On Apr 15, 1:05 pm, "Nick Nuclear" <1245...@[EMAIL PROTECTED]
>
wrote:
> On rising gas/oil prices and rising food prices: Since we are occupying
Ir=
aq
> and Afghanistan where all the oil is, how come we're having an
oil/gasolin=
e
> shortage problem? ...
Oil Rules! - The End of the World as You Know It
=2E..and the Rise of the New Energy World Order
By Michael T. Klare
TomDispatch. com - posted April 15, 2008 11:19am
http://www.tomdispatch.com/post/174919/michael_klare_oil_rules_
[Introduction by Tom Engelhardt, founder and editor of
TomDispatch.com :
It's strange that the business and geopolitics of
energy takes up so little space on American front pages
-- or that we could conduct an oil war in Iraq with
hardly a mention of the words "oil" and "war" in the
same paragraph in those same papers over the years.
Strange indeed. And yet, oil rules our world and energy
lies behind so many of the headlines that might seem to
be about other matters entirely.
Take the food riots now spreading across the planet
because the prices of staples are soaring, while stocks
of basics are falling. In the last year, wheat (think
flour) has risen by 130%, rice by 74%, soy by 87%, and
corn by 31%, while there are now only eight to 12 weeks
of cereal stocks left globally. Governments across the
planetary map are shuddering. This is a fast growing
horror story and, though the cry in the streets of
Cairo and ****t au Prince might be for bread, this, too,
turns out to be a tale largely ruled by energy: Too
many acres turned over to corn (and sugar cane) for the
creation of biofuels; a historic drought in Australia
and other climate-change-induced extremes of weather --
a result of the burning of fossil fuels -- that have
affected crop yields; and many new middle-class
consumers, in China and elsewhere, coming on line, with
a growing desire for meat, the production of which is
heavily petroleum based.
=46rom resource wars to oil wars (the subjects of his
last two books), Michael Klare, Tomdispatch's energy
expert, has long been ahead of the curve when it came
to ways in which our planet was being reshaped at the
most basic level. Today, he offers Tomdispatch readers
a peek into some of the key themes in his staggering
new book, Rising Powers, Shrinking Planet: The New
Geopolitics of Energy. If you want to grasp the true
shape of our shaky world, of where exactly we've been
and where we might be going, this is a book not to be
missed. It offers the profile-in-formation of a shape-
****fting planet, a planet in transition and on a road
to nowhere pretty. Check out as well, the latest
Tomdispatch brief video (produced by TD's Brett Story)
- in which Klare discusses key issues in his new book -
by clicking here.
<http://www.tomdispatch.com/p/tdvideo/klare04152008>
--
Tom Engelhardt]
=3D=3D=3D=3D=3D
The End of the World as You Know It
=2E..and the Rise of the New Energy World Order
By Michael T. Klare
Oil at $110 a barrel. Gasoline at $3.35 (or more) per
gallon. Diesel fuel at $4 per gallon. Independent
truckers forced off the road. Home heating oil rising
to unconscionable price levels. Jet fuel so expensive
that three low-cost airlines stopped flying in the past
few weeks. This is just a taste of the latest energy
news, signaling a profound change in how all of us, in
this country and around the world, are going to live --
trends that, so far as anyone can predict, will only
become more pronounced as energy supplies dwindle and
the global struggle over their allocation intensifies.
Energy of all sorts was once hugely abundant, making
possible the worldwide economic expansion of the past
six decades. This expansion benefited the United States
above all -- along with its "First World" allies in
Europe and the Pacific. Recently, however, a select
group of former "Third World" countries -- China and
India in particular -- have sought to participate in
this energy bonanza by industrializing their economies
and selling a wide range of goods to international
markets. This, in turn, has led to an unprecedented
spurt in global energy consumption -- a 47% rise in the
past 20 years alone, according to the U.S. Department
of Energy (DoE).
An increase of this sort would not be a matter of deep
anxiety if the world's primary energy suppliers were
capable of producing the needed additional fuels.
Instead, we face a frightening reality: a marked
slowdown in the expansion of global energy supplies
just as demand rises precipitously. These supplies are
not exactly disappearing -- though that will occur
sooner or later -- but they are not growing fast enough
to satisfy soaring global demand.
The combination of rising demand, the emergence of
powerful new energy consumers, and the contraction of
the global energy supply is demoli****ng the energy-
abundant world we are familiar with and creating in its
place a new world order. Think of it as: rising
powers/shrinking planet.
