Peak Oil News: The Militarization of Energy Security

Tuesday, February 05, 2008

The Militarization of Energy Security

Excerpt from: International Analyst Network


“Peak Oil”

Oil, which sits in the foreground of the global energy picture, is a finite resource. Much remains to be discovered about the ultimate extent of global petroleum reserves, and about the economics of their exploitation. In the final analysis, however, there is no disputing that the world’s supply of oil must be depleted sooner or later. This fact casts its shadow over strategic calculations in the energy sphere.

Experts disagree about when what has come to be called “peak oil” will arrive. Some hold that it is already behind us—that we have already used up half of mankind’s natural endowment of oil, and are on the downward slope of a curve whose theoretical bottom represents the absolute disappearance of oil as a natural resource. Most experts reject this idea, however, and in recent years estimates of available reserves have pushed the hypothetical peak of oil farther into the future, generally beyond the twenty- to fifty-year horizon that constitutes the practical limit of even the most ambitious strategic planning.

In reality the true moment of peak oil is likely to be apparent only in retrospect. At the same time, its looming presence somewhere over history’s horizon seems equally certain to be priced into the market before it actually arrives. The idea of peak oil is already becoming established as a subtext or unspoken assumption among strategists and policy-makers, and reinforces the tendency to see the energy sector as one in which especially critical threats are liable to arise. In this sense the timing of peak oil is less significant that the strategic inferences that thinking about it and getting ready for it may inspire.

Peak oil also has a derivative meaning that strategists must struggle to take into account. In theoretical terms peak oil means simply that oil ceases to be useable for present human purposes. The simplest reason for this would be that the world’s supply of oil dries up—peak oil in its most immediate sense. But mankind might reach comparable conditions by a different avenue, should conditions arise that cause all the environmental externalities associated with the use of carbon-based energy to get priced into the energy market. Energy markets in the industrial era have invariably failed to reflect the true immediate and long-term social costs incurred by mankind’s ferocious hunger for carbon-based fuels, costs that have only recently become apparent, and are now accumulating at a rapid rate. In the same way that estimates of world oil reserves have so far proven to be too pessimistic, estimates of measurable environmental effects linked to climate change have proven no less consistently optimistic. If the graph of peak oil has moved consistently “to the right” by virtue of the accumulation of new scientific knowledge,[5] the metrics of impending environmental crisis have all moved no less consistently “to the left” for the same reason.[6] Even granting the significant uncertainty that prevails in both areas, it is easy enough to imagine a cross-over point at which the environment impacts of fossil fuel consumption (a category that includes coal, biomass, and natural gas as well as oil) begin to register in strategic terms, so that a condition akin to “virtual peak oil” is reached well in advance of the real thing.

From a market perspective there are risks on both sides of the peak oil problem. A nation that preemptively abandons a petroleum-based economy before others do so may incur additional short-term costs, as an early adopter of new and unproven technologies that place it at a disadvantage relative to competitors that hold on longer to what is still cheap and familiar. A nation that waits too long may find itself paying premium prices for a commodity that has become too scarce to burn, but must be rationed for other, more specialized purposes. The risks associated with “virtual” peak oil also include the possibility that states will attempt to coerce each other to reduce their consumption of fossil fuels (and the resulting carbon emissions), in effect re-defining environmental pollution as a form of international delinquency, perhaps even as “aggression,” toward which a strategic response is warranted.


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