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May 06, 2005

Reflections on the State of the ‘Black Gold’
Guest Author: Maryam Farid

oil_drop.jpg I just read a marvelous article ("The real trouble with oil" [requires subscription]) in The Economist magazine. What I mostly like about this magazine is the little note that always appears on the very lower left corner of its first page, reading:

First published in September 1843 to take part in 'a severe contest between intelligence, which presses forward, and an unworthy, timid ignorance obstructing our progress.'

That was the reason, which mostly propelled me to write a post today — however rudimentary.

The issue of oil is a vast subject of study, and this post does not intend to tap into it. Rather, it is an expression of some of my opinions or perhaps just notes to parts of the above-mentioned article.

Is a technological revolution, for sources of energy, looming large in front of us?

The article starts: "A young Winston Churchill, on the eve of the first world war, took a gamble that changed the course of history [...] he decided to convert the British navy from Welsh coal to imported oil. The resulting gains in speed gave Britain's navy a decisive advantage over Germany's."

Over the years following its advent into the energy market, the 'black gold' and the ensuing power rivalries for its possession have left substantial footprints on the political, economic, military, and social lives of nations and people world-over.

As economic productivity and growth take off around the world, so would demand for energy. In addition, as trade and the markets become ever more globalized, so would intensify the rivalries for the acquisition of energy and its sources. The demands, alliances, advantages and so on, not only could change the rules of the game in the domestic affairs of many nations, but could also largely affect relations among nations. Of the questions that emerge in this era, could be: what would be the role and share of the world's superpower concerning these transformations? (The effects of the price of oil on its economy being just one of the byproducts of this transformation.)

The Economist article seems to see the prospects of America's "energy independence"—vehemently pursued by the Congress—and 'energy security' to lie in "the resilience of global oil markets, in conservation, and in alternative energy sources." It adds how in fact "two-thirds of the world's proven oil reserves lie in the hands of just five Persian Gulf countries," which would mean a rising share of these countries in the market as well as their subsequently greater chances of "disruption" and "embargo." Henceforth, it suggests more emphasis on the conservation and pursuit of alternative energy sources, as more viable options.

If this were to happen, therefore, may the world be soon saying goodbye to oil (as its solely dominant source of energy) like it once did to coal!

praktike at May 6, 2005 01:41 PM [permalink]:

vehemently pursued by the Congress? surely you're joking.

Babak S at May 6, 2005 02:49 PM [permalink]:

That's true, praktike. For now check out White House's energy policy web page and look for this: Energy Solutions Should Reduce U.S. Dependence On Foreign Energy.

Rancher at May 7, 2005 01:22 PM [permalink]:

It's pursued, it will be allot more aggressively pursued as prices rise. China and India will be the ones vigorously trying to get secured supplies, the U.S. will be vigorously discovering alternatives and energy efficient technologies.

anonymous at May 7, 2005 03:42 PM [permalink]:

to me, the interesting point seems to lie in that fossil fuels have a double edge, in that they're not only necessary for maintenance of millitary power and logstics but are also largely used in goods production.
With globalization and outsourcing becoming ever more realized, the U.S. may still be the largest consumer, but it is no longer and not necessarily the largest producer of many goods. Becoming dependent on other countries for production, may mean that their access to wider sources of energy would somehow be in U.S.'s interest too.
At the same time, how could it ensure that this wide access would not be consumed towards attainment of military prowess?
Talks about U.S.'s concerns over China's millitary status and U.S. disagreements with some NATO nations on this issue are for instance among the top contemporary issues now.