This new world order will be characterized by fierce
international competition for dwindling stocks of oil,
natural gas, coal, and uranium, as well as by a tidal
****ft in power and wealth from energy-deficit states
like China, Japan, and the United States to energy-
surplus states like Russia, Saudi Arabia, and
Venezuela. In the process, the lives of everyone will
be affected in one way or another -- with poor and
middle-class consumers in the energy-deficit states
experiencing the harshest effects. That's most of us
and our children, in case you hadn't quite taken it in.
Here, in a nutshell, are five key forces in this new
world order which will change our planet:
1. Intense competition between older and newer economic
powers for available supplies of energy: Until very
recently, the mature industrial powers of Europe, Asia,
and North America consumed the lion's share of energy
and left the dregs for the developing world. As
recently as 1990, the members of the Organization of
Economic Cooperation and Development (OECD), the club
of the world's richest nations, consumed approximately
57% of world energy; the Soviet Union/Warsaw Pact bloc,
14% percent; and only 29% was left to the developing
world. But that ratio is changing: With strong economic
growth in the developing countries, a greater
pro****tion of the world's energy is being consumed by
them. By 2010, the developing world's share of energy
use is expected to reach 40% and, if current trends
persist, 47% by 2030.
China plays a critical role in all this. The Chinese
alone are projected to consume 17% of world energy by
2015, and 20% by 2025 -- by which time, if trend lines
continue, it will have overtaken the United States as
the world's leading energy consumer. India, which, in
2004, accounted for 3.4% of world energy use, is
projected to reach 4.4% percent by 2025, while
consumption in other rapidly industrializing nations
like Brazil, Indonesia, Malaysia, Thailand, and Turkey
is expected to grow as well.
These rising economic dynamos will have to compete with
the mature economic powers for access to remaining
untapped reserves of ex****table energy -- in many
cases, bought up long ago by the private energy firms
of the mature powers like Exxon Mobil, Chevron, BP,
Total of France, and Royal Dutch Shell. Of necessity,
the new contenders have developed a potent strategy for
competing with the Western "majors": they've created
state-owned companies of their own and fa****oned
strategic alliances with the national oil companies
that now control oil and gas reserves in many of the
major energy-producing nations.
China's Sinopec, for example, has established a
strategic alliance with Saudi Aramco, the nationalized
giant once owned by Chevron and Exxon Mobil, to explore
for natural gas in Saudi Arabia and market Saudi crude
oil in China. Likewise, the China National Petroleum
Cor****ation (CNPC) will collaborate with Gazprom, the
massive state-controlled Russian natural gas monopoly,
to build pipelines and deliver Russian gas to China.
Several of these state-owned firms, including CNPC and
India's Oil and Natural Gas Cor****ation, are now set to
collaborate with Petr=C3=B3leos de Venezuela S.A. in
developing the extra-heavy crude of the Orinoco belt
once controlled by Chevron. In this new stage of energy
competition, the advantages long enjoyed by Western
energy majors has been eroded by vigorous, state-backed
upstarts from the developing world.
2. The insufficiency of primary energy supplies: The
capacity of the global energy industry to satisfy
demand is shrinking. By all accounts, the global supply
of oil will expand for perhaps another half-decade
before reaching a peak and beginning to decline, while
supplies of natural gas, coal, and uranium will
probably grow for another decade or two before peaking
and commencing their own inevitable declines. In the
meantime, global supplies of these existing fuels will
prove incapable of reaching the elevated levels
demanded.
Take oil. The U.S. Department of Energy claims that
world oil demand, expected to reach 117.6 million
barrels per day in 2030, will be matched by a supply
that -- miracle of miracles -- will hit exactly 117.7
million barrels (including petroleum liquids derived
from allied substances like natural gas and Canadian
tar sands) at the same time. Most energy professionals,
however, consider this estimate highly unrealistic.
"One hundred million barrels is now in my view an
optimistic case," the CEO of Total, Christophe de
Margerie, typically told a London oil conference in
October 2007. "It is not my view; it is the industry
view, or the view of those who like to speak clearly,
honestly, and [are] not just trying to please people."
Similarly, the authors of the Medium-Term Oil Market
Re****t, published in July 2007 by the International
Energy Agency, an affiliate of the OECD, concluded that
world oil output might hit 96 million barrels per day
by 2012, but was unlikely to go much beyond that as a
dearth of new discoveries made future growth
impossible.
Daily business-page headlines point to a vortex of
cla****ng trends: worldwide demand will continue to grow
as hundred of millions of newly-affluent Chinese and
Indian consumers line up to purchase their first
automobile (some selling for as little as $2,500); key
older "elephant" oil fields like Ghawar in Saudi Arabia
and Canterell in Mexico are already in decline or
expected to be so soon; and the rate of new oil-field
discoveries plunges year after year. So expect global
energy shortages and high prices to be a constant
source of hard****p.
