Background: Iranian official science research institute ISIR, Tehran, in October 2002, and subsequent national energy data from ISIR,Iran NOC, and Tehran-based analysts through 2003-2008

* Deputy Head of the ISIR, Mohammad Ali Akhavan in Oct 2002 stated that Iran’s fast growth of domestic oil demand, particularly motor fuels to run its car fleet growing at over 10%pa, would lead to zero net export capacity of crude by about 2010 – Iran’s refining capacity already.in late 2002 being unable to meet refined fuel products demand.

* Internationally respected Iranian oil expert Ali Samsam Bakhtiari (recently deceased) has confirmed the basic trend of declining Iranian oil production versus domestic demand growth, but dismissed ISIR’s cut-off date as too early,and suggested zero net export would be reached about 2012-2013

* For many backers of ‘pre-emptive war’ against Iran, its decreasing oil export capacity and rising domestic demand gives Iran every possible incentive to ‘spread the word’ of Chi’ite power politics. They argue that, backed by Chi’ite demographic clout, its large population and rising industrial capacity, Iran menaces the minority Sunnite-controlled GCC countries like it did at the time of Khomenei’s Revolution and war against Saddam’s Iraq.

* Iranian overthrow of the Sunnite-minority regimes of the Gulf Cooperation Council countries, including Saudi Arabia, would give Iran massive geopolitical power through vastly increasing the oil reserves it controls, and bring it vertiginous piles of petrodollars, add supporters of ‘pre-emptive war’ against Iran

* Despite the clear evidence of rising depletion limits on Iranian oil production, Western media continues present Iran as having the third or fourth-largest oil reserves in the world. This implies oil export ‘underperformance’, repeating media claim’s of Iraqi oil reserves versus its pumping ‘performance’ in the run-up to invasion in 2003

The writing is on the wall
Experts will forever discuss and dispute the causes of previous wars, both local and civil, both political and religious, for vital space and vital resources, specially oil and gold, to deny markets to, or weaken the money of enemies, and for other reasons. These other war reasons include mass migration to offload population in ‘empty lands’ such as 19thC and 20th C mass migration to USA or Australia, South Africa or Canada, New Zealand, Argentina, Brazil, the Russian Far East or Tibet. Since the end of Ottoman rule in the Middle East (from 1918-23), ethnic-based population movement is constant across the region, building large Chi’ite communities in key oil regions such as NE Saudi Arabia. The bigger and longer the war, the more that experts will dispute its causes. Historians, economists, analysts and writers still disagree on the exact causes of last century’s ‘total wars’ in 1914-18 and 1939-45. More closely related to Iran War posturing, disagreement is sharp and strong about the causes of the Iran-Iraq war of 1980-88. In particular: was it partly oil-related or oil-driven, and secondly, which country started this war, with the aid, support or incitation of who?

Rising stakes
The now accelerating countdown to Peak Oil marking the ultimate peak of world production – with a faster fall-off in net export supplies than total production under several logical scenarios - can only aggravate existing global and regional tensions, specially in the Mid East. Any decline in global export supply (currently running at about 51 million barrels/day (Mbd)) will be catastrophic for attempts at maintaining flagging credibility in ‘market supply/demand balance’ and open market price setting. The date at which this will happen, without war accelerating the process through destroying oil infrastructures is of course disputed. Several studies indicate likely date could be 2012-2013.

When we arrive at permanent undersupply, prices will explode. This will be the end of market trading. Bilateral country-to-country arrangements will replace open market trading – returning world oil commerce to pre-1990s structures and arrangements, best suited to opaque and complex supply deals. Moving on from oil-for-food, supply deals will be dominated by weapons-for-oil, and support for using them. This was a key part of supply deals operated by major powers with Iraq, including third party supply of oil from Iraq’s Sunnite-ruled GCC neighbor countries, during the 1980-88 war.

The run-up to this vast shift in how oil is supplied and paid is likely imminent. When oil prices surge through the price range around 150 USD/barrel, for any reason including simple undersupply of markets with the north hemisphere’s seasonal bulge of demand, in late summer 2008, Iran war posturing will receive additional credibility. Repeating the run-up to the first Gulf War of 1990-91, oil market trader reflex action, bidding up prices thtough successive ‘psychological ceilings’, will be another strand in the war rationale. Unlike 1991, however, knocking Iran out of global supply systems will tilt world market supply/demand balance heavily into deficit. We will have accelerated into Peak Oil by several years, making it unlikely supply can ever again match world demand unless this demand continually falls at least at the rate of Peak Oil decline (perhaps 2%pa in first 3 years of decline).

