To Have and Have Not: Energy security vs energy independence in a world awash in cheap oil

February 23, 2016 |

Hawks and doves

I am an energy security hawk. I am happy and proud to admit it. Some are doves.

I am very concerned about the world that we live in. And that’s why I am for sustainable energy for all, and for the development of renewable resources that will dampen dependency on the energy trade and the resultant hot spots and  intolerable risks that go with it. And that is why I am against slumbering while oil prices dip.

Sleep is comfortable, and dreams can be pleasant. But increasing our dependence on any resource which is found unevenly around the world — whether it is rare metals or energy liquids — make the world economy dependent on precarious trade flows, and divide the world into haves and have-nots. This is not a trade in cars, or consumer electronics. This is a trade in energy, the blood of an economy.

We might redouble our efforts to secure stability in the world by removing the root cause of that instability, and that is the uneven distribution of oil wealth. Or we might not.

Ask yourself: as economies grow and industrialize they become more dependent on liquid energy, and as control of the resource becomes more important to those who have it and more fearful to those who do not, will this growth increase tension or reduce it? At what point does tension break into war?

More oil and more expensive oil

In the longer term, we might note that the International Energy Agency contends that “the centre of gravity of energy demand is switching decisively to the emerging economies, particularly China, India and the Middle East.” They see “global energy use one-third higher” by 2035.” “The cost of that energy? In today’s dollars, $128 oil — the highest in history.

Tight oil technology will solve everything, some say. Will it?

We could point out that shale well yields are falling fast. The IEA projects that it will take 2500 new wells per year to maintain the Bakken’s current 1 million BPD yields. Or that the economics of shale oil plays are not pretty. Even by 2014 a Bloomberg survey of 61 drillers revealed that debt had doubled since 2011 while revenue has grown 5.6 percent. And in the last 18 months, oil rig counts have plummeted.

Or that the world will need to add something like 43 million barrels per day of liquid energy demand before the mid-century, we are told by the IEA. That’s the equivalent of 659 billion gallons of capacity. Nothing even close is on the drawing boards. Oil companies are not increasing their investments, they are retrenching, fast. And we are not always comfortable with the places they expect to find the liquid energy we demand. Environmental and political concerns are making energy plays tougher to exploit.

Never mind China, here comes India, and why not India?

You can pooh-pooh the rise of China, but later will come India, and deservedly so, the world’s largest democracy, industrializing. How can we deny them the path to prosperity that we took? Yet, how can we celebrate their rising power and prosperity given the risks their growth will impose on the region and the world?

There is only one answer and you can sum it up in four words.

Sustainable energy for all. It is not a question of whether we owe a duty to provide a safer world to those who come after us, but whether we will do that duty. Find that honor. Protect our country. Or, instead, live inside the pleasant dream that only good things flow from a barrel drawn from the ground.

About those cherry blossoms

Cherry-BlossomEach spring, many articles are written about the beauty of the cherry trees that blossom across Washington, DC.

The first 3,020 of them were a gift from Japan in 1912, as a symbol of the enduring friendship between the two nations that would never die. Friends we are, but the friendship did not always endure. By 1941, relations had soured to the point of war. In the 1930s, Japan industrialized and needed imported energy and raw materials in huge amounts. War came because of energy — or the lack of it — and access became a weapon of the haves and a catalyst for the have-nots.

War can erupt between sworn friends, and it is worth pointing out that not every nation that harbors significant petroleum reserves is a sworn friend.

If we are to escape the cycles of history we might strive harder to change the conditions that lead to oil wars, and that means getting off the dope. Now. Everywhere. In spite of some inconvenience at the pump.

Or not.

 

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