a rise in global demand for crude to 99 million barrels a day by 2015 from 87 million barrels a day presently. While I think the current fundamentals don’t justify the recent sky high price, it’s hard to argue that there is much downside when faced with the global supply/demand imbalance.”

  46. Morgan Warstler says:

    You should listen to your friends more!

    I believe he’s right to assume the certainty of high prices. If it goes down for even short bursts of time below say $80, that it seems like it’d be a function of the dollar’s value increasing, more than supply and demand.

    I do wish we could chase the speculators out of the market (no laws please). I think that is solved in small part by having announced contracts with Iraq that encourage “get as much out while you can,” and an inevitable cut back in demand brought about by slowing economies.

    Mostly, after hearing from your friend, I’d think you cozy up to the idea of western oil tapping the cheapest to extract, easiest to process oil in the world. Atleast half of the new 12mbpd we need to solve for can come from Iraq in in the next 7 years.

    Najaf will be Al-Sadr’s Waterloo, no? And if it is, and the oil deals keep coming, will you please forget about leaving Iraq, and focus on casualties?

  47. Rick Turner says:

    Who is “Iraq”?

    We have met the enemy and they are us…

    Walt Kelly as Pogo…

  48. Pingback: What Alternative Energy Policy? « Jon Taplin’s Blog

  49. Warren says:

    We definitely shouldn’t be looking to national government or their aspiring candidates for solutions on this. It will come and is coming from local, regional, state and cross-national global business collaboration.

    I posted on this a few weeks back on blog for my firm, Common Current, which is working with governments to make Blueprints-like world emerge:

  50. Pingback: Perfect Timing « Jon Taplin’s Blog

  51. Michael Jefferson says:

    I tried earlier today to submit a response – inter alia pointing out that you start with the entirely misleading statement that Peter Schwartz was the first in this field within Shell. He came along about a decade later than Pierre Wack’s start, and I listed a number of names of major contributors between 1971 and when Peter came on board. Maybe you aren’t interested?

  52. Michael Jefferson says:

    Now that I see the system is responding, let me add a few names to that of Pierre Wack: Ted Newland (though too close to the Hudson Institute and Hermann Kahn in the earlier stages); Gareth Price reporting to Ted; Guy Jillings; Napier Collyns (a co-founder of Peter Schwartz’s GBN many years later); Hans DuMoulin and his energy team; Graham Galer and Joop de Vries who took over the societal work that I covered from 1974-1976; and my work covering economic and geopolitical matters from January, 1974, until March, 1979. The period of the 1973 and 1979 crises were, of course, challenging – but those of us familiar with economic and social history (and with the Middle East) could recessionary and inflationary forces in our stride. There is nothing new under the sun … And this was the period when under Pierre Wack’s leadership the most innovative work was done. It was not always done optimally, as those familiar with “Beyond Positive Economics?” (Wiseman, J. Ed.), Macmillan, 1983, will know.

  53. Lenora says:

    Give the people involved with your relief efforts something to remember your organization by.
    From time to time we all find ourselves buying something we hadn’t intended to, or coming home with something we really didn’t want.
    Lapel pins can be made in a variety of different styles to fit specific needs.

    Also visit my web-site: gold star lapel pin –

  54. There are so many more ways that you can advertise
    your special event such as using:. Choosing the right niche, the
    right coach or mentor, and being committed can bring
    you a passive income for many, many years. ‘ I was persuaded to adopt the former by Ben Stone the Bad Quaker.

    Feel free to visit my web blog; custom made badges (

Leave a Reply