Tuesday, October 30, 2007


Peak Oil and Geopolitics

There seems to be some controversy over whether geopolitics plays a role in peak oil. Some claim it’s just the supply-and-demand fundamentals, others say that above-ground factors instead of geology are responsible, and still others emphasize there’s no peak oil at all because production is held up by “thug governments.”

Personally I have no doubt that geopolitics plays a role in keeping oil production lower than it might otherwise be. Social and political unrest in oil-producing countries surely hamper exploration, drilling, and production.

So does that mean that peak oil is a hoax and we could solve the energy crisis by bringing “thug governments” to heel? The answer is no. Geology is the main determining factor, and that’s why supplies are so tight. If the world were really awash in cheap and accessible oil as it was for the previous several decades, oil importing countries could just shop around for a bargain somewhere else and leave the “thug governments” to stew in their own oil. “Thug governments” are the object of oil consumers’ ire now because other suppliers are topping out and the “thug governments” are not pumping “our” oil fast enough (suggesting strongly that the definition of “thug government” is “a government which does not produce oil at breakneck pace to feed the insatiable thirst of extravagant developed countries”).

But let’s say that “thug governments” were all converted this very day to the American model of “capitalist democratic governments” (meaning “governments which produce oil at breakneck pace to feed the insatiable thirst of extravagant developed countries”). Supplies would increase, the price of oil would go down, peak oil would be postponed, and governments would be given some breathing space to start crash programs for renewables, right? Time for a reality check: Unfortunately, the last part about crash programs for renewables would be omitted. Everyone would just consume with abandon as they have until now, and we’d end up at the same place again a few years down the road, only this time with much worse pollution and environmental degradation.

And what about getting rid of “thug governments”? Realistically, they aren’t going away. You just have to factor them into the equation. Further, which governments are “thug governments” is also open to debate, as suggested above. Just as “one man’s terrorist is another man’s freedom fighter,” you can also say that “one man’s thug government is another man’s savior government.” For example, most Americans (except those saved by Hugo Chavez from freezing to death) would say that Venezuela is a “thug government.” But ask Venezuelans who are for the first time getting medical care or learning to read, and you’ll get an entirely different answer. To Americans, Venezuela is a “thug government” because it doesn’t produce enough cheap oil for the US and isn’t amenable enough to US business interests.

So to sum up, geopolitics does play a role in peak oil, but there’s little or nothing we can do about it, so we have to just factor that into the equation. And further, even if geopolitics didn’t play a role, it wouldn’t improve the overall situation one iota.

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