Enter the past, present and future Great Powers
Rising tension with Iran is presented as only due to its ‘nuclear ambitions’, which if true should apply with even more force to non-signatories of the NPT (non-proliferation treaty) which have developed atomic weapons – Israel, Pakistan and India. In the case of Pakistan and India, these are de facto and self-proclaimed atomic weapons powers. Israel has recently claimed, or confirmed in an aside from a speech by Prime Minister Olmert, that it does possess atomic weapons. This fact is unsurprising given the age and size of its nuclear installations and facilities ! North Korea likely still possesses rudimentary atomic weapons, but has such small economic, military or geopolitical significance it is in no way a serious contender for ‘Great Power’ status.

This prized status could be defined as having big geographic size, large populations, large or growing economies, large armies and military clout including ballistic missile and atomic or thermonuclear weapons capability, national pride, and powerful media or public opinion forming structures. In the coming oil wars the ‘natural candidates’ will be those Great Powers with the highest dependence on imported oil, the fastest-growing demand for oil, and greatest belief they can act and win.

Like tiny Israel, the demographic giants Pakistan and India are extremely dependent on oil imports, but these powers are well behind the world’s biggest importers which by rank are: USA, Japan, China. The Big 3 have combined oil imports totaling about 22 Mbd depending on time of year, economic output, and oil stocks. Their combined demand is growing, mainly due to domestic oil depletion in the US, and fast-growing demand plus doemstic oil depletion in the case of thermonuclear-armed China.

Coming quite close behind (more than 1.6 Mbd net imports, each) we have the Big 6. These are India, Germany, South Korea, France, Italy and Spain. All are major economic powers. France has both atomic and thermonuclear weapons, while India at present only has atomic weapons. Apart from India, all the Big 6 have extreme high oil and energy-intenise economies, like the USA and Japan. Thermonuclear-armed UK, due to extreme-rapid extraction and depletion of its North Sea oil reserves is now again a net importer, but presently at small day average volumes (about 0.3 Mbd).

Nuclear know-how
All of the undeclared nuclear powers in the Big 9 importer countres have nuclear installations and know-how, in several cases obtaining large amounts of their national electric power supply from nuclear power. In some cases, Japan for example, its quick capability of producing nuclear weapons when or if needed, is openly declared as its response to nuclear threat by North Korea. All of the Big 9 presently without nuclear weapons can be considered ‘two screwdriver turns’ from having them. Most also have extensive ballistic missile capabilities, or access to these through regional alliance (European space agency for France, Germany, Italy and Spain).

Taking the first 3 and second 6 most oil import-dependent countries, their combined import demand stands at about 38 Mbd in 2008, a very big chunk of world total oil import demand, noted above, of about 51 Mbd. Other importers total about 150 countries. Exporters including OPEC-13 and thermonuclear-armed Russia count only about 25 countries able to export more than 50 000 barrels/day (0.05 Mbd). As we noted above, the writing is on the wall.

Who will act first?
On a highly logical basis, one or more of the Big 9 importer powers should either directly, or indirectly, either alone or in alliance with other big importers take strong action to assure its oil import supplies at the slightest sign of physical decline in world export supply. In the case of Europe’s big oil importers with present or past claims to the status of “Great Power”, Germany, France, Italy and Spain, the potential for concertation and EU-brokered action is likely or strongly possible. This can replace or extend current EU-brokered action, led by Germany, UK and France, to force Iran to relinquish its nuclear weapons ambitions.

Oil prices nearing 150 US dollars-per-barrel might be considered this clear sign of ‘structural undersupply’. Their action will almost certainly accelerate to the present, if ‘pre-emptive war’ against Iran is decided, perhaps by Neoconservative warmongers close to the outgoing G W Bush power elite of the USA, or Israeli war hawks taking their last chance to find political support and shelter from the outgoing G W Bush regime. Presidential candidate Obama has already declared his intention to remove US troops from Iraq, but neither Obama nor McCain can be considered ‘soft’ on Iran. The potential for a McCain victory, if this outcome becomes credible in Q3 2008, may temper Israeli war hawks in the short-term, as they consider that a McCain White House will be supportive of military action against Iran later on.

