World politics in the age of oil depletionPaying for Petrol with Human Lives
The message of this paper can be expressed very simply - most of the world's population will probably become aware of the growing energy crisis through wars, and the preparation for wars, made about oil and gas. The green policy message, about economising on energy, may be brought home to people through dramatic geo-political crises. The green movement must relate its message to the public in and through these crises. The true cost of oil will not only include its depletion cost and its environment cost, but also its cost in human lives lost in oil wars - and the need to respond to energy shortages arising in them.
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Over the next 30 to 40 years the world economy and society have to make a transition from an energy intensive mode of production, based largely on fossil fuel based energy sources, to a low energy mode of production, based largely on renewable sources. This is because the planet cannot absorb the toxicity of fossil fuels and petrochemical products, as the Greenhouse effect shows, and also because of oil and gas depletion.
It will not be an easy transition to make. There are powerful inertial forces in the economic, social and political structure. Physical models of the economy (involving natural capital accounting) show that making the transition to renewable energy, and less energy intensive production, will not be easy - and there is an inertia which resides in a reluctance of the public to change their life styles. It is highly stressful to make major life style and work changes quickly, as anyone who has ever been made redundant, or who must pay a big bill, in a cash crisis, knows. The scale of the transition we are talking about may strain many people's coping abilities to the limit. Also there is a huge reluctance in the political economic elite to start the change process - because their investments and their mind set are centred around easily available fuels, as well as economic activities which are energy intensive, and which assume cheap and readily available energy.
However, as I said, oil and gas depletion is and will continue to push them to change. Now, of course, people will say, what oil and gas depletion? World oil production is continuing to rise and there are, according to BP, 35 years of supply left based at current projected rates of consumption. Gas reserves will last even longer. Is there not plenty of time for an easy transition here?
In fact, more and more energy will be needed to extract the remaining oil - the days of gushers has long gone by and the oil will have to be extracted from depleting fields. In a few years world oil production will start to slide because of the exhaustion of the fields and declining new discoveries. What is more, and this is crucial to understanding what is happening in world politics, the depletion of world oil and gas is and will be highly geograpically uneven. Oil production has been in decline in the USA itself since about 1970. In the North Sea, oil production has begun to slip over the last two years and, in the non OPEC countries as a whole, it is generally recognised that oil production will fall unless new technologies can be found to get more oil out of existing wells. One estimate suggests, however, that this would cost $1trillion to bring about - a sum equal to 77% of British GDP for a year or 23 times the current yearly investment sum by all the major existing oil companies together, in all their areas of investment.
But there are some places in the world where oil is still available, for now, in abundance - and in particular, the Middle East. Of course, production will go into decline in the middle eastern countries too eventually, especially as they end up supplying a larger and larger proportion of world supplies. And that is indeed what is set to happen - the more rapid depletion elsewhere will drive the share of the Middle East up. By 2009 it is estimated that the Middle East will supply over 50% of world production and that will give some countries a tremendous potential economic and political power. (See the various writings of Dr Colin Campbell and colleagues of the Association for the Study of Peak Oil).
This is then the real background to much of what is going on in world politics. If we look below all the propoganda, for the consumption of public opinion, about defending freedom and democracy, what is essential happening is that the US energy elite is involved in geo-political manoevres in order to secure its oil (and gas) supplies. The Texan oil barons, who currently run the White House, want to ensure that they are not held hostage by Middle Eastern regimes that show an unwelcome independence, and that they are well placed, when the going gets difficult, to ensure that the oil and gas goes to the USA, and not to other places.
This can be described as their strategy to defend the status quo, and, as I said, its intention is to try to create as long a time period as possible - which will allow the US to avoid, or survive, the necessary economic, social and political changes to a solar and low energy economy. Given that there is only so much oil available those who get it will do so at the expense of other countries and peoples on the earth - above all the worlds poor, who are likely to be priced out of the world's energy market.
