Energy Geopolitics

The Perversity of Energy Geopolitics

The Geopolitics of Scarcity

Brown uses this catchy phrase that runs through the discussion here. See discussion below

Of the 23 leading oil producers, output appears to have peaked in 15 and still rising in eight. (22)

U.S. peaked in 1970, exactly as Hubbert predicted in 1956. Domestic production

A barrel of crude now carries a price of about $90, 9/26/12

Brown's chapter speaks to a world of $50. Real price has almost doubled. Get it!

The U.S.A. used 21 MBD -- about 25% of global consumption -- and produced 8.2 MBD

Work out the arithmetic: a deficit of 4.8 billion barrels per year. At the market price of $64.14, this runs up a trade deficit of over $309 billion per year. Think about it. This constitutes a major rupture within our economy.

The Carter Doctrine

The Carter Doctrine was a policy proclaimed by President of the United States Jimmy Carter in his State of the Union Address on 23 January 1980, which stated that the United States would use military force if necessary to defend its national interests in the Persian Gulf region.
The Carter Doctrine, Wikipedia

Increases in demand > increases in supply: price rise

According to Peak Oil hypothesis, this seems inevitable -- and a liability for USA

Geographical mismatch in supply and demand

Energy rich Mideast looms larger and poorer nations may have a hand to play while richer nations grow more energy-dependent.

Energy war shaping up in Mountain West

Vast amounts of oil are trapped in shale and sand in the Canadian and American West, but will require huge amounts of water and produce immense environment damage -- and controversy. See Brown (33).

Big winner: U.S. Midwest, Bread Basket

Grain prices will soar, such as corn, as food becomes fuel and as grain production around the world stabilizes but population grows. Wind power generation will thrive in Great Plains. (Not mentioned by Brown.)

Consider data on recent production of crude oil, from The Boston Globe

Oil Output (2005)

Nation

Output

Geopolitical Note

1. Saudi Arabia

11.1 million barrels per day

OPEC leader. A friend, but vulnerable. May have peaked.

2. Russia

9.5 million barrels per day

Not a friend. Number 1 is natural gas reserves.

3.
USA

8.2 million barrels per day

Peaked in 1970

4. Iran

4.2 million barrels per day

Hostile. Number 2 in natural gas reserves.

5. Venezuela

3.4 million barrels per day (est.)

Not a friend.

Nigeria is #6, but I don't have the numbers. Now, consider some geopolitical implications.

The Geopolitics of Scarcity

Consider this, from Oil, Geopolitics, and the Coming War with Iran by Michael T. Klare

According to the most recent tally by Oil and Gas Journal, Iran houses the second-largest pool of untapped petroleum in the world, an estimated 125.8 billion barrels. Only Saudi Arabia, with an estimated 260 billion barrels, possesses more; Iraq, the third in line, has an estimated 115 billion barrels. With this much oil -- about one-tenth of the world's estimated total supply -- Iran is certain to play a key role in the global energy equation, no matter what else occurs.

It is not, however, just sheer quantity that matters in Iran's case; no less important is its future productive capacity. Although Saudi Arabia possesses larger reserves, it is now producing oil at close to its maximum sustainable rate (about 10 million barrels per day). It will probably be unable to raise its output significantly over the next 20 years while global demand, pushed by significantly higher consumption in the United States, China, and India, is expected to rise by 50%. Iran, on the other hand, has considerable growth potential: it is now producing about 4 million barrels per day, but is thought to be capable of boosting its output by another 3 million barrels or so. Few, if any, other countries possess this potential, so Iran's importance as a producer, already significant, is bound to grow in the years ahead.

And it is not just oil that Iran possesses in great abundance, but also natural gas. According to Oil and Gas Journal, Iran has an estimated 940 trillion cubic feet of gas, or approximately 16% of total world reserves. (Only Russia, with 1,680 trillion cubic feet, has a larger supply.) As it takes approximately 6,000 cubic feet of gas to equal the energy content of 1 barrel of oil, Iran's gas reserves represent the equivalent of about 155 billion barrels of oil. This, in turn, means that its combined hydrocarbon reserves are the equivalent of some 280 billion barrels of oil, just slightly behind Saudi Arabia's combined supply. At present, Iran is producing only a small share of its gas reserves, about 2.7 trillion cubic feet per year. This means that Iran is one of the few countries capable of supplying much larger amounts of natural gas in the future.

Could be long-term strategic conundrum. Do we want military to provide a global oil-protection service? Be concerned about the geopolitics of energy scarcity. Be very concerned. ^


Wayne Hayes, Ph.D. | Initialized: 2/25/2007 | Last Update: 9/26/12