The World Petroleum Congress often dubbed as the ‘Oil Olympics’ has just finished, with Secretary General Abdallah Al-Badri calling the US to ‘stop harassing the OPEC’ — underlining once again the dangerous, deep divisions within the oil fraternity. With the debate getting scary, clouds have started to gather — ominous signs indeed. We are entering a definite red, dangerous zone. With each rising dollar in barrel market prices, temperatures are rising and fingers pointing. Things are getting murkier and still murkier. A new era, marked by deep distrust, seem to dawning.
“The time when we could count on cheap oil and even cheaper natural gas is clearly ending,” Chevron Texaco Chairman and CEO David O’Reilly delivered these ‘gloomy’ words way back in February 2005 — a literally gone by age. The price he was referring to was no match to the current standards. Markets had then just touched $50 mark. Later in March the same year the fire brand Venezuelan President Hugo Chavez reiterated and some say rather gleefully, ‘the world should forget about cheap oil.’ Both were dead on point. The world should definitely forget cheap oil.
Jeff Rubin of CIBC World Markets now is forecasting “oil prices almost doubling over the next five years”. That would mean at least $270 a barrel by 2013. Things have started to burst at seam.
Oil markets are changing global political balance in this unipolar world, taking the world along to a new era of ‘energy imperialism.’ The question of who can tame the markets has taken a back seat. Senator Joe Lieberman, the former US vice presidential candidate, commenting on the ongoing scramble for energy resources between the US and China says the race to secure their growing requirements “may escalate competition (between them) for oil to something as hot and dangerous as the nuclear arms race between the US and the Soviet Union”.
And the ongoing scramble for energy sources apparently explains why the Brown government is now strongly backing BP to get a big new slice of the oil drilling licenses soon to be issued in Iraq, and — astonishingly — has now also made clear it intends to annex a third of a million square miles of the seabed off Antarctica to pre-empt any rights to the oil it may contain.
The fight for oil has begun in earnest, writes Michael Meacher in Guardian.
The geopolitical implications of the gathering crisis on global energy supplies and markets are simply immense — at times even beyond our imagination. The risk of further military interventions and conflicts in the Middle East is clearly high, Meacher adds. Total world oil reserves today are estimated at 2.5-2.9 trillion barrels, of which half has now been already consumed, while half of the 51 oil-producing countries reported output declines in 2006.
Non-OPEC Russia and the world’s biggest oil exporter after Saudi Arabia, now is faced with its first annual decline in production in a decade. Output fell 0.9 percent to 9.76 million barrels a day in the first five months of the year.
Non-OPEC production is now expected to peak and decline within the next five years, driven mainly by burgeoning demand from China and the US, together with restricted output from Iraq.
The ability of OPEC to meet the gap would largely depend on how fast world demand grows and how extensively OPEC invests in new capacity, argued Meacher.
OPEC’s clamor that given the demand security, it has the ability, capacity and the will to meet the growing global energy requirements is getting no where, sucking the world into a new crisis of monumental proportions. This has ominous repercussions for this entire world. Despite an un-winnable war in Iraq, the US is still constructing at least five large permanent military bases there in order, according to evidence given to a US Congressional Committee, to control access to Gulf oil. As one neocon recently put it, “one of the reasons we had no exit plan from Iraq is that we didn’t intend to leave”.
The US is also trying to force through a new Iraqi oil law that would give Western, primarily American, oil multinationals control of Iraqi oilfields for the next 30 years. The US already maintains 737 military bases in 130 countries under cover of the “war on terror” to defend American economic interests, particularly access to oil. The principal objective for the continued existence and expansion of Nato post-Cold War is the encirclement of Russia and the pre-emption of China dominating access to oil and gas in the Caspian Sea and Middle East regions.
It is only the beginning of the unannounced titanic global resource struggle between the US and China, the world’s largest importers of oil. Islam has been dragged into this tussle because it is in the Islamic world where most of these resources lie, but Islam is only a secondary player, Meacher continued to argue.
In the case of Russia, the recent pronounced stepping up of Western attacks on Putin and claims he is undermining democracy are ultimately aimed at securing a pro-Western government there, and access to the immense Russian oil and gas resources. Russia has the world’s largest gas reserves and has been a close second crude producer after Saudi Arabia for many months now.
The struggle has also spilled over into West Africa, reckoned to hold some 66 billion barrels of oil typically low in sulfur and thus ideal for refining.
In 2005 the US imported more oil from the Gulf of Guinea than from Saudi Arabia and Kuwait combined, and is expected over the next 10 years to import more oil from Africa than from the Middle East.
In step with this, the Pentagon is setting up a new unified military command for the continent named Africom. Conversely, Angola is now China’s main supplier of crude oil, overtaking Saudi Arabia last year. There is no doubt that Africom, which will greatly increase the US military presence in Africa, is aimed at the growing conflict in the region with China over oil supplies.
Clouds are definitely gathering on the horizon. Big boys have entered the fray and if we happen to witness some real action in not too distant a future, it should be courtesy — the black gold.