The presence in the Middle East of Britain and France, as well as of the German armies in world war two, are all explainable in terms of securing oil supplies. Over the last 50 years, of course, Britain and France, have been supplanted by the US as the dominant oil consumer and external military presence. The way the US operates is nicely explained by US Foreign Policy adviser Zbigniew Brzezinski in his book, published in 1997, "The Grand Chessboard - American Primacy And It's Geostrategic Imperatives," The aim, according to Brzezinski, is to "decipher the central external goals of the political elites and the likely consequences of their seeking to attain them;. second, to formulate specific U.S. policies to offset, co-opt, and/or control the above....To put it in a terminology that harkens back to the more brutal age of ancient empires, the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected, and to keep the barbarians from coming together." (p.40)
With that in mind the US has developed a special relationship with the Saudi royal family, that goes back to the 1940s, and with Israel. It is also seeking to undermine regimes that are hostile to it, or too independent. These different approaches of US strategy do not always work well together.
Israel is heavily backed militarily to be what Noam Chomsky calls America's "attack dog". Britain and France allied with Israel in this way in their attempt to attack what they saw as the danger or radical Arab nationalism embodied in Nasser, when he nationalised the Suez canal, the main oil route to Europe, in 1956. Then in 1967 Israel again dealt a heavy blow to radical nationalist regimes in the 6 day war. However, as I said, this support for Israel does not go down very well in the Arab world and does not do anything for the popularity and stability of the Saudi regime. Thus, in the 1973 Yom Kippur War, the Arab world displayed a rare degree of unity and imposed an oil embargo against the west and the US for their support against Israel. In this respect its worth noting that virtually all OPEC countries are Muslim countries. As someone has put it, the God of Oil is Allah.
In 1973 queues immediately formed at petrol pumps and oil prices rocketed. This had an enormous impact in getting energy looked at seriously and was a real boost to the green movement at the time - it was also, however, a real blow to Third World oil importing countries, and helped create the later Third World debt crisis. What the US fears, of course, and what Saddam Hussein would like to see happen...what many people in the Arab World would like to see happen, including Osama bin Laden, who has said so, is for that oil embargo to happen again. (As Jeremy Rifkin has pointed out, this would be a body blow, not only to the industrial oil importing countries, but to many Third World ones. But if there were a similar price explosion as in 1973 maybe Saudi Arabia, Lybia and Iraq would redirect the money to Third World countries - exporting their variants of Islam along with it.)
That makes the situation in Saudi Arabia and Iraq particularly important. Basically US policy in regard to Saudi Arabia has been the same since the 1940s. The US government promises to prop up the Saudi royal family militarily, sell its all the arms it wants, in return for Saudi oil at a slightly discounted price. The dollars that the Saudi's get for their oil, also largely flows into US banks and the US financial markets.
Another place these petrodollars flow is into the promotion of Saudi Arabia's particular brand of puritanical and autocratic Islam - Wahhabism. The US did not mind this at all for a long period of time - because Islamic extremism was a useful card that could be backed by the US too - to further its broader aims. Thus was Osama bin Laden supported by the CIA for many years. Islamic extremists were trained to be used against radical nationalist regimes and tendencies - as well in wars whose aim was to loosen Russian control over the Caspian Sea area, Central Asia and Afghanistan.
This was also done, essentially, to secure access to oil and gas reserves in this area. In the 1980s and early 1990s it was thought that the oil and gas reserves there were much larger than they in fact are. The area was seen as an alternative source that would reduce dependence on the Middle East. According to Sheila Heslin, energy expert at the NSC, testifying to a Senate Committee hearing in 1997 - "US policy was to promote the rapid development of Caspian energy...We did so specifically to promote the development of these oil rich countries, in essence to break Russia's monopoly control over the transportation of oil from that region, and frankly to promote Western energy security through diversification of supply" (quoted in Ahmed Rashid's book "Taliban" ).