The looming possibility, or near-certainty of open conflict for assuring a bigger share of smaller export supplies is, to be sure, a certain and constant cause of Middle Eastern tension, covering conflicts from the Mediterranean to the Arab or Persian Gulf. Defensive alliances with great powers is also a sure and certain reflex of the region’s oil exporters, for example Qatar’s hosting of US military command for the Gulf region – as well as Al Jazeera TV. Russia’s ambivalent relations with Iranian president Ahmedinejad’s regime has to date not prevented Russia from selling weapons to Iran, including hi-tech air defense systems around its main ‘targetable’ nuclear installations, notably Natanz.

The atomic joker
Iran’s population size and growing industrial capacities – plus its declining oil reserves – all led to its decision to develop nuclear electricity production. This decision, taken by the Chah of Iran in 1973-1975, was warmly approved by US, European and Japanese leaderships of the day, and has been simply continued by the Chah’s Chi’ite Islamist successors ever since.

The constant, and now rising threat of great power invasion, for any reason but finally concerning oil, could logically be taken as the basic driver of Iran’s nuclear weapons programme. Atomic weapon possession is thought of as ensuring ‘inviolability’ in the face of invasion threats or attempts. As we can however also note, any large-size nuclear reactor is a ‘potential Chernobyl’. Conventional ballistic missile capability brings these ‘dirty bombs’ into the sweep of nuclear-related targets, in any country possessing civil nuclear power plants of any size.

Answering the key question of when this Oil Apocalypse could or might start is in fact relatively easy: When there is world economic crisis, as in 1929-36, this is nearly always a ‘Mother of War’. When we have global economic crisis at least equal in intensity to the 1929 crisis, we can assume we also have the basic geo-economic conditions able to trigger Oil Apocalypse, especially where recession is thought of, and presented by media as “only due to oil supply shortage and high prices”. Unlike the 1980-83 global economic crisis, when declining oil demand and increasing production capacities crossed over, giving nearly 15 years of cheap oil through 1986-2000, Peak Oil decline in export capacities will tend to shut-out and shorten this ‘slump premium for consumers’. The period during which oil prices would fall, with the start of a major recession, is likely short, making a repeat of 1985-2000 very unlikely or impossible.

As well-demonstrated by the Putin-Medvedev Kremlin, and de facto national oil and gas entity Gazprom, ‘the state within the state’, thermonuclear-armed Russia can dictate supply and price conditions unlike any other oil exporter. Possessing even rudimentary atomic weapons is therefore a key, of course undeclared strategy of many oil exporter countries.

How and why did the Last Oil War happen?
As we noted above, there is always dispute of how and why wars started, but historians and anaysts agree on one salient point: since the early-20th century, wars increasingly kill civilians and destroy civilian and economic infrastructures. Oil and gas infrastructures in the Middle East will surely not escape this rule, as clearly shown by Iraq’s willful destruction of Kuwaiti installations when Iraq was forced out of Kuwait in 1991.

Wars in the 20thC increasingly started, or spun-off from civil and ethnic wars but today, these are unwisely considered ‘manageable’ by media and politicians in the Great Powers. The Iran-Iraq war of 1980-88 was already, at least in part a Chi’ite-Sunnite ethnic war. Any attack on Iran to punish it for developing nuclear weapons capability, and surely with the hope this ‘unlocks’ new oil production capacities, will rather surely open Pandora’s Box – possibly triggering an uncontrollable spiral of regional instability, and fatally drawing in other and newer oil-hungry Great Powers.

The theory of ‘permanent war’ can in fact be traced to late 19th century historians and military strategists, including Clausewitz, Marx and Engels. Their theory affirms that under certain conditions, ‘low level permanent war’ occasionally breaks out into paroxysms of total war, for example when national or regional civil wars coalesce and attain a ‘critical mass’.

The 1980-88 war could be interpreted as a regionally-limited and circumscribed but long ethnic war. At the time, world oil demand was around 20 Mbd less than today, and world oil reserves were around 25 years further away from Peak Oil. Adding pressure from gasoline- and diesel fuel-hungry citizens in nuclear-armed Great Powers, today, any potential repeat of regional and ‘low-level Sunnite/Chi’ite conflict’ cannot operate. Also making this option impossible or very unlikely, Iran’s march towards possessing atomic weapons makes it near certain we would start with high-level warfare.

