As the second decade of the twenty-first century begins, we find ourselves at one of those relatively rare moments in history when major power shifts become visible to all.  If the first decade of the century witnessed profound changes, the world of 2009 nonetheless looked at least somewhat like the world of 1999 in certain fundamental respects:  the United States remained the world’s paramount military power, the dollar remained the world’s dominant currency, and NATO remained its foremost military alliance, to name just three.

By the end of the second decade of this century, however, our world is likely to have a genuinely different look to it.  Momentous shifts in global power relations and a changing of the imperial guard, just now becoming apparent, will be far more pronounced by 2020 as new actors, new trends, new concerns, and new institutions dominate the global space.  Nonetheless, all of this is the norm of history, no matter how dramatic it may seem to us.

Less normal — and so the wild card of the second decade (and beyond) — is intervention by the planet itself.  Blowback, which we think of as a political phenomenon, will by 2020 have gained a natural component.  Nature is poised to strike back in unpredictable ways whose effects could be unnerving and possibly devastating.

What, then, will be the dominant characteristics of the second decade of the twenty-first century?  Prediction of this sort is, of course, inherently risky, but extrapolating from current trends, four key aspects of second-decade life can be discerned: the rise of China; the (relative) decline of the United States; the expanding role of the global South; and finally, possibly most dramatically, the increasing impact of a roiling environment and growing resource scarcity.

Let’s start with human history and then make our way into the unknown future history of the planet itself.

The Ascendant Dragon

That China has become a leading world power is no longer a matter of dispute.  That country’s new-found strength was on full display at the climate summit in Copenhagen in December where it became clear that no meaningful progress was possible on the issue of global warming without Beijing’s assent.  Its growing prominence was also evident in the way it responded to the Great Recession, as it poured multi-billions of dollars into domestic recovery projects, thereby averting a significant slowdown in its economy.  It spent many tens of billions more on raw materials and fresh investments in Africa, Latin America, and Southeast Asia, helping to ignite recovery in those regions, too.

If China is an economic giant today, it will be a powerhouse in 2020.  According to the U.S. Department of Energy (DoE), that country’s gross domestic product (GDP) will jump from an estimated $3.3 trillion in 2010 to $7.1 trillion in 2020 (in constant 2005 dollars), at which time its economy will exceed all others save that of the United States.  In fact, its GDP then should exceed those of all the nations in Africa, Latin America, and the Middle East combined.  As the decade proceeds, China is expected to move steadily up the ladder of technological enhancement, producing ever more sophisticated products, including advanced green energy and transportation systems that will prove essential to future post-carbon economies.  These gains, in turn, will give it increasing clout in international affairs.

China will undoubtedly also use its growing wealth and technological prowess to enhance its military power.  According to the Stockholm International Peace Research Institute (SIPRI), China is already the world’s second largest military spender, although the $85 billion it invested in its armed forces in 2008 was a pale shadow of the $607 billion allocated by the United States.  In addition, its forces remain technologically unsophisticated and its weapons are no match for the most modern U.S., Japanese, and European equipment.  However, this gap will narrow significantly in the century’s second decade as China devotes more resources to military modernization.

The critical question is:  How will China use its added power to achieve its objectives?

Until now, China’s leaders have wielded its growing strength cautiously, avoiding behavior that would arouse fear or suspicion on the part of neighbors and economic partners.  It has instead employed the power of the purse and “soft power” — vigorous diplomacy, development aid, and cultural ties — to cultivate friends and allies.  But will China continue to follow this “harmonious,” non-threatening approach as the risks of forcefully pursuing its national interests diminish?  This appears unlikely.

A more assertive China that showed what the Washington Post called “swagger” was already evident in the final months of 2009 at the summit meetings between presidents Barack Obama and Hu Jintao in Beijing and Copenhagen.  In neither case did the Chinese side seek a “harmonious” outcome:  In Beijing, it restricted Obama’s access to the media and refused to give any ground on Tibet or tougher sanctions on key energy-trading partner Iran; at a crucial moment in Copenhagen, it actually sent low-ranking officials to negotiate with Obama — an unmistakable slight — and forced a compromise that absolved China of binding restraints on carbon emissions.

If these summits are any indication, Chinese leaders are prepared to play global hard-ball, insisting on compliance with their core demands and giving up little even on matters of secondary importance.  China will find itself ever more capable of acting this way because the economic fortunes of so many countries are now tied to its consumption and investment patterns — a pivotal global role once played by the United States — and because its size and location gives it a commanding position in the planet’s most dynamic region.  In addition, in the first decade of the twenty-first century Chinese leaders proved especially adept at nurturing ties with the leaders of large and small countries in Africa, Asia, and Latin America that will play an ever more important role in energy and other world affairs.

To what ends will China wield its growing power?  For the top leadership in Beijing, three goals will undoubtedly be paramount: to ensure the continued political monopoly of the Chinese Communist Party (CCP), to sustain the fast-paced economic growth which justifies its dominance, and to restore the country’s historic greatness.  All three are, in fact, related:  The CCP will remain in power, senior leaders believe, only so long as it orchestrates continuing economic expansion and satisfies the nationalist aspirations of the public as well as the high command of the People’s Liberation Army.  Everything Beijing does, domestically and internationally, is geared to these objectives.  As the country grows stronger, it will use its enhanced powers to shape the global environment to its advantage just as the United States has done for so long.  In China’s case, this will mean a world wide-open to imports of Chinese goods and to investments that allow Chinese firms to devour global resources, while placing ever less reliance on the U.S. dollar as the medium of international exchange.

The question that remains unanswered:  Will China begin flexing its growing military muscle?  Certainly, Beijing will do so in at least an indirect manner.  By supplying arms and military advisers to its growing network of allies abroad, it will establish a military presence in ever more areas.  My suspicion is that China will continue to avoid the use of force in any situation that might lead to a confrontation with major Western powers, but may not hesitate to bring its military to bear in any clash of national wills involving neighboring countries.  Such a situation could arise, for example, in a maritime dispute over control of the energy-rich South China Sea or in Central Asia, if one of the former Soviet republics became a haven for Uighur militants seeking to undermine Chinese control over Xinjiang Province.

The Eagle Comes in for a Landing

Just as the rise of China is now taken for granted, so, too, is the decline of the United States.  Much has been written about America’s inevitable loss of primacy as this country suffers the consequences of economic mismanagement and imperial overstretch.  This perspective was present in Global Trends 2025, a strategic assessment of the coming decades prepared for the incoming Obama administration by the National Intelligence Council (NIC), an affiliate of the Central Intelligence Agency.  “Although the United States is likely to remain the single most powerful actor [in 2025],” the NIC predicted, “the United States’ relative strength — even in the military realm — will decline and U.S. leverage will become more constrained.”

Some unforeseen catastrophe aside, however, the U.S. is not likely to be poorer in 2020 or more backward technologically.  In fact, according to the most recent Department of Energy projections, America’s GDP in 2020 will be approximately $17.5 trillion (in 2005 dollars), nearly one-third greater than today.  Moreover, some of the initiatives already launched by President Obama to stimulate the development of advanced energy systems are likely to begin bearing fruit, possibly giving the United States an edge in certain green technologies.  And don’t forget, the U.S. will remain the globe’s preeminent military power, with China lagging well behind, and no other potential rival able to mobilize even Chinese-level resources to challenge U.S. military advantages.

What will change is America’s position relative to China and other nations — and so, of course, its ability to dominate the global economy and the world political agenda.  Again using DoE projections, we find that in 2005, America’s GDP of $12.4 trillion exceeded that of all the nations of Asia and South America combined, including Brazil, China, India, and Japan.  By 2020, the combined GDP of Asia and South America will be about 40% greater than that of the U.S., and growing at a much faster rate.   By then, the United States will be deeply indebted to more solvent foreign nations, especially China, for the funds needed to pay for continuing budget deficits occasioned by the wars in Iraq and Afghanistan, the Pentagon budget, the federal stimulus package, and the absorption of “toxic assets” from troubled banks and corporations.