3. The painfully slow development of energy
alternatives: It has long been evident to policymakers
that new sources of energy are desperately needed to
compensate for the eventual disappearance of existing
fuels as well as to slow the buildup of climate-
changing "greenhouse gases" in the atmosphere. In fact,
wind and solar power have gained significant footholds
in some parts of the world. A number of other
innovative energy solutions have already been developed
and even tested out in university and cor****ate
laboratories. But these alternatives, which now
contribute only a tiny percentage of the world's net
fuel supply, are simply not being developed fast enough
to avert the multifaceted global energy catastrophe
that lies ahead.
According to the U.S. Department of Energy, renewable
fuels, including wind, solar, and hydropower (along
with "traditional" fuels like firewood and dung),
supplied but 7.4% of global energy in 2004; biofuels
added another 0.3%. Meanwhile, fossil fuels -- oil,
coal, and natural gas -- supplied 86% percent of world
energy, nuclear power another 6%. Based on current
rates of development and investment, the DoE offers the
following dismal projection: In 2030, fossil fuels will
still account for exactly the same share of world
energy as in 2004. The expected increase in renewables
and biofuels is so slight -- a mere 8.1% -- as to be
virtually meaningless.
In global warming terms, the implications are nothing
short of catastrophic: Rising reliance on coal
(especially in China, India, and the United States)
means that global emissions of carbon dioxide are
projected to rise by 59% over the next quarter-century,
from 26.9 billion metric tons to 42.9 billion tons. The
meaning of this is simple. If these figures hold, there
is no hope of averting the worst effects of climate
change.
When it comes to global energy supplies, the
implications are nearly as dire. To meet soaring energy
demand, we would need a massive influx of alternative
fuels, which would mean equally massive investment --
in the trillions of dollars -- to ensure that the
newest possibilities move rapidly from laboratory to
full-scale commercial production; but that, sad to say,
is not in the cards. Instead, the major energy firms
(backed by lavish U.S. government subsidies and tax
breaks) are putting their mega-windfall profits from
rising energy prices into vastly expensive (and
environmentally questionable) schemes to extract oil
and gas from Alaska and the Arctic, or to drill in the
deep and difficult waters of the Gulf of Mexico and the
Atlantic Ocean. The result? A few more barrels of oil
or cubic feet of natural gas at exorbitant prices (with
accompanying ecological damage), while non-petroleum
alternatives limp along pitifully.
4. A steady migration of power and wealth from energy-
deficit to energy-surplus nations: There are few
countries -- perhaps a dozen altogether -- with enough
oil, gas, coal, and uranium (or some combination
thereof) to meet their own energy needs and provide
significant surpluses for ex****t. Not surprisingly,
such states will be able to extract increasingly
beneficial terms from the much wider pool of energy-
deficit nations dependent on them for vital supplies of
energy. These terms, primarily of a financial nature,
will result in growing mountains of petrodollars being
accumulated by the leading oil producers, but will also
include political and military concessions.
In the case of oil and natural gas, the major energy-
surplus states can be counted on two hands. Ten oil-
rich states possess 82.2% of the world's proven
reserves. In order of im****tance, they are: Saudi
Arabia, Iran, Iraq, Kuwait, the United Arab Emirates,
Venezuela, Russia, Libya, Kazakhstan, and Nigeria. The
possession of natural gas is even more concentrated.
Three countries -- Russia, Iran, and Qatar -- harbor an
astoni****ng 55.8% of the world supply. All of these
countries are in an enviable position to cash in on the
dramatic rise in global energy prices and to extract
from potential customers whatever political concessions
they deem im****tant.
The transfer of wealth alone is already mind-boggling.
The oil-ex****ting countries collected an estimated $970
billion from the im****ting countries in 2006, and the
take for 2007, when finally calculated, is expected to
be far higher. A substantial fraction of these dollars,
yen, and euros have been deposited in "sovereign-wealth
funds" (SWFs), giant investment accounts owned by the
oil states and deployed for the acquisition of valuable
assets around the world. In recent months, the Persian
Gulf SWFs have been taking advantage of the financial
crisis in the United States to purchase large stakes in
strategic sectors of its economy. In November 2007, for
example, the Abu Dhabi Investment Authority (ADIA)
acquired a $7.5 billion stake in Citigroup, America's
largest bank holding company; in January, Citigroup
sold an even larger share, worth $12.5 billion, to the
Kuwait Investment Authority (KIA) and several other
Middle Eastern investors, including Prince Walid bin
Talal of Saudi Arabia. The managers of ADIA and KIA
insist that they do not intend to use their newly-
acquired stakes in Citigroup and other U.S. banks and
cor****ations to influence U.S. economic or foreign
policy, but it is hard to imagine that a financial
****ft of this magnitude, which can only gain momentum
in the decades ahead, will not translate into some form
of political leverage.
