Home > International > Europe > Taking the World By Oil
Taking the World By Oil
By Dariya Fadeeva, Russia
With worldwide oil consumption so inextricably attached to issues of security and terrorism it's a wonder why governments, the energy industry and the global public haven't shut off the oil spigots in favor of using other forms of energy. Things will have to change when oil reaches peak production in seven to 25 years. If we wait that long, there will be huge shakeups in traditional business and intergovernmental relationships and no matter where we live in the world, our lifestyle will be impacted dramatically.
Because the thirst for energy seems limitless the price of gasoline, diesel, heating oil and jet fuel is hitting all-time levels. But our insatiable thirst doesn't seem to take into account the fact that it takes thousands of years of very specific geological conditions for fossil fuels to be formed deep under the earth by organisms (decayed plants and animals). Natural gas and oil have finite life spans.
9/11 had a lot to do with America's attitude towards its major supplier of oil, Saudi Arabia. With 15 of the 19 hijackers coming from the kingdom, suspicion was raised as to whether Saudi Arabia could be a reliable fuel-supplying ally.
While the Middle East traditionally provided big-time consumers like the U.S. with oil, (Saudi Arabia sits on about 66% of the world's oil reserves) Russia has become a new economic interest most especially to the U.S. As the second largest producer of oil, Russia also has the world's largest supply of natural gas.
America's search for energy diversification has come as a gift to President Vladimir Putin, who since he was elected in 2000, has been working on reasserting Russia's power, hoping to balance the world's only hegemony of the post Cold War era - the United States.
High energy prices, (also due to the rise of oil demand from China) have allowed Russia to build the third largest currency reserves in the world. As renowned historian Niall Ferguson put it, Russia's geopolitical power has become a function of the value of its energy exports.
Although Russia's greatest influence is most likely to remain in gas, its current rate of oil production is exceeding its rate of discovery of new reserves by a significant margin. In the long term, Russia won't have the resources to sustain high levels of oil production and export.
While Russia is devoting much of its energy to restoring political influence through economic expansion around the world President Putin has also come under fire for using oil and gas as "tools of intimidation and blackmail. American Vice President Dick Cheney accused the Kremlin of "unfairly restricting citizens' rights" in participating in free market trade.
While the U.S. pressures Putin on political and legal rights, Russia is looking elsewhere for political and economic allies. Recently, Russia conducted military exercises with China for the first time in its history. Hostility from the West seems to be pushing Russia further towards creating its own Moscow-centered political system and further from democratic ideals. One can only hope these tensions will subside with the 2008 U.S. and Russian presidential elections although efforts to capitalize on renewable and natural energy sources such as biofuels are likely to impact the geopolitical arena as well.
