Rising Powers, Shrinking Planet: How Scarce Energy Is Creating a New World Order

February 5, 2009

The dust jacket of this book proclaims that "the price of oil has doubled in less than two years. And it is still rising". Not now it isn't.

In early 2008, US investment bank Goldman Sachs, at that time seemingly lording it over the financial world, predicted that the price of oil could reach $200 (£136) a barrel. But today, the firm has been humbled and the price per barrel tumbled below $40 by the end of 2008.

All over the world, economic growth is slowing or shuddering to a halt. It has become apparent that the big developing countries can't hold out against the economic downturn originating in the West.

Russia, which built its attempted return as a great power on high oil and gas prices, will have to rethink its ambitions. And China and India, which figure prominently in Michael Klare's book, could face a very difficult period, too.

Klare's work is based on the thesis that oil is becoming a scarce resource and that the nature of international relations in the future will change as a consequence.

The West, he says, will have to compete with a Sino-Indian juggernaut and with "a resurgent Russia (which) holds Europe to ransom". But has his book already become obsolete?

Some reviewers will probably say yes, but not this one. In my view, his analysis is spot on and anyone who ignores what he has to say could be in for a shock. The price of oil may be relatively low now, but it will almost certainly climb steeply again as soon as there are signs of recovery from recession, whenever they might occur. At that point, the dynamics he discusses will come back into play and probably in an urgent and dramatic way.

George W. Bush got it right when he said that the US is "addicted to oil". It may guzzle more of it per head of population than any other country, but in truth our industrial civilisation as a whole has an oil habit.

Well over 90 per cent of transport is oil-based. In one way or another, oil is involved in almost all the manufactured goods that figure so large in our lives today. And we are nowhere near replacing oil with more advanced energy resources. Renewable energy accounts for less than 1 per cent of global energy production.

As economic growth resumes, the struggle to control the world's oil resources is likely to become more and more acute. The requirement for primary energy is expected to rise by some 60 per cent over the next two decades or so.

Where is it all going to come from? Klare points out that almost half the world's oil production comes from just over 100 oil fields. Almost all were discovered years ago, and most are showing signs of depletion.

New reserves lie mostly in areas where they will be difficult to extract, such as in Central Asia, off the coast of Brazil or in the melting Arctic.

Moreover, much of the oil that is accessible comes from countries that are politically unstable. Natural gas may be able to step into the breach, but the discovery rate for new gas fields has been falling, too.

Natural gas is even more concentrated in terms of its distribution than oil is. Some 56 per cent of proven reserves are in three countries: Iran, Qatar and Russia.

A scramble for resources could serve to intensify world conflicts, a prospect that promises great dangers. The main protagonists, the US and China, could start building a military strategy around their competition for scarce energy resources.

Klare quotes official American documents in which just such a strategy is outlined. The motives behind the US-led invasion of Iraq were mixed, but no one can doubt that the country's large oil reserves figured significantly in the equation.

Gunboat diplomacy has been deployed in recent years by America in a number of contexts. For instance, in the summer of 2007, it stationed two aircraft carriers, a large number of smaller warships and warplanes in the Gulf as a threat to Iran.

The demand for energy is driving not only a scramble for oil, it also bears directly on another major threat - climate change. If it is allowed to advance unchecked, it could intensify the battle lines that already exist.

The conflict in Darfur has been called "the first climate-change war" because the drying-up of Lake Chad helped produce the population migration that helped cause the bloodshed. Yet it is also an "energy war" because the Chinese have supported the Sudanese Government to gain access to the country's oil.

So how can we prevent a second Cold War? The US and China, Klare says, should get together. As the world's greatest consumers of energy and biggest greenhouse-gas polluters, they should recognise that what they have in common outweighs their differences.

They should work jointly on developing alternatives to fossil fuels and share technological knowledge. An improbable prospect? Klare says not: after all, the US and the Soviet Union co-operated fruitfully on arms reduction even at the height of their hostilities. Let's hope he is right.

Rising Powers, Shrinking Planet: How Scarce Energy Is Creating a New World Order

By Michael Klare. Oneworld, 336pp, £18.99 and £10.99. ISBN 9781851686483 and 6285. Published 1 September 2008.

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