Regional ethnic conflict and the Peak Oil war
From the late 1980s, spurred by intensifying poverty due to record-low commodity export prices and IMF-imposed structural adjustment, population growth, and the AIDS scourge, the Pan African Civil War broke out. In 1994 this helped trigger the Rwanda genocide, where around 1 million persons were slaughtered in a few months – a kill rate even higher than the insane excesses of Germany’s Nazi ‘final solution’. Within the opulence of petrodollar-fuelled double digit economic growth in today’s GCC countries, large population groups, notably Chi’ite communities, are exposed to relative or absolute poverty and exclusion from jobs.

This context, which in excluded minorities within Sunnite communities feeds Al-Qaida and Salafist recruitment is a potent support to Ahmedinejad’s strategy of winning majority-support inside the oil-rich GCC countries, and elsewhere in central and west Asia. It is surely hard to gauge what regional intensity of support has been won by Ahmedinejad, for example in Iraq where Chi’ite demographic clout leaves little chance for post-American Iraq to remain unaligned with Iran. Eradicating the certainty of Iraq falling into the Chi’ite sphere, dominated by Iran, and then moving on to repeat this geopolitical and oil resource takeover in the GCC countries, has only one method.

Pre-emptive war against Iran, under the easy-to-communicate pretext of stopping Iran from developing atomic weapons capability, is surely an attractive rationale for certain US, Israeli, European and other Great Power strategists as oil prices move towards 150 USD/barrel. During economic recession, as proven in the ‘Cheap Oil interval’ of 1986-2000, surely heightens ethnic tension between Chi’ite and Sunnite communities in the GCC countries. The rising likelihood that 150-dollar oil can trigger global recession underlines this economic pre-emptive rationale for war against Iran.

Placing the Last Oil War in context
Marking the end of the 1914-91 phase in a near-century of war, ‘total war’ historians argue, the 1991 first Gulf War, or strong anchorage of Kuwait’s Sunnite-minority ruling regime to US and OECD Great Powers was one of the last, or the last outbreak of ‘total war’. Conversely, we can argue today in 2008, the ‘Liberation of Kuwait’ was the first, and real outlier Oil War, preceding the The Final Energy Crisis.

The 1991 Gulf War, we can note, was not only be a model for, but even the cause of those to come. Massive aerial supremacy, the non-possession of atomic or thermonuclear weapons by the opposing Iraqi side, the desert terrain and other factors made US-led victory fast and easy. When the Last Oil Wars come, probably announced and triggered by regional civil wars, almost certainly in the Middle East and central Asia, not one but many nuclear armed ‘players’, from the Big 9 list, can play in this final Petro Apocalypse . The classic game of variable geometry alliances will decide the alignment, and who will have the world’s last remaining reserves of oil.

The real cause and enablement of the 20th century’s total or permanent war was dramatic expansion of population and unrepeatable growth of cheap energy supplies. We are forced to conclude it was a one-shot event that will not and cannot be repeated.

A few simple facts underscore this claim. Through 1900-1999 world population increased from about 1450 Million to nearly 6000 Million (around 6.55 billion in 2008), while fossil fuel production and consumption rose from about 1100 Million tons of oil equivalent (Mtoe) to some 9800 Mtoe. Population rose 4-fold, but cheap energy supply rose 9-fold. But when we take account of a considerable increase in average efficiency of use, rising from around 10%-15% in 1900 to over 25% in the 1990s, actual applied and useful energy consumption increased about 18-fold for about a 4-fold rise in human numbers.

This one-off feat is unlikely to be repeated. But while energy supply growth is certainly and surely constrained weapons supply growth is not. Key indicators for output of both civil and military equipment, such as light and mid-weight armored vehicles, small arms and light artillery showed spectacular increases. While civil automobile production increased ‘only’ about 65 times through 1900-1999, (a growth of 6400%), the production of mortars, mines, grenades, service rifles, small caliber missile and grenade launchers, and small caliber artillery (105 mm and below) increased about 250-fold in the same period (24 000% growth)

Nuclear reactors are not designed to resist even the smallest and lightest hand-held antitank missile and, where they are claimed to be ‘terror-proof’, their cooling systems and control systems are entirely vulnerable. In any Great Power rivalry sparked by intense dispute for shrinking oil reserves, the enemy’s ‘civil’ nuclear reactors will be the softest of soft target for certain missile attack. The Ahmedinejad regime, like any other power, great or otherwise, should understand and comprehend this simple fact.