Count on this, though:  in an increasingly competitive world economy in which U.S. firms enjoy ever diminishing advantages, the prospects for ordinary Americans will be distinctly dimmer.  Some sectors of the economy, and some parts of the country, will certainly continue to thrive, but others will surely suffer Detroit’s fate, becoming economically hollowed out and experiencing wholesale impoverishment.  For many — perhaps most — Americans, the world of 2020 may still provide a standard of living far superior to that enjoyed by a majority of the world; but the perks and advantages that most middle class folks once took for granted — college education, relatively accessible (and affordable) medical care, meals out, foreign travel — will prove significantly harder to come by.

Even America’s military advantage will be much eroded.  The colossal costs of the disastrous Iraq and Afghan wars will set limits on the nation’s ability to undertake significant military missions abroad.  Keep in mind that, in the first decade of the twenty-first century, a significant proportion of the basic combat equipment of the Army and Marine Corps has been damaged or destroyed in these wars, while the fighting units themselves have been badly battered by multiple tours of duty.  Repairing this damage would require at least a decade of relative quiescence, which is nowhere in sight.

The growing constraints on American power were recently acknowledged by President Obama in an unusual setting:  his West Point address announcing a troop surge in Afghanistan.  Far from constituting a triumphalist expression of American power and preeminence, like President Bush’s speeches on the Iraq War, his was an implicit admission of decline.  Alluding to the hubris of his predecessor, Obama noted, “We’ve failed to appreciate the connection between our national security and our economy.  In the wake of the economic crisis, too many of our neighbors and friends are out of work and struggle to pay the bills…. Meanwhile, competition in the global economy has grown more fierce.  So we simply can’t afford to ignore the price of these wars.”

Many have chosen to interpret Obama’s Afghan surge decision as a typical twentieth-century-style expression of America’s readiness to intervene anywhere on the planet at a moment’s notice.  I view it as a transitional move meant to prevent the utter collapse of an ill-conceived military venture at a time when the United States is increasingly being forced to rely on non-military means of persuasion and the cooperation, however tempered, of allies.  President Obama said as much:   “We’ll have to be nimble and precise in our use of military power…. And we can’t count on military might alone.”  Increasingly, this will be the mantra of strategic planning that will govern the American eagle in decline.

The Rising South

The second decade of the century will also witness the growing importance of the global South:  the formerly-colonized, still-developing areas of Africa, Asia, and Latin America.  Once playing a relatively marginal role in world affairs, they were considered open territory, there to be invaded, plundered, and dominated by the major powers of Europe, North America, and (for a time) Japan.  To some degree, the global South, a.k.a. the “Third World,” still plays a marginal role, but that is changing.

Once a member in good standing of the global South, China is now an economic superpower and India is well on its way to earning this status.  Second-tier states of the South, including Brazil, Indonesia, South Africa, and Turkey, are on the rise economically, and even the smallest and least well-off nations of the South have begun to attract international attention as providers of crucial raw materials or as sites of intractable problems including endemic terrorism and crime syndicates.

To some degree, this is a product of numbers — growing populations and growing wealth.  In 2000, the population of the global South stood at an estimated 4.9 billion people; by 2020, that number is expected to hit 6.4 billion.  Many of these new inhabitants of planet Earth will be poor and disenfranchised, but most will be workers (in either the formal or informal economy), many will participate in the political process in some way, and some will be entrepreneurs, labor leaders, teachers, criminals, or militants.  Whatever the case, they will make their presence felt.

The nations of the South will also play a growing economic role as sources of raw materials in an era of increasing scarcity and founts of entrepreneurial vitality.  By one estimate, the combined GDP of the global South (excluding China) will jump from $7.8 trillion in 2005 to $15.8 trillion in 2020, an increase of more than 100%.  In particular, many of the prime deposits of oil, natural gas, and the key minerals needed in the global North to keep the industrial system going are facing wholesale depletion after decades of hyper-intensive extraction, leaving only the deposits in the South to be exploited.

Take oil:  In 1990, 43% of world daily oil output was supplied by members of the Organization of Petroleum Exporting Countries (the major Persian Gulf producers plus Algeria, Angola, Ecuador, Libya, Nigeria, and Venezuela), other African and Latin American producers, and the Caspian Sea countries; by 2020, their share will rise to 58%.  A similar shift in the center of gravity of world mineral production will take place, with unexpected countries like Afghanistan, Kazakhstan, Mongolia, Niger (a major uranium supplier), and the Democratic Republic of Congo taking on potentially crucial roles.

Inevitably, the global South will also play a conspicuous role in a series of potentially devastating developments.  Combine persistent deep poverty, economic desperation, population growth, and intensifying climate degradation and you have a recipe for political unrest, insurgency, religious extremism, increased criminality, mass migrations, and the spread of disease.  The global North will seek to immunize itself from these disorders by building fences of every sort, but through sheer numbers alone, the inhabitants of the South will make their presence felt, one way or another.

The Planet Strikes Back

All of this might represent nothing more than the normal changing of the imperial guard on planet Earth, if that planet itself weren’t undergoing far more profound changes than any individual power or set of powers, no matter how strong.  The ever more intrusive realities of global warming, resource scarcity, and food insufficiency will, by the end of this century’s second decade, be undeniable and, if not by 2020, then in the decades to come, have the capacity to put normal military and economic power, no matter how impressive, in the shade.

“There is little doubt about the main trends,” Professor Ole Danbolt Mjøs, Chairman of the Norwegian Nobel Committee, said in awarding the Peace Prize to the Intergovernmental Panel on Climate Change (IPCC) and Al Gore in December 2007:  “More and more scientists have reached ever closer agreement concerning the increasingly dramatic consequences that will follow from global warming.”  Likewise, a growing body of energy experts has concluded that the global production of conventional oil will soon reach a peak (if it hasn’t already) and decline, producing a worldwide energy shortage.  Meanwhile, fears of future food emergencies, prompted in part by global warming and high energy prices, are becoming more widespread.

All of this was apparent when world leaders met in Copenhagen and failed to establish an effective international regime for reducing the emission of climate-altering greenhouse gases (GHGs).  Even though they did agree to keep talking and comply with a non-binding, aspirational scheme to cut back on GHGs, observers believe that such efforts are unlikely to lead to meaningful progress in controlling global warming in the near future.  What few doubt is that the pace of climate change will accelerate destructively in the second decade of this century, that conventional (liquid) petroleum and other key resources will become scarcer and more difficult to extract, and that food supplies will diminish in many poor, environmentally vulnerable areas.

Scientists do not agree on the precise nature, timing, and geographical impact of climate-change effects, but they do generally agree that, as we move deeper into the century, we will be seeing an exponential increase in the density of the heat-trapping greenhouse-gas layer in the atmosphere as the consumption of fossil fuels grows and past smokestack emissions migrate to the outer atmosphere.  DoE data indicates, for example, that between 1990 and 2005, world carbon dioxide emissions grew by 32%, from 21.5 to 31.0 billion metric tons.  It can take as much as 50 years for GHGs to reach the greenhouse layer, which means that their effect will increase even if — as appears unlikely — the nations of the world soon begin to reduce their future emissions.

