 "Did a Biblical god just end OPEC's oil monopoly?")
The underground vaults of the Sri Padmanabhaswamy Temple in Thiruvananthapuram aren’t the only place from where treasures unknown to man have in recent times been gushing out.
Last week, there were a rash of breathless reports that Japanese scientists had discovered mammoth deposits of “rare earth” minerals - which are vital for making high-tech products (including smartphones, iPads and flat-screen TVs) - in the ocean floor around Hawaii.
The find, estimated at about 1,000 times the currently known land deposits of rare earth minerals (most of which are concentrated in China, which has imposed curbs on its exports), had analysts immediately proclaiming that it would break China’s stranglehold on the global rare earth market.
In another part of the world, energy analysts claimed, with the fervour of astronomers who had stumbled upon a new and distant star, that Israel would likely emerge as the “world’s newest energy giant” to rival Saudi Arabia, following the discovery of a treasure trove of oil shale deposits in the Shfela Basin near Jerusalem.
[caption id=“attachment_39637” align=“alignleft” width=“380” caption=“The latest sensational claims that Israel will emerge as an energy exporter are just so much hot air. AFP”]  [/caption]
Predictably, it had polemicists rapturous with premature celebrations. “Finally we can say SCREW YOU OPEC!” rejoiced Joel Bowman, Managing Editor of the investment newsletter The Daily Reckoning.
The find of Biblical proportions (and just as miraculous), would, if confirmed, have geopolitical implications, and Bowman wasn’t unaware of it. “Goodbye Saudi Arabia! Good riddance Libya! Farewell Venezuela!” he wrote. “There’s a new oil power broker in town… in America-friendly Israel. Israel has discovered what could be the 2nd LARGEST “Oil Vault” in the world…worth over $27 TRILLION…officially giving OPEC the “middle finger.”
What accounts for these bounteous finds, within weeks of each other? Do they really have the capacity to break the economic stranglehold of China and the OPEC bloc?
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It appears that in both the cases, it might be a little too soon to uncork the champagne bottles.
Analysts say that tapping the new find of rare earth minerals from the ocean bed is “a pipedream”. They point out that rare earths are very difficult to process commercially, and that it would be enormously costly to develop deposits that are - as with the new find - located miles underneath the sea.
An executive at a rare earth company ridiculed the whole idea, and said mischievously that he’d “wait for the giant squid and the prehistoric monsters that will come out of the bottom of the sea first before we see any rare earths.”
So too with the oil shale deposits in Israel. Industry analysts point out that in fact the Israel oil shale isn’t a new discovery at all - its existence had been known for decades; the reason it had been ignored so far is that the technology to extract the oil doesn’t exist. For instance, to extract oil from oil shale, it would have to be “cooked” until it matures and bleeds from the rock - as would happen in nature over hundreds of thousands of years.
The experience of the US, where exists an even bigger deposit of oil shale, is somewhat sobering. Oil giants have tried every conceivable method - including, somewhat fantastically, building nuclear plants to “cook” the rocks and extract the oil. But the prohibitive costs involved have inhibited them thus far.
Other reports claim that Israel has a proprietory extraction technique that would make it possible to extract the oil for about $35-40 a barrel. If that’s true, it would truly be a game-changer, but even then it will be years before any oil spurts out.
Sensational headlines, sobering reality
So what’s behind these attention-grabbing headlines of miraculous finds? In the context of the recent tug-of-war in the energy and rare earth minerals space, these appear to be the latest manifestations of an “information war” to “talk down” monopolies and threats of supply disruptions.
Just last month, the International Energy Agency, in a coordinated action by its 28 member-countries, released 60 million barrels of oil evidently to signal to the OPEC that its “energy blackmail” would face a pushback. But although oil prices fell immediately after the IEA move, they’ve climbed back up on the realisation that the IEA’s “magic bullet” won’t work.
The latest sensational claims that Israel will emerge as an energy exporter are just so much hot air. Biblical gods may have arranged for manna from heaven, but even they can’t deliver petrocarbons on tap for eternity.
Similarly, China’s restrictions on exports of rare earth minerals, and its vigorous defence of its actions that have unnerved the world, are at the centre of a global tussle. The World Trade Organisation ruled last week that China’s export quotas on rare earth minerals violated WTO guidelines.
Claims of a gigantic find of rare earth minerals, celebrated too early on as an end of China’s monopoly, are just part of the psy-ops in the war for energy resources. China’s monopoly may need to be ended, but it will take a lot more than hype - or ‘miraculous’ finds - to do it.
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