This is a strategy which has formidable problems associated with it, however. For one thing there is not as much oil there as was at first thought - many exploratory wells came up dry. For another, some of the newly discovered fields, e.g. In Kazakhstan have been found to have a very high sulphur content, so it would be highly polluting to use. From an oil executive point of view the area is a wild west. The post Soviet political bosses are not good at sticking to their contracts - in a highly competitive environment where other oil companies are trying to break in. There is a huge amount of corruption. There are political disputes between the different countries around the Caspian about oil rights in it. And there are problems about transporting or pumping the oil out. Oil pipelines or potential pipeline routes lead through zones where already existing conflicts make them vulnerable - like Grozny, like the Kurdish areas of Iraq or Turkey, like Afghanistan. Putting troops into some of those areas to try to secure them has led to the exacerbation of conflicts and immense suffering. Yet there is no doubt that is why they are there. Thus, for example, as the US has been trying to detach Caspian Sea from Russian control, Putin's government have been trying to ensure, in Grozny, that they can guarantee they keep a presence in the area - and has the alternative strategy of offering oil and gas, from and through Russia, to the West, to worm his way into a alliance with NATO, even perhaps eventual membership.
In this regard he is making headway. Until very recently the US energy and military establishment still thought that they could work with the Islamic fundamentalists that they had built up. They were negotiating with the Taliban regime about pipelines through Afghanistan up until a few weeks before Sept 11th. The war on terror is really an abandonment of that strategy - and has entailed reaching a modus vivendi with Russia, which now wants to present itself as an alternative to Saudi Arabia on the world oil scene. There is a big question, however, of how much the Russians, who already provide huge gas supplies to Germany and elsewhere in Europe, have access the necessary supplies.
So this is the background, as you will see to many current political developments - not forgetting to include Venezuela, where Hugo Chavez has just survived a really ham fisted coup attempt - at least in part because he is independent of the US and sees Venezuela's oil industry as a source of revenue for programmes to support the poor in that country.
Whereover one looks, underneath the geo-political manoevring, we discover that energy politics are absolutely central. This bigger context largely explains the drive towards war - which is about securing cheap and plentiful energy in a world where differential depletion is leading to greater dependency on the Middle East and Saudi Arabia. After Saudi Arabia, Iraq is next in line in terms of reserves and securing control over Iraq would also give Kuwait greater security and be strategically important in containing Iran.
The question is what is to be done about all of this? It seems to me that merely opposing war preparations and murderous intrigues is not enough. One needs a credible energy policy that squarely confronts the issues and the broader context, namely, how to make the transition to a low energy intensity economy, powered by renewables. In this regard the cost of oil is far too cheap - it is too cheap because its market price does not reflect its scarcity value in the face of depletion, it does not reflect its cost to the environment, nor its cost in wars, blood and human rights violations. In order to motivate the massive change there will be a need for a corespondingly massive change in perception and government policies to cost of energy up and cost of labour (human expertise and ingenuity) down.
So oil consumption has to be brought down. There are a number of very simple and admnistratively feasible ways in which this can be done - for example tradeable personal energy rights given to each citizen which the government limit so that, in total, a country can only consume no more than an agreed upper limits of calories or joules of energy. It would also be remarkably easy to tax primary energy sources (oil, gas, coal etc ) at the place they enter the economy (e.g. Where oil tankers dock) and abolish income tax and VAT. This system, the so called Unitax, would be effectively unevadable. If unadjusted, the resultant tax regime would slightly discrimate against the poor, because of the amount of their income they spend on space heating. However, it would be simple to have a rebate, or other system, for all citizens up to a certain figure on their energy bills. The resultant price changes would provide an enormous boost for energy efficiency and renewables, which would not be taxed, as well as encouraging a whole series of life style changes that would save on energy intensive consumption products and choices. House building would boom as the energy intensity of building is very low - it is a very labour intensive industry. More people would take to their bikes in preference to paying huge fuel bills for their cars. Local food would be cheaper because of lower transport costs and vegetarianism would be too, as meat is energy intensive. Local seaside resorts would have a renaissance as going abroad would cost a lot more.
