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Energy in International Politics: the Rise of a New Power Currency

The growing importance of hydrocarbons for the world economy has increased their potential nature as powerful political tools

In April 2010 when the British Petroleum (BP) oil rig Deepwater Horizon exploded and sank into the Gulf of Mexico, dumbstruck television watchers were once again reminded of the disastrous consequences that oil spills can inflict on the environment and on their lives. The general impression was, however, that many among analysts, journalists and statesmen did not fully grasp the deepest meaning of the catastrophe and simply interpreted it as an accident caused by sheer misfortune.

As in early November 2011 a Chevron oil platform spilled crude off the coast of Brazil provoking a second major natural disaster in a bit more than a year , it became clear that oil spills, caused by the increasingly common practice of offshore drilling, are as much the result of unforeseeable tragedies as it is to get killed by playing Russian roulette. Extraction of oil from deep waters is a reckless practice whose rationale lies behind the inconvenient truth that “the era of easy oil is over”, as Chevron CEO David O’Really claimed in 2005. Increasingly frequent oil disasters are, at a closer look, the result of the steady decline of oil reserves and of the consequent attempts of oil companies to seek new oil fields in ever deeper ocean waters. In parallel with the relentless depletion of fossil fuels, the world energy consumption is undergoing a dramatic climb due to the tremendous economic growth experienced by rising Asian powers such as China and India. According to the International Energy Agency (IEA) the size of the two countries and their share of global energy consumption “is transforming the global energy system.”

The outcomes of such energy dynamics are not merely represented by the evident acceleration of global warming effects, they are, unfortunately, far more outreaching. The ubiquitous presence of fossil fuels in every single aspect of modern life- from industrial production, to travelling to house heating- makes energy an indispensable commodity for the sustainment of the global economy. As a result, a failure to increase global energy output, warns prof. Micheal Klare, defense analyst for The Nation and Director of the Five College program in Peace and World Security Studies at Hampshire College in Amherst, Massachusetts, USA , would inevitably expose the entire world to risks of economic recession, jeopardizing the globalization project.

The implications of declining fossil fuel production

In the short term one of the most serious threats of energy scarcity would be the disruption of power balances between nations, with consequent repercussions on international security. The combination of plunging output and climbing demand of energy resources is, in fact, ushering in what prof. Klare defined “a new international energy order”. In this new architecture, a nation’s power is not determined any longer by its military or economic preponderance, but rather by the vastness of its oil and gas reserves or its ability to purchase or mobilise the resources of other energy-producing nations.

In other words, the new reality in the making is one that gives energy-surplus countries, in many cases rogue states, disproportionate power vis-à-vis their more militarily and economically powerful counterparts. In this respect Saudi Arabia is a case in point according to Klare. Despite its negligible military capabilities, the country has come to exert huge leverage on world affairs due to the possession of some of the biggest oil reserves in the world.

Some other notable examples are Venezuela and Iran. In the first case, the rising oil production that the country experienced over the last decade led it to become the holder of the largest oil reserves. Following this development, Venezuelan president Hugo Chavez made no bones about his intention to redirect consistent amounts of oil exports to energy-thirsty China to lessen his dependence on US petrodollars and, most likely, to sharpen his Anti-American rhetoric.

As far as Iran is concerned, despite considerable attempts by the US and the EU to cripple the country’s oil revenues through sanctions, Tehran managed to ensure its economic survival exporting oil to China and using Beijing’s sympathy to countervail Western hostility. The climax, however, was reached last December when, following EU and US decision to tighten sanctions against the Islamic republic, Tehran responded with a threat to block the straits of Hormuz, a crucial passage for Middle Eastern resources whose closure would inflict serious disruptions to global oil trade.

The above mentioned tensions give an idea of how the relentless depletion of fossil fuels represents an insidious menace to global security, in that it might unleash a scramble among world powers to hoard the last remaining energy resources and to use them as instruments of power. Although scarcity of hydrocarbons is not here yet, the looming peak in global oil production is raising states’ sensitivity for their energy security and laying bare the vulnerability of energy-deficit nations. In this situation, the balance of power in international relations is increasingly tipped in favour of energy-rich nations, those who possess the economic lifeblood of our contemporary, fossil-fuel driven world.

by Stefano Salustri