In other words, the early manifestations of global warming in the first decade of this century — intensifying hurricanes and typhoons, torrential rains followed by severe flooding in some areas and prolonged, even record-breaking droughts in others, melting ice-caps and glaciers, and rising sea levels — will all become more pronounced in the second.  As suggested by the IPCC in its 2007 report, uninhabitable dust bowls are likely to emerge in large areas of Central and Northeast Asia, Mexico and the American Southwest, and the Mediterranean basin.  Significant parts of Africa are likely to be devastated by rising temperatures and diminished rainfall.  More cities are likely to undergo the sort of flooding and destruction experienced by New Orleans after Hurricane Katrina in 2005.   And blistering summers, as well as infrequent or negligible rainfall, will limit crop production in key food-producing regions.

Progress will be evident in the development of renewable energy systems, such as wind, solar, and biofuels.  Despite the vast sums now being devoted to their development, however, they will still provide only a relatively small share of world energy in 2020.  According to DoE projections, renewables will take care of only 10.5% of world energy needs in 2020, while oil and other petroleum liquids will still make up 32.6% of global supplies; coal, 27.1%; and natural gas, 23.8%.  In other words, greenhouse gas production will rage on — and, ironically, should it not, thanks to expected shortfalls in the supply of oil, that in itself will likely prove another kind of disaster, pushing up the prices of all energy sources and endangering economic stability.  Most industry experts, including those at the International Energy Agency (IEA) in Paris, believe that it will be nearly impossible to continue increasing the output of conventional and unconventional petroleum (including tough to harvest Arctic oil, Canadian tar sands, and shale oil) without increasingly implausible fresh investments of trillions of dollars, much of which would have to go into war-torn, unstable areas like Iraq or corrupt, unreliable states like Russia.

In the latest hit movie Avatar, the lush, mineral-rich moon Pandora is under assault by human intruders seeking to extract a fabulously valuable mineral called “unobtainium.”  Opposing them are not only a humanoid race called the Na’vi, loosely modeled on Native Americans and Amazonian jungle dwellers, but also the semi-sentient flora and fauna of Pandora itself.   While our own planet may not possess such extraordinary capabilities, it is clear that the environmental damage caused by humans since the onset of the Industrial Revolution is producing a natural blowback effect which will become increasingly visible in the coming decade.

These, then, are the four trends most likely to dominate the second decade of this century.  Perhaps others will eventually prove more significant, or some set of catastrophic events will further alter the global landscape, but for now expect the dragon ascendant, the eagle descending, the South rising, and the planet possibly trumping all of these.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and author of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Owl Books). A documentary film version of his previous book, Blood and Oil, is available from the Media Education Foundation at Bloodandoilmovie.com.

Copyright 2010 Michael T. Klare

Memo to the CIA: You may not be prepared for time-travel, but welcome to 2025 anyway! Your rooms may be a little small, your ability to demand better accommodations may have gone out the window, and the amenities may not be to your taste, but get used to it. It’s going to be your reality from now on.

Okay, now for the serious version of the above: In November 2008, the National Intelligence Council (NIC), an affiliate of the Central Intelligence Agency, issued the latest in a series of futuristic publications intended to guide the incoming Obama administration. Peering into its analytic crystal ball in a report entitled Global Trends 2025, it predicted that America’s global preeminence would gradually disappear over the next 15 years — in conjunction with the rise of new global powerhouses, especially China and India. The report examined many facets of the future strategic environment, but its most startling, and news-making, finding concerned the projected long-term erosion of American dominance and the emergence of new global competitors. “Although the United States is likely to remain the single most powerful actor [in 2025],” it stated definitively, the country’s “relative strength — even in the military realm — will decline and U.S. leverage will become more constrained.”

That, of course, was then; this — some 11 months into the future — is now and how things have changed. Futuristic predictions will just have to catch up to the fast-shifting realities of the present moment. Although published after the onset of the global economic meltdown was underway, the report was written before the crisis reached its full proportions and so emphasized that the decline of American power would be gradual, extending over the assessment’s 15-year time horizon. But the economic crisis and attendant events have radically upset that timetable. As a result of the mammoth economic losses suffered by the United States over the past year and China’s stunning economic recovery, the global power shift the report predicted has accelerated. For all practical purposes, 2025 is here already.

Many of the broad, down-the-road predictions made in Global Trends 2025 have, in fact, already come to pass. Brazil, Russia, India, and China — collectively known as the BRIC countries — are already playing far more assertive roles in global economic affairs, as the report predicted would happen in perhaps a decade or so. At the same time, the dominant global role once monopolized by the United States with a helping hand from the major Western industrial powers — collectively known as the Group of 7 (G-7) — has already faded away at a remarkable pace. Countries that once looked to the United States for guidance on major international issues are ignoring Washington’s counsel and instead creating their own autonomous policy networks. The United States is becoming less inclined to deploy its military forces abroad as rival powers increase their own capabilities and non-state actors rely on “asymmetrical” means of attack to overcome the U.S. advantage in conventional firepower.

No one seems to be saying this out loud — yet — but let’s put it bluntly: less than a year into the 15-year span of Global Trends 2025, the days of America’s unquestioned global dominance have come to an end. It may take a decade or two (or three) before historians will be able to look back and say with assurance, “That was the moment when the United States ceased to be the planet’s preeminent power and was forced to behave like another major player in a world of many competing great powers.” The indications of this great transition, however, are there for those who care to look.

Six Way Stations on the Road to Ordinary Nationhood

Here is my list of six recent developments that indicate we are entering “2025” today. All six were in the news in the last few weeks, even if never collected in a single place. They (and other events like them) represent a pattern: the shape, in fact, of a new age in formation.

1. At the global economic summit in Pittsburgh on September 24th and 25th, the leaders of the major industrial powers, the G-7 (G-8 if you include Russia) agreed to turn over responsibility for oversight of the world economy to a larger, more inclusive Group of 20 (G-20), adding in China, India, Brazil, Turkey, and other developing nations. Although doubts have been raised about the ability of this larger group to exercise effective global leadership, there is no doubt that the move itself signaled a shift in the locus of world economic power from the West to the global East and South — and with this shift, a seismic decline in America’s economic preeminence has been registered.

“The G-20’s true significance is not in the passing of a baton from the G-7/G-8 but from the G-1, the U.S.,” Jeffrey Sachs of Columbia University wrote in the Financial Times. “Even during the 33 years of the G-7 economic forum, the U.S. called the important economic shots.” Declining American leadership over these last decades was obscured by the collapse of the Soviet Union and an early American lead in information technology, Sachs also noted, but there is now no mistaking the shifting of economic power from the United States to China and other rising economic dynamos.

2. According to news reports, America’s economic rivals are conducting secret (and not-so-secret) meetings to explore a diminished role for the U.S. dollar — fast losing its value — in international trade. Until now, the use of the dollar as the international medium of exchange has given the United States a significant economic advantage: it can simply print dollars to meet its international obligations while other nations must convert their own currencies into dollars, often incurring significant added costs. Now, however, many major trading countries — among them China, Russia, Japan, Brazil, and the Persian Gulf oil countries — are considering the use of the Euro, or a “basket” of currencies, as a new medium of exchange. If adopted, such a plan would accelerate the dollar’s precipitous fall in value and further erode American clout in international economic affairs.

One such discussion reportedly took place this summer at a summit meeting of the BRIC countries. Just a concept a year ago, when the very idea of BRIC was concocted by the chief economist at Goldman Sachs, the BRIC consortium became a flesh-and-blood reality this June when the leaders of the four countries held an inaugural meeting in Yekaterinburg, Russia.

The very fact that Brazil, Russia, India, and China chose to meet as a group was considered significant, as they jointly possess about 43% of the world’s population and are expected to account for 33% of the world’s gross domestic product by 2030 — about as much as the United States and Western Europe will claim at that time. Although the BRIC leaders decided not to form a permanent body like the G-7 at this stage, they did agree to coordinate efforts to develop alternatives to the dollar and to reform the International Monetary Fund in such a way as to give non-Western countries a greater voice.

