Oil And War

Today's headlines:

Oil crosses $129 for first time, heads for $130 -- Yahoo News
Oil Rises to a Record After Pickens Says Prices May Reach $150 -- Bloomberg
Opec says oil could hit $200 -- Financial Times
America must face the harsh realities over oil -- Times Online
Every recent post by the blog .... The Oil Drum .... a website that I find incredibly informative and accurate in their forecasts .... paints a very dire picture of oil prices and availability.

With all of these headlines, I then come across this report which makes the following prediction: Oil Future and War Now: A Grim Earth Sciences’ Point of View.

Summarizing, the report says the following:

Worldwide per-capita oil consumption is closely correlated with the standard of living. In developing nations like China and India increasing prosperity therefore requires increased per-capita oil consumption. However, oil is a finite resource whose production globally is about to begin to decline irreversibly. Consequently the growing demand for oil is leading to a growing global conflict in which the Gulf War, the 9/11 attack, and the war in Iraq are just the first three skirmishes. These skirmishes pale in comparison with the looming potential conflict over oil with China.

The complete report in pdf is here.

My Comment: Oil is the lifeblood of our civilization today. It is unfortunate that much of the world's reserves today are in the most unstable of countries. I personally do not believe that shortages of supply and price hikes will precipitate an immediate war, instead I can easily forsee a slow bleed in which falling living standards, economic dislocation, and rising internal tensions in countries that are most vulnerable to oil shocks ..... China and India just to name two ..... can easily escalate over a period of months to a year or two into a major conflict.

My hope is that energy alternatives will become more economical and preferable to oil as it and its byproducts become more scarce and expensive. My fear is that governments ..... always responding to crisis with short term goals in mind ..... will respond in a manner that will make a terrible problem worse.

Other useful articles and links on oil, its future, and consequences for war are the following:
The Oil Drum -- An informative site that discusses energy issues and our future.
The Undeclared Oil War -- A 2004 Washington Post article discussing Japanese and Chinese competition for oil resources.
Oil And War -- A prophetic and informative article from 2003 (John Robb's Weblog).
Oil Wars -- A book by Mary Kaldor , Terry Karl, Yahia Said. The link goes to Avaxhome where it can be freely downloaded.

Why Oil Wealth Fuels Conflict

From Real Clear Politics:

The world is far more peaceful today than it was 15 years ago. There were 17 major civil wars -- with "major" meaning the kind that kill more than a thousand people a year -- going on at the end of the Cold War; by 2006, there were just five. During that period, the number of smaller conflicts also fell, from 33 to 27.

Despite this trend, there has been no drop in the number of wars in countries that produce oil. The main reason is that oil wealth often wreaks havoc on a country's economy and politics, makes it easier for insurgents to fund their rebellions, and aggravates ethnic grievances. Today, with violence falling in general, oil-producing states make up a growing fraction of the world's conflict-ridden countries. They now host about a third of the world's civil wars, both large and small, up from one-fifth in 1992. According to some, the U.S.-led invasion of Iraq shows that oil breeds conflict between countries, but the more widespread problem is that it breeds conflict within them.

Read more ....

My Comment: Oil broke the $126.00 US barrier today. The political culture of many oil producing countries will not permit them to adopt Western Government strategies and policies when it comes to their oil wealth and cash flow. This in the short to medium term will result in lesser oil production, higher prices, and a search for alternative supplies and energy sources.

The real problem will arise when oil prices start to collapse .... which historically has always happened when the price of oil has increased as substantially as it has in the past two years. Countries such as Russia, Venezuela, Iran, and Mexico are heavily dependent for most of their revenues from oil royalties and earnings. Any disruption in this flow of funds will bring about turmoil, collapse of government price supports for basic staples, and an atmosphere of blame and finger pointing.