In the case of Russia, which has risen from the ashes
of the Soviet Union as the world's first energy
superpower, it already has. Russia is now the world's
leading supplier of natural gas, the second largest
supplier of oil, and a major producer of coal and
uranium. Though many of these assets were briefly
privatized during the reign of Boris Yeltsin, President
Vladimir Putin has brought most of them back under
state control -- in some cases, by exceedingly
questionable legal means. He then used these assets in
campaigns to bribe or coerce former Soviet republics on
Russia's periphery reliant on it for the bulk of their
oil and gas supplies. European Union countries have
sometimes expressed dismay at Putin's tactics, but
they, too, are dependent on Russian energy supplies,
and so have learned to mute their protests to
accommodate growing Russian power in Eurasia. Consider
Russia a model for the new energy world order.
5. A Growing Risk of Conflict: Throughout history,
major ****fts in power have normally been accompanied by
violence -- in some cases, protracted violent
upheavals. Either states at the pinnacle of power have
struggled to prevent the loss of their privileged
status, or challengers have fought to topple those at
the top of the heap. Will that happen now? Will energy-
deficit states launch campaigns to wrest the oil and
gas reserves of surplus states from their control --
the Bush administration's war in Iraq might already be
thought of as one such attempt -- or to eliminate
competitors among their deficit-state rivals?
The high costs and risks of modern warfare are well
known and there is a widespread perception that energy
problems can best be solved through economic means, not
military ones. Nevertheless, the major powers are
employing military means in their efforts to gain
advantage in the global struggle for energy, and no one
should be deluded on the subject. These endeavors could
easily enough lead to unintended escalation and
conflict.
One conspicuous use of military means in the pursuit of
energy is obviously the regular transfer of arms and
military-sup****t services by the major energy-im****ting
states to their principal suppliers. Both the United
States and China, for example, have stepped up their
deliveries of arms and equipment to oil-producing
states like Angola, Nigeria, and Sudan in Africa and,
in the Caspian Sea basin, Azerbaijan, Kazakhstan, and
Kyrgyzstan. The United States has placed particular
emphasis on suppressing the armed insurgency in the
vital Niger Delta region of Nigeria, where most of the
country's oil is produced; Beijing has emphasized arms
aid to Sudan, where Chinese-led oil operations are
threatened by insurgencies in both the South and
Darfur.
Russia is also using arms transfers as an instrument in
its efforts to gain influence in the major oil- and
gas-producing regions of the Caspian Sea basin and the
Persian Gulf. Its urge is not to procure energy for its
own use, but to dominate the flow of energy to others.
In particular, Moscow seeks a monopoly on the
trans****tation of Central Asian gas to Europe via
Gazprom's vast pipeline network; it also wants to tap
into Iran's mammoth gas fields, further cementing
Russia's control over the trade in natural gas.
The danger, of course, is that such endeavors,
multiplied over time, will provoke regional arms races,
exacerbate regional tensions, and increase the danger
of great-power involvement in any local conflicts that
erupt. History has all too many examples of such
miscalculations leading to wars that spiral out of
control. Think of the years leading up to World War I.
In fact, Central Asia and the Caspian today, with their
multiple ethnic disorders and great-power rivalries,
bear more than a glancing resemblance to the Balkans in
the years leading up to 1914.
What this adds up to is simple and sobering: the end of
the world as you've known it. In the new, energy-
centric world we have all now entered, the price of oil
will dominate our lives and power will reside in the
hands of those who control its global distribution.
In this new world order, energy will govern our lives
in new ways and on a daily basis. It will determine
when, and for what purposes, we use our cars; how high
(or low) we turn our thermostats; when, where, or even
if, we travel; increasingly, what foods we eat (given
that the price of producing and distributing many meats
and vegetables is profoundly affected by the cost of
oil or the allure of growing corn for ethanol); for
some of us, where to live; for others, what businesses
we engage in; for all of us, when and under what
circumstances we go to war or avoid foreign
entanglements that could end in war.
This leads to a final observation: The most pressing
decision facing the next president and Congress may be
how best to accelerate the transition from a fossil-
fuel-based energy system to a system based on climate-
friendly energy alternatives.
[Michael T. Klare is a professor of peace and world
security studies at Hamp****re College and the author of
Resource Wars and Blood and Oil. Consider this essay a
preview of his newest book, Rising Powers, Shrinking
Planet: The New Geopolitics of Energy, which has just
been published by Metropolitan Books.]
Copyright 2008 Michael T. Klare
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