3. On the diplomatic front, Washington has been rebuffed by both Russia and China in its drive to line up support for increased international pressure on Iran to cease its nuclear enrichment program. One month after President Obama cancelled plans to deploy an anti-ballistic missile system in Eastern Europe in an apparent bid to secure Russian backing for a tougher stance toward Tehran, top Russian leaders are clearly indicating that they have no intention of endorsing strong new sanctions on Iran. “Threats, sanctions, and threats of pressure in the current situation, we are convinced, would be counterproductive,” declared the Russian foreign minister, Sergey V. Lavrov, following a meeting with Secretary of State Hillary Clinton in Moscow on October 13th. The following day, Russian Prime Minister Vladimir Putin said that the threat of sanctions was “premature.” Given the political risks Obama took in canceling the missile program — a step widely condemned by Republicans in Washington — Moscow’s quick dismissal of U.S. pleas for cooperation on the Iranian enrichment matter can only be interpreted as a further sign of waning American influence.

4. Exactly the same inference can be drawn from a high-level meeting in Beijing on October 15th between Chinese Prime Minister Wen Jiabao and Iran’s first vice president, Mohammed Reza Rahimi. “The Sino-Iran relationship has witnessed rapid development as the two countries’ leaders have had frequent exchanges, and cooperation in trade and energy has widened and deepened,” Wen said at the Great Hall of the People. Coming at a time when the United States is engaged in a vigorous diplomatic drive to persuade China and Russia, among others, to reduce their trade ties with Iran as a prelude to toughened sanctions, the Chinese statement can only be considered a pointed rebuff of Washington.

5. From Washington’s point of view, efforts to secure international support for the allied war effort in Afghanistan have also met with a strikingly disappointing response. In what can only be considered a trivial and begrudging vote of support for the U.S.-led war effort, British Prime Minister Gordon Brown announced on October 14th that Britain would add more troops to the British contingent in that country — but only 500 more, and only if other European nations increase their own military involvement, something he undoubtedly knows is highly unlikely. So far, this tiny, provisional contingent represents the sum total of additional troops the Obama administration has been able to pry out of America’s European allies, despite a sustained diplomatic drive to bolster the combined NATO force in Afghanistan. In other words, even America’s most loyal and obsequious ally in Europe no longer appears willing to carry the burden for what is widely seen as yet another costly and debilitating American military adventure in the Greater Middle East.

6. Finally, in a move of striking symbolic significance, the International Olympic Committee (IOC) passed over Chicago (as well as Madrid and Tokyo) to pick Rio de Janeiro to be the host of the 2016 summer Olympics, the first time a South American nation was selected for the honor. Until the Olympic vote took place, Chicago was considered a strong contender, especially since former Chicago resident Barack Obama personally appeared in Copenhagen to lobby the IOC. Nonetheless, in a development that shocked the world, Chicago not only lost out, but was the city eliminated in the very first round of voting.

“Brazil went from a second-class country to a first-class country, and today we began to receive the respect we deserve,” said Brazilian President Luiz Inácio Lula da Silva at a victory celebration in Copenhagen after the vote. “I could die now and it already would have been worth it.” Few said so, but in the course of the Olympic decision-making process the U.S. was summarily and pointedly demoted from sole superpower to instant also-ran, a symbolic moment on a planet entering a new age.

On Being an Ordinary Country

These are only a few examples of recent developments which indicate, to this author, that the day of America’s global preeminence has already come to an end, years before the American intelligence community expected. It’s increasingly clear that other powers — even our closest allies — are increasingly pursuing independent foreign policies, no matter what pressure Washington tries to bring to bear.

Of course, none of this means that, for some time to come, the U.S. won’t retain the world’s largest economy and, in terms of sheer destructiveness, its most potent military force. Nevertheless, there is no doubt that the strategic environment in which American leaders must make critical decisions, when it comes to the nation’s vital national interests, has changed dramatically since the onset of the global economic crisis.

Even more important, President Obama and his senior advisers are, it seems, reluctantly beginning to reshape U.S. foreign policy with the new global reality in mind. This appears evident, for example, in the administration’s decision to revisit U.S. strategy on Afghanistan.

It was only in March, after all, that the president embraced a new counterinsurgency-oriented strategy in that country, involving a buildup of U.S. boots on the ground and a commitment to protracted efforts to win hearts and minds in Afghan villages where the Taliban was resurgent. It was on this basis that he fired the incumbent Afghan War commander, General David D. McKiernan, replacing him with General Stanley A. McChrystal, considered a more vigorous proponent of counterinsurgency. When, however, McChrystal presented Obama with the price tag for the implementation of this strategy — 40,000 to 80,000 additional troops (over and above the 20,000-odd extra troops only recently committed to the fight) — many in the president’s inner circle evidently blanched.

Not only will such a large deployment cost the U.S. treasury hundreds of billions of dollars it can ill afford, but the strains it is likely to place on the Army and Marine Corps are likely to be little short of unbearable after years of multiple tours and stress in Iraq. This price would be more tolerable, of course, if America’s allies would take up more of the burden, but they are ever less willing to do so.

Undoubtedly, the leaders of Russia and China are not entirely unhappy to see the United States exhaust its financial and military resources in Afghanistan. Under these circumstances, it is hardly surprising that Vice President Joe Biden, among others, is calling for a new turn in U.S. policy, foregoing a counterinsurgency approach and opting instead for a less costly “counter-terrorism” strategy aimed, in part, at crushing Al Qaeda in Pakistan — using drone aircraft and Special Forces, rather than large numbers of U.S. troops (while leaving troop levels in Afghanistan relatively unchanged).

It is too early to predict how the president’s review of U.S. strategy in Afghanistan will play out, but the fact that he did not immediately embrace the McChrystal plan and has allowed Biden such free rein to argue his case suggests that he may be coming to recognize the folly of expanding America’s military commitments abroad at a time when its global preeminence is waning.

One senses Obama’s caution in other recent moves. Although he continues to insist that the acquisition of nuclear weapons by Iran is impermissible and that the use of force to prevent this remains an option, he has clearly moved to minimize the likelihood that this option — which would also be plagued by recalcitrant “allies” — will ever be employed.

On the other side of the coin, he has given fresh life to American diplomacy, seeking improved ties with Moscow and approving renewed diplomatic contact with such previously pariah states as Burma, Sudan, and Syria. This, too, reflects a reality of our changing world: that the holier-than-thou, bullying stance adopted by the Bush administration toward these and other countries for almost eight years rarely achieved anything. Think of it as an implicit acknowledgement that the U.S. is now descending from its status as the globe’s “sole superpower” to that of an ordinary country. This, after all, is what ordinary countries do; they engage other countries in diplomatic discourse, whether they like their current governments or not.

So, welcome to the world of 2025. It doesn’t look like the world of our recent past, when the United States stood head and shoulders above all other nations in stature, and it doesn’t comport well with Washington’s fantasies of global power since the Soviet Union collapsed in 1991. But it is reality.

For many Americans, the loss of that preeminence may be a source of discomfort, or even despair. On the other hand, don’t forget the advantages to being an ordinary country like any other country: Nobody expects Canada, or France, or Italy to send another 40,000 troops to Afghanistan, on top of the 68,000 already there and the 120,000 still in Iraq. Nor does anyone expect those countries to spend $925 billion in taxpayer money to do so — the current estimated cost of both wars, according to the National Priorities Project.

The question remains: How much longer will Washington feel that Americans can afford to subsidize a global role that includes garrisoning much of the planet and fighting distant wars in the name of global security, when the American economy is losing so much ground to its competitors? This is the dilemma President Obama and his advisers must confront in the altered world of 2025.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and author of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Owl Books). A documentary film version of his previous book, Blood and Oil, is available from the Media Education Foundation at Bloodandoilmovie.com.