Great Game 2
With the collapse of the Soviet empire in 1991, after its highly symbolic defeat in Afghanistan by US-backed proxy forces, Islamist mujahadin including Osama bin Laden, the accelerating decline of global oil and gas discoveries and ever-rising oil import demand of China, India, Pakistan and Turkey brings i3 new nuclear armed players, and rivals to Great Game 2. These include the renascent and well-armed, modern industrializing Turkey, seeking revenge for its 1918-23 defeat and loss of empire. These are 3 new and powerful players in what will become Great Game 2.

During Great Game 1, which lasted over 75 years (about 1830-1914), disputed areas stretched throughout West and Central Asia. Oil came late to the party – with the collapse of the Ottoman Empire and the rush to grab and hold oil reserves, production capacities and transport infrastructures in the Arabian peninsula and surrounding regions. This time, in Great Game 2, oil is the undeclared, but real motor for conflict. This time the game will be very short.

Imperial and geostrategic resource map drawing exercises, no longer in tea rooms but in air-conditioned think tanks and bunkers, has re-emerged as a major activity. This activity is no longer only or mainly a discreet but constant activity in Washington, Moscow, Paris and London, but also in Beijing, New Delhi, Istanbul and Islamabad. And elsewhere. The players, this time around, are more numerous. They also have much less time.

Weapons stocks and troop strengths in the widely-defined Middle Eastern and contiguous strategic region containing around 60% of all remaining world oil reserves and over 60% of remaining known gas reserves have been multiplied, at least 6-fold for troop numbers, since 2000. Great Game 2, to be sure, is ‘only’ a continuation and intensification of its previous version that started in 1917, but its geographic sweep is now greatly extended. The reason for this is simple: oil depletion. Since 2000, the regional focus extends across oil- and gas-bearing territory and contiguous pipeline routes stretching from ex-Soviet central Asia through Afghanstan, to Iraq. This zone then continues, with the oil-bearing source rocks, to GCC states including Saudi Arabia, Kuwait, UAE, Qatar and the other princely oil-producing states of the Gulf, facing Iran, and extends to Yemen in the west.

Would Tehran ‘regime change’ unlock new oil supplies?
Iran was the ‘Persia’ of the Anglo-Persian Oil Co. of the 1920s, later becoming BP (which, today, sometimes uses a prophetic nickname: Beyond Petroleum). Oil production and geophysical oil source rock prospecting dates back nearly 100 years. Iran’s peak production, never subsequently re-attained, was in 1978. This was only 8 years after the USA attained its own ultimate peak of oil production, after more than 100 years of oil exploration and production.

Iran’s national or domestic demand continues to grow with population and economic growth, and, after China, Iran has the fastest-growing car fleet in Asia, at more than 10%pa each year since 1995. It is therefore rational for the ISIR, Bakhtiari and other analysts to argue that Iran’s oil production is so far past its peak that by 2010-2012 (see top of article), it will likely cease to have any exportable surplus of oil at all. Iran is set to become a net importer.

For Iran, other than the long-dated siren call to develop nuclear power – opening the way for nuclear arms in its confrontation with the USA and Israel – one effective solution, apart from DSM or energy demand-side management, will be developing capital intensive, and slow-to-grow gas-to-oil conversion (GTO). This would enable Iran to produce synthetic oil from its world class gas resources, albeit at extreme high rates of energy conversion losses. Slowing the development of Iran’s South Pars gas field (shared with Qatar), we can note, is one key element in G W Bush’s “spoiler strategy” against Iran.

Tehran regime change, however sincerely called-for by Condoleeza Rice at every available microphone, will not in any way favour rapid development of Iranian gas reserves, or GTO. This will further accelerate Iran’s demise as an oil exporter. Iranian pipeline gas supply to the Nabucco line feeding Europe, or LNG export capacity development are becoming more necessary every year, as the world moves towards Peak Gas, which is probable by 2013-2015 or perhaps before.

Even before the overthrow of Shah Pahlavi by the Khomenei-led revolution of 1979, the country’s oil discovery/production indicators showed that Iran was heading towards that day – then a long way in the future – when it would cease to export oil. One consequence was the entirely ‘classic’ economic decision to develop civil nuclear electricity production. As amply proven by India and Pakistan, South Africa and Argentina, and most recently by North Korea, and the real basis of ‘civil’ nuclear energy in the USA, France, UK, Russia, China and Israel, so-called ‘civil’ nuclear energy enables nuclear weapons production. Civil nuclear, and military nuclear are seamless, whatever the NPT and the IAEA might like to suggest or propose.

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