European Tribune - Energy moving from economic realm to political one

Troubling times ahead -- law

Energy moving from economic realm to political one
by Jerome a Paris

The use by the Russians of the gas weapon against Ukraine... has rung like an alarm bell in Western capitals, who suddenly seem to discover .. energy and energy security

Philip Stephens: Energy scramble fuels new politics (FT)

The bigger lesson is the extent to which rising demand for finite energy resources is already remaking the strategic landscape. This week's spat was a fragment of an altogether more disturbing picture. For now, Islamist terrorism, failed states and unconventional weapons pose the most visible threat to global security. Rival claims on scarce energy supplies will soon come a close second.

Oil has ever been a parent to realpolitik. (...) Competition, though, will intensify. Take your pick from the official forecasts - most see demand for oil and gas rising by upwards of 50 per cent by 2030 - and one conclusion is irresistible. Even at present prices, the demand for fossil fuels will fast outstrip available supplies. More importantly, we are witnessing a profound change in the nature of competition among consumers.


The emergence of China and India as the motors of rising demand changes everything. The interests of consumers are no longer obviously aligned. China's per capita oil consumption is only about one 25th of that of the US. Yet secure and rising energy supplies are vital to its rise as a global power. India, too, has more to lose than established western powers from disruption to its supplies.

The threat now is of conflict between consumers as much as any stand-off with suppliers. The early signs are already visible in the explosion of Chinese diplomacy in Africa, the Middle East and Latin America.

This point is worth repeating: the previous oil shocks were supply-shocks, i.e. they were caused to a large extent by suppliers, as a group, withdrawing supplies form the market and exercising their power against the purchasers to improve the balance between the two sides (the price).

Today, in an apparent paradox as we fret about peak oil, the issue today is on the demand side: demand is growing strongly in many parts of the world - and is basically outstripping the supply side's ability to keep up.
This creates two kinds of problems:

* the tension on the market pushes prices up, as we have seen in the past 3 years;

* competition and rivalry between buyers grows, underlining the issue of security of supply, and creating geopolitical tension.

To see how tension is inevitable, here's an extract from the presentation of a book that has just come out, Earth Policy Institute's Lester Brown's Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble:

Among the basic commodities--grain and meat in the food sector, oil and coal in the energy sector, and steel in the industrial sector--China now consumes more than the United States of each of these except for oil. It consumes nearly twice as much meat (67 million tons compared with 39 million tons) and more than twice as much steel (258 million to 104 million tons).

These numbers are about total consumption. "But what if China reaches the U.S. consumption level per person?" asks Brown. "If China's economy continues to expand at 8 percent a year, its income per person will reach the current U.S. level in 2031.

"If at that point China's per capita resource consumption were the same as in the United States today, then its projected 1.45 billion people would consume the equivalent of two thirds of the current world grain harvest. China's paper consumption would be double the world's current production. There go the world's forests."

If China one day has three cars for every four people, U.S. style, it will have 1.1 billion cars. The whole world today has 800 million cars. To provide the roads, highways, and parking lots to accommodate such a vast fleet, China would have to pave an area equal to the land it now plants in rice. It would need 99 million barrels of oil a day. Yet the world currently produces 84 million barrels per day and may never produce much more.

The western economic model--the fossil-fuel-based, auto-centered, throwaway economy--is not going to work for China.

and yet, that's what they are rushing into, just as we have no intention so far of giving up our own ways (remember Dick "the American Way of Life is non negotiable" Cheney - but to be fair, Europe's way are slightly less wasteful, but still similarly unsustainable).

I have been accused of being unduly gloomy, of having a tendency for gleeful predictions of war and conflict that never pan out. But such conflicts, even when they are inevitable, take time to come, and a few months or even a couple of years is probably not the best time scale to judge such predictions. That may sound like an easy out, but it isn't - things are moving in the general direction I am indicating.

How many times do we read about peak oil, or energy crises, in the mainstream press, as opposed to a couple of years ago? In my job (financing energy), the topic hardly ever came up - the issue was seen as being beyond the horizon we care about (to be repaid). Now a lot of people are talking about it openly.

European Tribune - Community, Politics & Progress.


Post a Comment

Links to this post:

Create a Link

<< Home