Copyright 2009 Michael T. Klare

The debate rages over whether we have already reached the point of peak world oil output or will not do so until at least the next decade. There can, however, be little doubt of one thing: we are moving from an era in which oil was the world’s principal energy source to one in which petroleum alternatives — especially renewable supplies derived from the sun, wind, and waves — will provide an ever larger share of our total supply. But buckle your seatbelts, it’s going to be a bumpy ride under Xtreme conditions.

It would, of course, be ideal if the shift from dwindling oil to its climate-friendly successors were to happen smoothly via a mammoth, well-coordinated, interlaced system of wind, solar, tidal, geothermal, and other renewable energy installations. Unfortunately, this is unlikely to occur. Instead, we will surely first pass through an era characterized by excessive reliance on oil’s final, least attractive reserves along with coal, heavily polluting “unconventional” hydrocarbons like Canadian oil sands, and other unappealing fuel choices.

There can be no question that Barack Obama and many members of Congress would like to accelerate a shift from oil dependency to non-polluting alternatives. As the president said in January, “We will commit ourselves to steady, focused, pragmatic pursuit of an America that is free from our [oil] dependence and empowered by a new energy economy that puts millions of our citizens to work.” Indeed, the $787 billion economic stimulus package he signed in February provided $11 billion to modernize the nation’s electrical grid, $14 billion in tax incentives to businesses to invest in renewable energy, $6 billion to states for energy efficiency initiatives, and billions more directed to research on renewable sources of energy. More of the same can be expected if a sweeping climate bill is passed by Congress. The version of the bill recently passed by the House of Representatives, for example, mandates that 20% of U.S. electrical production be supplied by renewable energy by 2020.

But here’s the bad news: even if all these initiatives were to pass, and more like them many times over, it would still take decades for this country to substantially reduce its dependence on oil and other non-renewable, polluting fuels. So great is our demand for energy, and so well-entrenched the existing systems for delivering the fuels we consume, that (barring a staggering surprise) we will remain for years to come in a no-man’s-land between the Petroleum Age and an age that will see the great flowering of renewable energy. Think of this interim period as — to give it a label — the Era of Xtreme Energy, and in just about every sense imaginable from pricing to climate change, it is bound to be an ugly time.

An Oil Field as Deep as Mt. Everest Is High

Don’t be fooled by the fact that this grim new era will surely witness the arrival of many more wind turbines, solar arrays, and hybrid vehicles. Most new buildings will perhaps come equipped with solar panels, and more light-rail systems will be built. Despite all this, however, our civilization is likely to remain remarkably dependent on oil-fueled cars, trucks, ships, and planes for most transportation purposes, as well as on coal for electricity generation. Much of the existing infrastructure for producing and distributing our energy supply will also remain intact, even as many existing sources of oil, coal, and natural gas become exhausted, forcing us to rely on previously untouched, far more undesirable (and often far less accessible) sources of these fuels.

Some indication of the likely fuel mix in this new era can be seen in the most recent projections of the Department of Energy (DoE) on future U.S. energy consumption. According to the department’s Annual Energy Outlook for 2009, the United States will consume an estimated 114 quadrillion British thermal units (BTUs) of energy in 2030, of which 37% will be supplied by oil and other petroleum liquids, 23% by coal, 22% by natural gas, 8% by nuclear power, 3% by hydropower, and only 7% by wind, solar, biomass, and other renewable sources.

Clearly, this does not yet suggest a dramatic shift away from oil and other fossil fuels. On the basis of current trends, the DoE also predicts that even two decades from now, in 2030, oil, natural gas, and coal will still make up 82% of America’s primary energy supply, only two percentage points less than in 2009. (It is of course conceivable that a dramatic shift in national and international priorities will lead to a greater increase in renewable energy in the next two decades, but at this point that remains a dim hope rather than a sure thing.)

While fossil fuels will remain dominant in 2030, the nature of these fuels, and the ways in which we acquire them, will undergo profound change. Today, most of our oil and natural gas come from “conventional” sources of supply: large underground reservoirs found mainly in relatively accessible sites on land or in shallow coastal areas. These are the reserves that can be easily exploited using familiar technology, most notably modern versions of the towering oil rigs made famous most recently in the 2007 film There Will Be Blood.

Ever more of these fields will, however, be depleted as global consumption soars, forcing the energy industry to increasingly rely on deep offshore oil and gas, Canadian oil sands, oil and gas from a climate-altered but still hard to reach and exploit Arctic, and gas extracted from shale rock using costly, environmentally threatening techniques. In 2030, says the DoE, such unconventional liquids will provide 13% of world oil supply (up from a mere 4% in 2007). A similar pattern holds for natural gas, especially in the United States where the share of energy supplied by unconventional but nonrenewable sources is expected to rise from 47% to 56% in the same two decades.

Just how important these supplies have become is evident to anyone who follows the oil industry’s trade journals or simply regularly checks out the business pages of the Wall Street Journal. Absent from them have been announcements of major discoveries of giant new oil and gas reserves in any parts of the world accessible to familiar drilling techniques and connected to key markets by existing pipelines or trade routes (or located outside active war zones such as Iraq and the Niger Delta region of Nigeria). The announcements are there, but virtually all of them have been of reserves in the Arctic, Siberia, or the very deep waters of the Atlantic and the Gulf of Mexico.

Recently the press has been abuzz with major discoveries in the Gulf of Mexico and far off Brazil’s coast that might give the impression of adding time to the Age of Petroleum. On September 2nd, for example, BP (formerly British Petroleum) announced that it had found a giant oil field in the Gulf of Mexico about 250 miles southeast of Houston. Dubbed Tiber, it is expected to produce hundreds of thousands of barrels per day when production begins some years from now, giving a boost to BP’s status as a major offshore producer. “This is big,” commented Chris Ruppel, a senior energy analyst at Execution LLC, a London investment bank. “It says we’re seeing that improved technology is unlocking resources that were before either undiscovered or too costly to exploit because of economics.”

As it happens, though, anyone who jumped to the conclusion that this field could quickly or easily add to the nation’s oil supply would be woefully mistaken. As a start, it’s located at a depth of 35,000 feet — greater than the height of Mount Everest, as a reporter from the New York Times noted — and well below the Gulf’s floor. To get to the oil, BP’s engineers will have to drill through miles of rock, salt, and compressed sand using costly and sophisticated equipment. To make matters worse, Tiber is located smack in the middle of the area in the Gulf regularly hit by massive storms in hurricane season, so any drills operating there must be designed to withstand hurricane-strength waves and winds, as well as sit idle for weeks at a time when operating personnel are forced to evacuate.

A similar picture prevails in the case of Brazil’s Tupi field, the other giant discovery of recent years. Located about 200 miles east of Rio de Janeiro in the deep waters of the Atlantic Ocean, Tupi has regularly been described as the biggest field to be found in 40 years. Thought to contain some five to eight billion barrels of recoverable oil, it will surely push Brazil into the front ranks of major oil producers once the Brazilians have overcome their own series of staggering hurdles: the Tupi field is located below one-and-a-half miles of ocean water and another two-and-a-half miles of rock, sand, and salt and so accessible only to cutting edge, super-sophisticated drilling technologies. It will cost an estimated $70-$120 billion to develop the field and require many years of dedicated effort.

Xtreme Acts of Energy Recovery

Given the potentially soaring costs involved in recovering these last tough-oil reserves, it’s no wonder that Canadian oil sands, also called tar sands, are the other big “play” in the oil business these days. Not oil as conventionally understood, the oil sands are a mixture of rock, sand, and bitumen (a very heavy, dense form of petroleum) that must be extracted from the ground using mining, rather than oil-drilling, techniques. They must also be extensively processed before being converted into a usable liquid fuel. Only because the big energy firms have themselves become convinced that we are running out of conventional oil of an easily accessible sort have they been tripping over each other in the race to buy up leases to mine bitumen in the Athabasca region of northern Alberta.