We can see, here, of course, the reasons that this will not happen without some major social and economic crisis. There is a network of vested interest and inertia behind the present arrangements and people find changing their routines stressful. Virtually all tax inspectors and tax advisers would become redundant, as would butchers, and a lot of workers in motor car manufacturing plants - though less so in plants producing energy efficient vehicles. That said, we may be heading towards this crisis in the next few months - for we really do not know what will be the outcome once the US and Britain goes to war with Iraq. We know already what Saddam Hussein wants - a repeat of the 1973 oil embargo - and we will all hold our breath to see if the US, in those circumstances decides to use bunker buster mini nuclear weapons to prevent that occurring. At all events it is war that tends to speed up latent issues in politics and, by its effect on world oil supplies, this war might just give a huge shove behind the tendencies I have written about - including creating public recognition of the need for massive change and new policies of this type.
Brian Davey
April 2002
Postscript -
In writing the above, given as a talk in Nottingham at the end of April 2002, I found one book particularly helpful. These supplementary comments on that book are not meant to imply that its authors in any way share the views expressed above or below......
Not by Money Alone: Economics as Nature Intended, by Malcolm Slesser and Jane King, published by Jon Carpenter Publishing, Oxford (authors Jane King & Malcolm Slesser) ISBN 1-897766-72-6 is a very clear, very informative book. It is grounded in years of deep research into a econometric model which includes quantitative calculations of the physical characteristics of the (British, European, World) economy. This means calculating the input-output energy quantities implied in various scenarios, as well as the more usual things like unemployment, trade balances etc. They tested this econometric model against actual historical data and it works quite well. This enables them to calculate what is physically possible in regards to policy strategies - and no one can escape physical feasibilities. It includes the physical parameters any government would have to work within. I used their book to write the above article.....
There is one thing, however, their book does not say enough about: where the public support will come from, that will create the political will to push through their energy saving policy solutions. On two of three lines in their text they give a clue on this - when they refer to the energy context of the last war with Iraq.
War, and the preparations for war, accelerate latent political and economic issues rapidly. This means trying to get public support and understanding for the factual realities and the resultant options - like those presented by Slesser and King, and prepare too for the energy shocks in the months and years to come. People will become aware of the energy crisis through the war and war preparations and must be helped to see the relevance of the this agenda as a set of administratively implimentable political policies.
This is a blurb written by Jane King and sent out in publicity for the book.
"Some of you may be interested in some work we have done on the wider energy, social and global implications of the oil peak. As pioneers of Natural Capital Accounting, a procedure in which all economic activities are measured in terms of the primary non-renewable energy they dissipate, we have built several system dynamic models of economies. One of these, a global model (GlobEcco), has been used to explore what is the maximum rate at which the global economy can expand within the constraints set by available oil, gas and coal. The 'cost' of these resources is measured in terms of the energy that must be invested and used to explore, extract, refine and deliver fuels to the market. This amount will rise as resources are depleted and their extraction becomes more capital and energy intensive.
One can run such a model for any number of policy options - for example development of renewable energies, emphasis on nuclear, the hydrogen economy and so on. What emerges is that UNLESS action is taken soon, and there is a major diversion of capital resources into non-oil systems, the global economy will go though a peak about 2030, with disastrous effect on the developing world, not to mention a financial crisis in the developed world.
Outcomes are sensitive to the choices we as a global society make. What is the best mix of alternative energy sources and how can they best be phased in? What are we willing to trade off for future benefit? Clearly the outcome is also data sensitive, including just how much oil and gas there is and what it will take to extract it. This approach cannot take account of
geo-political factors which may exacerbate the situation long before 2030. We have sought to lay out the argument in simple non-technical language in our book.....".Jane King & Malcolm Slesser
© BRIAN DAVEY