The geopolitics of energy

the geopolitics of energy

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The geopolitics of energy

Oil is a global commodity vunerable to any event that impacts on its supply and demand. All countries that depend on oil imports are defenceless against external events affecting its supply. The global energy system faces 3 major strategic challenges in the 21st century:

  • the growing risk of disruptions to energy supply
  • the threat of environmental damage caused by energy production and use
  • persistant energy poverty in the less developed nations of the world

By 2020 energy consumption in less developed countries is set to surpass that of more developed countries. By 2025 Chinas economy will be bigger than thae USAs and Indias will be much larger than that of any individual European country. As these and other newly industrialising countries develop, so will thier appetite for natural resources, leading to fierce demand for the ever-diminishing supplies of non-renewable energy.

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As reserves of non-renewable energy continue to diminish, the following senarios are likely:

  • european dependence on middle east oil will remain significant
  • asian dependence on gulf oil will increase
  • US oil imports will continue to grow
  • natural gas will continue to be the fast-growing primary energy source
  • the growth of natural gas will require major infastructure investments
  • the USA will become more reliant on imported natural gas
  • Russia is likely to expand its exports to Europe
  • the use of sustainable renewable sources of energy will increase
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It is unlikey that the pattern of oil production will change significantly in the near future; major producers at the start of the 21st will still be major suppliers in 2020. Saudi Arabia is projected to be in the lead, followed closely to Russia, Iran, Iraq and Venezuela.

The developed countries must manage thier dependence on imported oil and the risks associated with this. There are a number of threats regarding the furture security of oil supplies:

  • saudi arabia at present has strong links with the USA and other western countries, but this could change with leadership transition, economic reform and terrorism threats.
  • iraq faced UN economic sanctions, which constrained the oil industry under Saddam Husseins rule. Although these sanctions have been lifted since the US invasion, civil unrest and internal economic problems since the war have continued to disrupt supplies
  • iran has an elected government but its policies are influenced strongly by religious leaders. This can hamper relations with the Western world. For example, the USA has imposed economic sanctions on Iran.
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  • OPEC has been successful in the past in manipulating fuel supply in an effort to hold prices within a particular range. This might lead to future price hikes similar to those of the 1970s.
  • russia's president Putin warned the West that its energy dependence on Russia could create obstacles if Moscow was not treated as an equal partner in future trade agreements.

Political developments in the middle east are of great importance to the energy sercurity of the rest of the world because the region possess most of the reserves of oil and gas. The West has an obvious interest in supporting political and social stability in the region. It is believed by some observers that once trade restrictions and sanctions have been removed in the middle east, liberalisation of political systems and economic growth will follow. In the future it is likely that the resource-rich middle eastern countries will want to develop thier gas and oil reserves so that they can maximise thier values. In the short term production decisions are likely to be taken within the framework of OPEC agreements, but in the long term it is likely that global oil coporations will be involved as they needed in the exploration and production stages.

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Tremendously wealthy and powerful transnational corporations (TNCs), such as Shell, BP and Exxon, dominate the international oil trade. Oil companies have considerable power in todays globalised world and they fund development projects and even presidential campagins in many countries. A number of NGOs are working together to uncover payments that have been made to governments by international companies and to expose corruption, but transnational oil giants are effictively the neo-colonial masters of the world.

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