The mining of oil sands and their conversion into useful liquids is a costly and difficult process, and so the urge to do so tells us a great deal about our particular state of energy dependency. Deposits near the surface can be strip-mined, but those deeper underground can only be exploited by pumping in steam to separate the bitumen from the sand and then pumping the bitumen to the surface — a process that consumes vast amounts of water and energy in the form of natural gas (to heat that water into steam). Much of the water used to produce steam is collected at the site and used over again, but some is returned to the local water supply in northern Alberta, causing environmentalists to worry about the risk of large-scale contamination.

The clearing of enormous tracts of virgin forest to allow strip-mining and the consumption of valuable natural gas to extract the bitumen are other sources of concern. Nevertheless, such is the need of our civilization for petroleum products that Canadian oil sands are expected to generate 4.2 million barrels of fuel per day in 2030 — three times the amount being produced today — even as they devastate huge parts of Alberta, consume staggering amounts of natural gas, cause potentially extensive pollution, and sabotage Canada’s efforts to curb its greenhouse-gas emissions.

North of Alberta lies another source of Xtreme energy: Arctic oil and gas. Once largely neglected because of the difficulty of simply surviving, no less producing energy, in the region, the Arctic is now the site of a major “oil rush” as global warming makes it easier for energy firms to operate in northern latitudes. Norway’s state-owned energy company, StatoilHydro, is now running the world’s first natural gas facility above the Arctic Circle, and companies from around the world are making plans to develop oil and gas fields in the Artic territories of Canada, Greenland (administered by Denmark), Russia, and the United States, where offshore drilling in northern Alaskan waters may soon be the order of the day.

It will not, however, be easy to obtain oil and natural gas from the Arctic. Even if global warming raises average temperatures and reduces the extent of the polar ice cap, winter conditions will still make oil production extremely difficult and hazardous. Fierce storms and plunging temperatures will remain common, posing great risk to any humans not hunkered down in secure facilities and making the transport of energy a major undertaking.

Given fears of dwindling oil supplies, none of this has been enough to deter energy-craving companies from plunging into the icy waters. “Despite grueling conditions, interest in oil and gas reserves in the far north is heating up,” Brian Baskin reported in the Wall Street Journal. “Virtually every major producer is looking to the Arctic sea floor as the next — some say last — great resource play.”

What is true of oil generally is also true of natural gas and coal: most easy-to-reach conventional deposits are quickly being depleted. What remains are largely the “unconventional” supplies.

U.S. producers of natural gas, for example, are reporting a significant increase in domestic output, producing a dramatic reduction in prices. According to the DoE, U.S. gas production is projected to increase from about 20 trillion cubic feet in 2009 to 24 trillion in 2030, a real boon for U.S. consumers, who rely to a significant degree on natural gas for home heating and electricity generation. As noted by the Energy Department however, “Unconventional natural gas is the largest contributor to the growth in U.S. natural gas production, as rising prices and improvements in drilling technology provide the economic incentives necessary for exploitation of more costly resources.”

Most of the unconventional gas in the United States is currently obtained from tight-sand formations (or sandstone), but a growing percentage is acquired from shale rock through a process known as hydraulic fracturing. In this method, water is forced into the underground shale formations to crack the rock open and release the gas. Huge amounts of water are employed in the process, and environmentalists fear that some of this water, laced with pollutants, will find its ways into the nation’s drinking supply. In many areas, moreover, water itself is a scarce resource, and the diversion of crucial supplies to gas extraction may diminish the amounts available for farming, habitat preservation, and human consumption. Nonetheless, production of shale gas is projected to jump from two trillion cubic feet per year in 2009 to four trillion in 2030.

Coal presents a somewhat similar picture. Although many environmentalists object to the burning of coal because it releases far more climate-altering greenhouse gases than other fossil fuels for each BTU produced, the nation’s electric-power industry continues to rely on coal because it remains relatively cheap and plentiful. Yet many of the country’s most productive sources of anthracite and bituminous coal — the types with the greatest energy potential — have been depleted, leaving (as with oil) less productive sources of these types, along with large deposits of less desirable, more heavily polluting sub-bituminous coal, much of it located in Wyoming.

To get at what remains of the more valuable bituminous coal in Appalachia, mining companies increasingly rely on a technique known as mountaintop removal, described by John M. Broder of the New York Times as “blasting off the tops of mountains and dumping the rubble into valleys and streams.” Long opposed by environmentalists and residents of rural Kentucky and West Virginia, whose water supplies are endangered by the dumping of excess rock, dirt, and a variety of contaminants, mountaintop removal received a strong endorsement from the Bush administration, which in December 2008 approved a regulation allowing for a vast expansion of the practice. President Obama has vowed to reverse this regulation, but he favors the use of “clean coal” as part of a transitional energy strategy. It remains to be seen how far he will go in reining in the coal industry.

Xtreme Conflict

So let’s be blunt: we are not (yet) entering the much-heralded Age of Renewables. That bright day will undoubtedly arrive eventually, but not until we have moved much closer to the middle of this century and potentially staggering amounts of damage has been done to this planet in a fevered search for older forms of energy.

In the meantime, the Era of Xtreme Energy will be characterized by an ever deepening reliance on the least accessible, least desirable sources of oil, coal, and natural gas. This period will surely involve an intense struggle over the environmental consequences of reliance on such unappealing sources of energy. In this way, Big Oil and Big Coal — the major energy firms — may grow even larger, while the relatively moderate fuel and energy prices of the present moment will be on the rise, especially given the high cost of extracting oil, gas, and coal from less accessible and more challenging locations.

One other thing is, unfortunately, guaranteed: the Era of Xtreme Energy will also involve intense geopolitical struggle as major energy consumers and producers like the United States, China, the European Union, Russia, India, and Japan vie with one another for control of the remaining supplies. Russia and Norway, for example, are already sparring over their maritime boundary in the Barents Sea, a promising source of natural gas in the far north, while China and Japan have tussled over a similar boundary dispute in the East China Sea, the site of another large gas field. All of the Arctic nations — Canada, Denmark, Norway, Russia, and the United States — have laid claim to large, sometimes overlapping, slices of the Arctic Ocean, generating fresh boundary disputes in these energy-rich areas.

None of these disputes has yet resulted in violent conflict, but warships and planes have been deployed on some occasions and the potential exists for future escalation as tensions rise and the perceived value of these assets grows. And while we’re at it, don’t forget today’s energy hotspots like Nigeria, the Middle East, and the Caspian Basin. In the Xtreme era to come, they are no less likely to generate conflicts of every sort over the ever more precious supplies of more easily accessible energy.

For most of us, life in the Era of Xtreme Energy will not be easy. Energy prices will rise, environmental perils will multiply, ever more carbon dioxide will pour into the atmosphere, and the risk of conflict will grow. We possess just two options for shortening this difficult era and mitigating its impact. They are both perfectly obvious — which, unfortunately, makes them no easier to bring about: drastically speed up the development of renewable sources of energy and greatly reduce our reliance on fossil fuels by reorganizing our lives and our civilization so that we might consume less of them in everything we do.

That may sound easy enough, but tell that to governments around the world. Tell that to Big Energy. Hope for it, work for it, but in the meantime, keep your seatbelts buckled. This roller-coaster ride is about to begin.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author, most recently of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Owl Books). A documentary film based on his previous book, Blood and Oil, is available from the Media Education Foundation.

