The rising cost, increased demand and limited supply of oil as well as the slow development of alternatives are all leading to a new world order that will be based on supply and demand economics – with power resting with oil and gas-abundant states, argues Professor Michael T. Clare of Hampshire College in a 17 April commentary for Middle East Online.
The price of oil is currently $110 a barrel and is only set to rise due to shrinking energy supplies and an intensifying wrangle over its distribution, says Clare. Many years ago, energy was abundant and was not seen as a hot political issue. But now, claims Clare, former “Third World” countries like India and China are beginning to industrialise their economies, leading to a massive surge in global energy consumption – of some 47% in the last 20 years, according to the US Department of Energy.
This would not be such a frightening prospect, believes Clare, if we were able to produce enough fuel. Yet the opposite is happening, with a noticeable slowdown in global energy supplies coming at a time of rising demand, he adds. This development, he believes, coupled with powerful emerging energy consumers, will lead to a new world order. He summarises this change as: “rising powers/shrinking planet.”
Clare suggests the new world order will be characterised by violent international competition for shrinking fossil fuel stocks and a shift of power from energy deficient states, like the US and China, to energy surplus states like Russia and Saudi Arabia.
Clare believes there are several major forces that will drive this change:
- There will be an intensifying of the competition between older and newer economic forces for energy supplies;
- the dwindling supply of primary energy supplies will lead to global energy shortages which will be a constant cause of conflict, and;
- alternative energy sources are being developed much too slowly.
According to the US Department of Energy, fossil fuels will account for the same amount of world energy in 2030 as in 2004, whereas the increase of renewables will be a mere 8.1%. Additionally, the Department of Energy revealed that global emissions of CO2 will rise by almost 60% in the next 25 years, which draws Clare to conclude that all hope of averting climate change are virtually lost.
Moreover, Clare believes a steady shift of power and wealth from energy deficient states to energy surplus states will contribute to creating a new world order. He reveals that net earnings of oil exporting states in 2006 were almost $1 trillion, with this figure set to rise in the coming years. These earnings have been deposited in “sovereign wealth funds”, owned by oil-rich countries such as those in the Gulf region, and are being used to buy up large stakes in key sectors of the US economy, which has gladly accepted petrodollars to shore up its own ailing economy, observes Clare.
Lastly, claims Clare, the growing risk of conflict in the world is enabling major powers to use military force to satisfy their objectives in search of energy resources. He concludes by suggesting the “energy-centric” world will dominate people’s lives as power will lie in the hands of those who control distribution of fossil fuels, “ending the world as we know it”.