Translate

Friday, November 16, 2012

The Next Global Political Shift?


Although many people have pointed out for several years that peak oil was a myth, it apparently took the recent IEA report to get the media's attention, and it certainly has ... at least, overseas. The Guardian has now jumped in with its own analysis, and suggests that the real losers will be Russia and the Gulf States:
Long-term consequences for the rest of the world are hard to predict but it is probably safe to say that many of the regimes whose global role rests on hydrocarbons alone are likely to be significantly weakened, if not swept away.
That includes the monarchies that have thus far withstood the Arab spring. Their persistence has depended on a historically high oil price and unquestioning western backing. Both those conditions are now in question.
Shashank Joshi, a fellow of the Royal United Services Institute, said: "The Gulf Arab political order for almost the entire post-war period has depended on US interest in the region.
"The monarchies endured for so long not because of any sort of popular legitimacy but because they could depend on enormous external support. Those regimes, which have already had to deal with a high degree of domestic mobilisation will come under unbearable stress and they cannot survive without the technical advantage of western weapons."
. . . A lot depends, too, on whether the new biggest customers for Gulf oil are ready to take America's place in patrolling the tanker routes.
Joshi said: "There is a mismatch between China and India's reliance on Middle East energy and their provisions for its security. India will have three carriers and both China and India are building blue-water [ocean-going] navies. They may be compelled to engage if the US pulls away."
Nicholas Redman, senior fellow for geopolitical risk and economic security at the International Institute for Strategic Studies, doubts that the US, even if freed of Gulf oil dependence, would want to cede the space to Indian or Chinese rivals.
As for Russia, the article goes on:
. . . The biggest single loser of all will most likely be Vladimir Putin's Russia, a regime largely dependent on high energy prices and a captive market with no real alternative plan.

Russia is already feeling the direct impact of the new gas age. Development of its Shtokman field – believed to be one of the largest gas fields in the world – deep under the Barents Sea, has been shelved, because its intended customer, the US, now has its own home-grown source of natural gas.

Russia is the most vulnerable of the current petro-states because of the central role of gas to its international standing. Moscow's sway over eastern and central Europe is dependent on Gazprom, which has used its dominance to set favourable terms, selling long-term contracts linked to the oil price.

Now, as more and more of the liquefied natural gas (LNG) formerly intended for the US finds its way on to the western market, the spot gas price is coming adrift of the oil price and the Europeans have new options, which will lessen their dependence on a single dominant seller.

"Russia has just seen its aspiration market disappear. The US is already a bigger gas producer than Russia," Redman said.

He pointed out that there were deep obstacles – environmental and economic – to large-scale European exploitation of its own oil shale resources, but imports from the US and elsewhere could still transform the continent's uneasy relationship with Moscow.

No comments:

Post a Comment