Copyright 2009 Michael T. Klare

Has it all come to this? The wars and invasions, the death and destruction, the exile and torture, the resistance and collapse? In a world of shrinking energy reserves, is Iraq finally fated to become what it was going to be anyway, even before the chaos and catastrophe set in: a giant gas pump for an energy-starved planet? Will it all end not with a bang, but with a gusher? The latest oil news out of that country offers at least a hint of Iraq’s fate.

For modern Iraq, oil has always been at the heart of everything. Its very existence as a unified state is largely the product of oil.

In 1920, under the aegis of the League of Nations, Britain cobbled together the Kingdom of Iraq from the Ottoman provinces of Basra, Baghdad, and Mosul in order to better exploit the holdings of the Turkish Petroleum Company, forerunner of the Iraq Petroleum Company (IPC). Later, Iraqi nationalists and the Baath Party of Saddam Hussein nationalized the IPC, provoking unrelenting British and American hostility. Hussein rewarded his Sunni allies in the Baath Party by giving them lucrative positions in the state company, part of a process that produced a dangerous rift with the country’s Shiite majority. And these are but a few of the ways in which modern Iraqi history has been governed by oil.

Iraq is, of course, one of the world’s great hydrocarbon preserves. According to oil giant BP, it harbors proven oil reserves of 115 billion barrels — more than any country except Saudi Arabia (with 264 billion barrels) and Iran (with 138 billion). Many analysts, however, believe that Iraq has been inadequately explored, and that the utilization of modern search technologies will yield additional reserves in the range of 45 to 100 billion barrels. If all its reserves, known and suspected, were developed to their full potential, Iraq could add as much as six to eight million barrels per day to international output, postponing the inevitable arrival of peak oil and a contraction in global energy supplies.

Nailing Down the Energy Heartland of the Planet

Iraq’s great hydrocarbon promise has been continually thwarted by war, foreign intervention, sanctions, internal disorder, corruption, and plain old ineptitude. Saddam Hussein did succeed for a time in elevating oil output, in the process raising national income and creating a well-educated middle class. However, his ill-conceived invasions of Iran in 1980 and Kuwait in 1990 led to devastating attacks on Iraqi oil facilities, as well as trade embargoes and crippling debt, erasing much of his country’s previous economic gains. The trade sanctions imposed by Presidents George H.W. Bush and Bill Clinton in the wake of the First Gulf War only further eroded the country’s oil-production capacity.

When President George W. Bush launched the invasion of Iraq in March 2003, his overarching goals all revolved around the geopolitics of oil. He and his top officials were intent on replacing Saddam Hussein’s regime with one that would prove friendly to American oil interests. They also imagined that, greeted as liberators by a grateful population, they would preside over a radical upgrading of Iraq’s petroleum capacity, thereby ensuring adequate supplies for American consumers at an affordable price. Finally, by building and manning a constellation of major military bases in a grateful Iraq, they saw themselves ensuring continued American dominance over the oil-soaked Persian Gulf region, and so the energy heartland of the planet.

All of this, of course, proved to be a mirage. The U.S. invasion and ensuing occupation policies provoked a bitter Sunni insurgency that quickly overshadowed all other American concerns, including oil. As a result, no matter how much money they poured into the task, the Bush administration and its Baghdad agents found themselves incapable of boosting petroleum output even to the levels of the worst days of Saddam Hussein’s regime — and so their plans to use oil revenues to pay for the war, the occupation, and the reconstruction of the country all vanished into thin air.

The data provided by BP on yearly production tallies cannot be starker when it comes to the impact on oil output of the insurgency, rampant corruption, the loss of the nation’s oil professionals (many of whom fled into exile amid sectarian warfare), and other related factors. Prior to the American invasion, Iraq was pumping 2.6 million barrels of oil per day, already significantly below its pre-invasion peak of 3.5 million barrels per day. In the first year of the ill-starred U.S. occupation, production quickly plunged to a paltry 1.3 million barrels per day. Only in 2007 did it finally top the two million mark and, with improved security, 2.4 million in 2008. Assuming conditions continue to improve, Iraqi output could, for the first time, exceed pre-invasion levels, though barely, in 2009 or 2010 — six years or more after Baghdad fell to American forces.

A Sea Change in Iraqi Oil Production?

Until recently, most analysts assumed that Iraq would continue, at best, to make modest progress in its efforts to increase daily output. There were too many obstacles, it was argued, to achieve dramatic breakthroughs. These included continued insurgent attacks on pipelines and production facilities; corruption in the Oil Ministry and major energy production enterprises; the failure of parliament to adopt a national hydrocarbons law; differences between the Kurdish Regional Government (KRG) and the central government over who has the right to award what sort of oil contracts in Kurdish-controlled territories; and the reluctance of major foreign oil firms to venture into, or invest in a major way in such a dangerous and unstable place.

Recently, however, the Oil Ministry has made noticeable progress in overcoming at least some of these obstacles. Under the leadership of Oil Minister Hussain al-Shahristani, a former nuclear scientist who was jailed and tortured by Saddam Hussein for refusing to assist in the development of nuclear weapons, corruption has been substantially reduced and various production bottlenecks eliminated. Shahristani has also won support from Prime Minister Nuri Kamal al-Maliki for the participation of foreign firms in the development of Iraqi oil fields, even though this has alienated many in Iraq who oppose any such involvement. Once derided for ineptitude, the Oil Ministry is beginning to be viewed as a functioning, professional operation.

As a result, there are clear indications that Iraq’s oil industry could be poised for a major turnaround. Among the most significant recent developments:

* Late last year, Iraq’s state-owned North Oil Company signed a $3.5 billion, 20-year service contract with the Chinese National Petroleum Corporation (CNPC) to develop the Adhab oil field in Wasit province, southeast of Baghdad. Originally negotiated under the Saddam Hussein regime, the deal was put on hold after the 2003 invasion and only given final approval in November 2008. This is the first major contract the government in Baghdad has signed with a foreign oil firm since the Iraq Petroleum Company was nationalized in the 1970s. It also represents the first significant investment by a company from China in Iraq. Under the agreement, CNPC and its partners will develop the Adhab field and deliver all resulting crude oil to state refineries; as the field’s main operator, CNPC will be paid a fee by the Iraqi government for its engineering work and all delivered petroleum.

* In May, the Oil Ministry reached an accord with the Kurdistan Regional Government that, for the first time, will allow the Kurds to export oil from fields under their control. Previously, the Baghdad government had refused to recognize any contracts signed by the KRG with private oil firms to develop fields in their territory and had prevented the Kurds from exporting oil from these fields through pipelines controlled by the central government. Under the accord, the KRG will initially be allowed to export 100,000 barrels per day from the Tawke and Taq Taq fields, with higher rates expected in the future; 73% of the resulting revenues will go to the central government, 15% to the Kurds, and 12% to the foreign oil companies that signed production contracts directly with the KRG, bypassing the central government in Baghdad. This agreement paves the way for a significant increase in output from Kurdish-controlled areas, which are thought to hold substantial reserves of untapped petroleum.

* In June, the Oil Ministry conducted its first auction of rights to operate existing fields in the country’s major producing areas. This represented a major — even staggering — shift in policy, opening the door for the first time in three decades to the participation of major international oil companies in the operation — if not the ownership — of the country’s nationalized oil fields. Although opposed by many key groups in Iraq, ranging from the oil workers’ union to significant factions in parliament, the move was taken to secure outside expertise in modernizing and upgrading the country’s crumbling oil infrastructure, thereby boosting output in a country that still relies on oil for more than 75% of its gross domestic product and about 95% of its revenues. In fact, many foreign companies chose not to bid in the auction’s opening round, finding the returns being offered insufficiently attractive. Nevertheless, one Western firm, BP, won the right (in partnership with CNPC) to operate the giant Rumaila field, Iraq’s largest. The Oil Ministry has since indicated that it will conduct additional auctions, including one for the right to explore for oil, on terms as yet unrevealed, in the country’s undeveloped south and west — possibly laying the groundwork for significantly more intrusive participation by foreign firms.

