Summary:
Robin M. Mills argues that the world is not running out of oil, that the current high energy prices are the result of a long period of low prices and under-investment, as well as irrational hostility between suppliers and consumers. Ideas about forestalling an oil crisis by ‘energy independence’, or by military action, are mistaken. The proper energy policy should be energy security, not energy independence. Objective profoundly harmed by climate, with elements of paranoia, racism and Islamophobia. Energy security is achieved when suppliers find markets, and markets find supply, at prices permitting both of them economic stability and growth, which requires a complex web of inter-relationships between producers and consumers. Policies to encourage US domestic production, increase efficiency and introduce alternative energy sources are desirable, often for environmental rather than energy security reason, but they have to be pursued with vigour and resolution. Promises to ‘jawbone’ OPEC into supplying more oil sit very oddly with the US’s uniquely comprehensive moratoria on offshore oil and gas production. Need a rational and balanced dialogue about how to co-operate on bringing that abundant energy to consumers. (Published: 02/09/08)
Comment:
- current high energy prices emerge from a long period of low prices and under-investment
- fruit of the breakdown of international energy relationships in the oil crises of 1973-4 and 1978-80
- high prices are not due to a lack of resources in the ground
- remains vast potential around the world for increasing recovery from
- existing fields,
- discovering new oil, e.g. recently deepwater Brazil
- largely untouched US offshore
- ‘unconventional’ sources such as Canada’s famous ‘oil sands’
- biofuels
- synthetic fuels from natural gas and coal, and others
- ideas about forestalling an oil crisis by ‘energy independence’, or by military action, are therefore mistaken
- such ‘solutions’ are likely to create the crisis they seek to mitigate
- proper objective of energy policy: not independence, but security
- objective profoundly harmed by climate, with elements of paranoia, racism and Islamophobia
- energy security is achieved when suppliers find markets, and markets find supply, at prices permitting both of them economic stability and growth
- requires a complex web of inter-relationships between producers and consumers
- attempts by a major nation to achieve energy self-sufficiency are very distorting to economic competitiveness
- even worse when bad relations with major energy suppliers, and conflicting messages about future energy policy, discourage much-needed investment
- if one side believes they are buying oil from terrorists, and the other thinks they are selling to neo-imperialists, it is not surprising that
- oil prices are high
- investment is lacking and
- most of world oil reserves are monopolised by state companies
- the Middle Eastern nations have generally been very reliable suppliers, and use of a mythical ‘oil weapon’ is very unlikely
- any régime would be reliant on its oil earnings to sustain the economy
- while strategic reserves in the industrialised countries give some ‘staying power’ to outlast an embargo
- policies to encourage US domestic production, increase efficiency and introduce alternative energy sources are desirable
- often for environmental rather than energy security reasons
- but: they have to be pursued with vigour and resolution
- US energy policy has been more erratic and hostile to increasing output than most of the Middle Eastern countries
- ‘pork barrel’ subsidies and the interminable, inconclusive debates over whether to open new exploration areas, build new pipelines and terminals for clean natural gas, extend support for renewable energy and increase mileage standards
- promises to ‘jawbone’ OPEC into supplying more oil sit very oddly with the US’s uniquely comprehensive moratoria on offshore oil and gas production
- military ‘control’ of oil is not achievable or cost-effective
- expenditure on such wars vastly exceeds the value of any oil ‘secured’
- while production can struggle along in war-torn areas, it is impossible to develop major new fields
- ‘Police actions’ to deal with specific threats are entirely reasonable
- as long as they are multi-lateral and proportional to the danger posed
- and carried out competently
- grandiose military adventures destroy the co-operation which is essential for global energy trade
- ‘Energy independence’ is a chimera, expensive, unachievable, and swimming against the tide of greater global economic integration
- world is not running out of oil
- we need a rational and balanced dialogue about how to co-operate on bringing that abundant energy to consumers
- if the profound misunderstanding of, and hostility towards, the Middle East, continues, the house of energy security is being built on sand
