With the price of crude oil recently hovering around US$115 a barrel, the perils of our planet’s addiction to petroleum have never been clearer. A scarcity of oil has a ripple effect not only on common foodstuff (in the last twelve months rice has become 75% dearer, soya almost 90%, and flour has more than doubled) but also on the viability of the vast transportation network that resupplies much of the developed world with consumer goods. Given the current fragility of the American economy, unaffordable oil could deepen the impending US recession, or even trigger a worldwide depression and alter the geopolitical landscape for the next decade. If that sounds like a stretch, consider the fact that according to Michael Klare — an American professor who has written prescient analyses of the political, military and economic consequences of depleted energy resources — “oil-exporting countries collected an estimated $970 billion from the importing countries in 2006, and the take for 2007, when finally calculated, is expected to be far higher.”
It may be worth recalling the membership of this elite group.
Ten countries currently control more than 80% of the world’s oil, they are: Saudi Arabia, Iran, Iraq, Kuwait, the United Arab Emirates, Venezuela, Russia, Libya, Kazakhstan, and Nigeria. Several of these have pooled their enormous profits into sovereign wealth funds like those which have begun to rescue leading US financial institutions from bankruptcy in the current credit crisis. Should America’s economic woes continue unchecked, these funds will soon have opportunities to purchase what amounts to a controlling interest of large parts of the US economy — with worrying albeit ultimately unknowable consequences.
Professor Klare believes that significant shortfalls in the global oil supply will occur much sooner than many of us would like to believe. The US Department of Energy estimates that by 2030 worldwide consumption will have risen to 117.6 million barrels per day, but its prediction that this figure could be met by current suppliers sounds like wishful thinking; one credible analysis recently 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.” If that is accurate, then it won’t be long before major economic powers start to jostle each other for control of the world’s shrinking energy supply, possibly triggering a series of conflicts that Klare refers to as “resource wars”.
Even if there is temporary relief from the current stratospheric prices, the long-term use of oil-derived energy remains problematic. With China and India just beginning to produce middle classes to rival those in Europe and America, world energy consumption is likely to rise dramatically in the next few years. The advent of a US$2,500 car in India and similar developments in China will place intolerable stresses on existing supplies (and on the atmosphere) unless our carbon-restriction policies rapidly evolve beyond Kyoto and into strict, enforceable regulations. Recent progress in this regard has — to say the least — not been encouraging.
If Guyana does strike oil in the next few years, and we become a significant net-exporter, we will soon find ourselves confronting several complex geopolitical pressures produced by this emerging crisis. Are we sufficiently prepared? As the list of leading oil suppliers given above shows, by themselves large oil revenues provide no guarantees of human development or political stability. In fact it is arguable that they often guarantee just the opposite.
Will large amounts of money solve our security problems, or make them worse? What about health and education: should we overhaul our infrastructure and import or train skilled labour, or will life after oil be more of the same except with more money in our failing systems? What about renewable energy and “green” alternatives, how should we assess the value of our relatively unspoiled forests? Is the carbon credit system fair or should we hold out for something better? Now is the best time to debate these questions, and a dozen others that would naturally arise in a petroleum-rich future.
If we don’t, and we end up repeating the mistakes that so many other oil-driven economies have made, we will have nobody to blame but ourselves.
