Expert Cautions Geopolitics of Persian Gulf May Challenge US Access to Cheap Oil

As the world continues to increase its rate of oil consumption, an energy expert visited AAAS to warn that geopolitics of the Persian Gulf will increasingly play a large role in the availability of cheap oil for the United States.

Robert Ebel, chairman of the Center for Strategic and International Studies Energy Program, said while he is concerned about global demand outpacing supply, the United States should be more concerned about the geographical concentration of the nations with the largest oil reserves.

With an estimated 800 billion barrels of oil reserves, the Persian Gulf states—Iran, Iraq, Kuwait, Saudi Arabia, United Arab Emirates, and others—are able to control the amount of oil they export through the Organization of the Petroleum Exporting Countries (OPEC).

By increasing or limiting the amount of oil they export, estimated at around 20.3 billion barrels a day or 70 percent of the OPEC total output, the Persian Gulf countries are generally able to influence the price of oil purchased by consumer nations.

In addition to nations in the Middle East, oil prices are heavily influenced by OPEC suppliers elsewhere including Venezuela, Nigeria, and Indonesia, along with other nations which have small domestic oil resources such as China and Russia.

"The future problems do not lie below the ground, but rather above in the geopolitics and capitals of oil-rich nations," Ebel said at the 17 April event hosted by the AAAS Center for Science, Technology, and Security Policy (CSTSP). "Because the Persian Gulf states control such a large amount of the world's oil, their domestic and international politics greatly affect the oil's price and availability."

While the United States does have approximately 10 billion barrels of oil in its domestic supply, it imports more than 20 billion barrels a year, mostly from Canada, Mexico, Saudi Arabia, Venezuela, and Nigeria.

"The United States needs to recognize that its oil prices are not only affected by the OPEC nations, but also potentially by nations with tough governments like Venezuela, Russia, and China," said Ebel.

Despite recent calls from U.S. politicians for the nation to reduce its dependency on foreign oil, Ebel believes that the United States should promote international energy interdependency. By increasing the dependency on revenue from the sale of oil from the United States, he reasoned, that OPEC nations would be less willing to reduce their oil output.

In addition, Ebel believes that even if the United States were to become less dependent on foreign oil, the nation would not be immune to rising global oil prices.

"The calls for energy independence are nonsense because in the globalized world, no one is isolated from the market," said Ebel. "The Persian Gulf should be unwilling to shock the oil market price for the U.S., especially since three-fifths of our oil imports come from the Western Hemisphere."

Within the next 20 years, many experts believe that China, currently an emerging player in global oil prices, will develop into a major actor that could compete with the United States in developing new means and alliances for cheap oil.

As the world's most populous nation, the second largest energy consumer, and the third largest net oil importer, many believe developing cooperative relations with China is among the most important steps for the United States.

"Over the past 25 years, China and the United States have had a very strong scientific and technological relationship," said Norman Neureiter, director of CSTSP. "It is clearly in the United States' interest to apply this strong relationship to the oil markets."

While Ebel is optimistic for cooperation between the two nations, he pointed out several significant points of contention including human rights, international relations, and the environment.

"While China views the U.S. as a global power and a purchaser of Chinese goods, they are wary of the U.S. stance on Taiwan and Iran, and the close alliances with India and Japan," said Ebel. "Likewise, the U.S. views China as an emerging power and needs their support when dealing with North Korea, but it is bothered by its human rights record and recent environmental disasters."

Citing statistics from the Energy Information Administration, a statistical agency of the U.S. Department of Energy, Ebel believes that by 2012, the developing world will begin consuming more energy than the developed world, and as soon as 2010, will be releasing more carbon dioxide.

While many have criticized them for not reducing emissions, the developing nations so far have been unwilling to hamper growth through voluntary restrictions on the burning of fossil fuels and coal.

To better meet future energy needs, Ebel urged the U.S. government to invest in technologies that can extract oil resources from regions rich in oil sands, a semisolid with clay and sand making the oil hard and expensive to extract, and to reduce the overall consumption.

Ebel estimates a worldwide resource endowment of at least 5 trillion barrels of oil trapped in oil sands.

While he believes that alternative energies like ethanol will not replace traditional sources, at least in the near future, he does suggest that they could help reduce consumption if the technology is improved. In addition, consumers can reduce their personal energy consumption by reducing their energy needs.

"Sometimes, it's as easy as putting down the car keys, turning off the light switch, and turning down the thermostat," Ebel said.

Benjamin Somers

25 May 2007