It’s a race to failure between rogue states and global oil output

Dwindling global oil supplies are leaving the world ever more reliant on a group of unstable countries - many of which are themselves facing major domestic problems right now.

Believe it or not, many of the world’s major oil exporters cannot maintain their own domestic energy requirements. Venezuelan consumers endure electricity blackouts of “seven or eight hours a day”, but less well known is the situation in the Middle East, where residents are facing rolling power outages just as summer temperatures soar, and with it, the demand for air conditioning.

Furthermore, a report in Forbes this month points to growing fears about the stability of Saudi Arabia, for decades the swing producer maintaining the world’s oil exports at a steady level. While any upheaval in any of the main oil exporting nations would be felt across the globe, Saudi is a special case, as its reserves are acquiring an ever more geopolitical significance due to the decline of non-OPEC oil. The West is becoming more reliant on the health of this highly secretive nation - essentially, if Saudi Arabia sneezes, the rest of the world catches cold.

It’s a fact of life that oil tends to come from unstable places - the very term petro state is shorthand for a country with “weak institutions and a malfunctioning public sector”, and an economy based around imports, not exports, due to exchange rates. Power is in the hands of the few, essentially the government, that control the petro-rent, and these are essentially violent, unhappy places for much of the population.

The reality is that seven of the countries currently listed by the US Energy Information Administration as the nation’s current Top 15 sources of crude oil are also on the US State Department’s Travel Warning List, for their “long-term, protracted conditions that make a country dangerous or unstable”. These are: Saudi Arabia, Mexico, Nigeria, Iraq, Columbia, Algeria, and the Democratic Republic of the Congo - with Saudi Arabia, Mexico and Nigeria being respectably second, third and fourth most important source of US imports. (Of course, Canada, the US’s largest single source of oil imports, is a model of staid stability - but many observers question the future expansion of its oil sands output which has arguably been overhyped for years.)

Oil fuels our industry, maintaining our lifestyles - and is as addictive to the West as it is to the producing nations. As US President Barack Obama said, when addressing the nation on June 14 in the immediate aftermath of BP’s Deepwater Horizon oil disaster, “Each day, we send nearly $1 billion of our wealth to foreign countries for their oil”. This is all money that isn’t being invested at home. It’s going on a product that is causing global climate change, which is making many unstable parts of the world more desperate, with geopolitical commentators now talking of coming wars over resources as basic as water. So addicted are we to oil that we apparently have little money left over to prepare for the transition to a future based around renewable energy. Instead, buying vast amounts of imported oil is taking money out of the US domestic economy and funding, in the main, rogue states that are adding to global security risks.

Read the US State Department’s travel advisory about Nigeria for an idea of the kind of regimes that oil is maintaining:

Violent crime committed by individuals and gangs, as well as by persons wearing police and military uniforms, is a problem throughout the country.

Since January 2009, over 111 foreign nationals have been kidnapped in Nigeria, including 18 in 2010. Six foreign nationals were killed in connection with these abductions; two U.S. citizens were killed in separate abduction attempts in Port Harcourt in April 2010. Local authorities and expatriate businesses operating in Nigeria believe that the number of kidnapping incidents throughout Nigeria is underreported. Since March 2010, five improvised explosive devices (IEDs) have been detonated in the Niger Delta region with no reported casualties.

It’s the same situation in Algeria, Columbia and the Congo - yet the remaining, more stable petro states are in turmoil of some sort, albeit less headline grabbing. An item in Abu Dhabi English language newspaper The National earlier in July, "Gulf braces for power shortages", is worth quoting at length:

The big heat has come early to the Gulf, and residents opting to stay are settling in for another summer of discontent punctuated by power cuts.

All Gulf states except Qatar face electricity shortages that intensify during the airconditioning season. Already this year, the emirate of Sharjah as well as Kuwait and Saudi Arabia have suffered disruptions.

On May 10, a 90-minute power cut grounded flights at King Abdul Aziz International Airport near Jeddah.

Last month, a series of electricity disruptions afflicted cities in the north and west of Saudi Arabia, including Mecca, Medina, Jeddah and Taif, amid temperatures reaching 52°C. Some schoolchildren taking exams passed out from the heat.

It goes on to state that other than in Iraq, where war destroyed much of the grid, these electricity blackouts are due to “rapid industrialisation and population growth”. Underpinning it are low domestic energy prices that attract energy-intensive industries and “wasteful consumer habits,” with the national focus on obtaining expansion as quickly as possible that overlooks any form of long-term energy efficiency. (This manic drive to have something to show for the oil bonanza is common to all petro states.) The article gives, as example:

Karim Elgendy, an architect and sustainable design researcher based in San Francisco, also believes the style of architecture has played a role. “Rapid urbanisation in the UAE, as well as in other GCC member states, has been characterised by forms of imported western architecture which were not environmentally responsive to the region’s climatic conditions,” he said. “High-rise buildings with large areas of glass facade, and huge demand for electricity for air conditioning can be seen in all new urban centres such as Dubai and Abu Dhabi, as well as other cities such as Riyadh and Doha.”