Taken together, these steps — aimed at securing the necessary external financing and expertise to achieve a significant boost in production — represent a genuine sea change in the way the Oil Ministry has been overseeing the country’s hydrocarbons industry. If all goes as planned, it intends to increase output by 1.5 million barrels per day, and another four to five million barrels by 2017. These efforts, if successful (and given recent history, that remains a big “if”), would place Iraq among the world’s top four or five oil producers, along with Saudi Arabia, Russia, and the United States.

A New Petro-State Servicing the Global Economy?

No one should underestimate the potential obstacles in the way of this objective. Any number of factors — a rise in opposition to giving away any part of the national “patrimony” to foreigners, a significant increase in insurgent violence, heightened factional fighting in Baghdad, a sharpening of tension between Baghdad and the Kurds, an increase in corruption — could prevent the realization of these ambitious goals. Moreover, pending the passage of a national oil and gas law (a goal pursued by U.S. officials for years), the major foreign oil companies will remain reluctant to sink too much money into Iraq, fearful that their assets will not be protected.

Nevertheless, it appears that, for the first time since the outbreak of the Iran-Iraq War in 1980, the stars in the energy firmament are aligning in ways that may favor Iraq’s reemergence as a major oil producer. Whereas the major powers once competed among themselves for influence in Iraq or backed one or another of Iraq’s local rivals in efforts to weaken or contain that country, all now seem inclined to invest in, and benefit from, the reconstruction of its energy infrastructure. The Bush administration, which looked with alarm at Saddam Hussein’s growing ties to Russia and China, invaded the country in part to reassert American dominance in the Persian Gulf region and diminish the role played by Moscow and Beijing. Today, Washington appears to welcome the growing role of Chinese and Russian firms in the rehabilitation of Iraq’s dilapidated energy infrastructure.

It’s a reasonable assumption that behind this unprecedented shift lies an acknowledgement of the inescapable reality of peak oil. As things stand now, the world will soon reach a maximum level of sustainable daily oil output, followed by an inevitable contraction in available supplies. Many experts believe that the peak in conventional (liquid) oil output is likely to occur in the very near future, perhaps in the 2010-2015 timeframe, with global output topping out about 5 to 10 million barrels per day higher than today’s 85 million barrels.

Hitting the peak moment in that timeframe, and at that level, would prove devastating to the world economy, as global energy demand is expected to climb far higher, thanks to rising consumption patterns in China, India, and other dynamos of the developing world. It’s not hard, then, to do the math. An addition of perhaps six million supplemental barrels per day from Iraq would make a striking difference in the energy equation. In fact, it might prove the difference between squeaking by and a catastrophic worldwide shortage. Under such circumstances, it is understandable that — no matter what their governments felt about the Bush administration’s invasion and occupation of Iraq — the major powers now share a common interest in facilitating that country’s recovery as a major oil exporter.

For devastated Iraq, of course, these last years were a disaster and real reconstruction of the country still remains a long way off. For the United States, gone are expectations of converting Iraq into a model Middle Eastern democracy, or of inserting a Western-trained, pro-U.S. regime in Baghdad. Nor is there any expectation that the state-owned Iraq National Oil Company will be completely privatized — once the dream of Bush-era neocons. Nonetheless, the (re)emergence of a functioning Iraqi petro-state working closely with foreign energy firms to boost global oil supplies (with American troops, whether based in Iraq or neighboring countries, providing ultimate security) would be an outcome that could be sold to Congress and, presumably, a majority of the American public.

Within Iraq itself, conditions may favor such an outcome. Although various Iraqi factions have enormous differences, all recognize that their future prosperity rests on the successful development of the nation’s hydrocarbon reserves. While Shiites, Sunnis, and Kurds may each hope to benefit disproportionately from this great treasure, they all realize that some degree of cooperation — for example, in the construction and maintenance of export facilities — is essential to their ambitions, however disparate. While the bargaining over the terms of cooperation may seem endless, and violence may sometimes accompany these negotiations, it is likely that some sort of collaborative structure will, in the end, emerge. A gradual drawdown, if not total departure, of American forces will, in all likelihood, only accelerate this process.

So it has finally come to this dismal possible end point: after all the blood and tears, all the death and destruction, almost all interested parties seem to be returning to the only vision of the country, however depressing, that has demonstrated any viability. In the future, Iraq is likely to be an oil-fueled petro-state with no function other than to service global markets and enrich local elites as well as the technocrats that assist them. This may be not be an inspiring vision — especially for Iraqis who have suffered so much — but it might possibly be the only reality available that will circumvent the horrific bloodletting of the past 30 years.

Michael T. Klare is a professor of peace and world security studies at Hampshire College in Amherst, Massachusetts. He is the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Henry Holt). A documentary movie of his previous book, “Blood and Oil,” is available at bloodandoilmovie.com.

Copyright 2009 Michael T. Klare

Every summer, the Energy Information Administration (EIA) of the U.S. Department of Energy issues its International Energy Outlook (IEO) — a jam-packed compendium of data and analysis on the evolving world energy equation. For those with the background to interpret its key statistical findings, the release of the IEO can provide a unique opportunity to gauge important shifts in global energy trends, much as reports of routine Communist Party functions in the party journal Pravda once provided America’s Kremlin watchers with insights into changes in the Soviet Union’s top leadership circle.

As it happens, the recent release of the 2009 IEO has provided energy watchers with a feast of significant revelations. By far the most significant disclosure: the IEO predicts a sharp drop in projected future world oil output (compared to previous expectations) and a corresponding increase in reliance on what are called “unconventional fuels” — oil sands, ultra-deep oil, shale oil, and biofuels.

So here’s the headline for you: For the first time, the well-respected Energy Information Administration appears to be joining with those experts who have long argued that the era of cheap and plentiful oil is drawing to a close. Almost as notable, when it comes to news, the 2009 report highlights Asia’s insatiable demand for energy and suggests that China is moving ever closer to the point at which it will overtake the United States as the world’s number one energy consumer. Clearly, a new era of cutthroat energy competition is upon us.

Peak Oil Becomes the New Norm

As recently as 2007, the IEO projected that the global production of conventional oil (the stuff that comes gushing out of the ground in liquid form) would reach 107.2 million barrels per day in 2030, a substantial increase from the 81.5 million barrels produced in 2006. Now, in 2009, the latest edition of the report has grimly dropped that projected 2030 figure to just 93.1 million barrels per day — in future-output terms, an eye-popping decline of 14.1 million expected barrels per day.

Even when you add in the 2009 report’s projection of a larger increase than once expected in the output of unconventional fuels, you still end up with a net projected decline of 11.1 million barrels per day in the global supply of liquid fuels (when compared to the IEO’s soaring 2007 projected figures). What does this decline signify — other than growing pessimism by energy experts when it comes to the international supply of petroleum liquids?

Very simply, it indicates that the usually optimistic analysts at the Department of Energy now believe global fuel supplies will simply not be able to keep pace with rising world energy demands. For years now, assorted petroleum geologists and other energy types have been warning that world oil output is approaching a maximum sustainable daily level — a peak — and will subsequently go into decline, possibly producing global economic chaos. Whatever the timing of the arrival of peak oil’s actual peak, there is growing agreement that we have, at last, made it into peak-oil territory, if not yet to the moment of irreversible decline.

Until recently, Energy Information Administration officials scoffed at the notion that a peak in global oil output was imminent or that we should anticipate a contraction in the future availability of petroleum any time soon. “[We] expect conventional oil to peak closer to the middle than to the beginning of the 21st century,” the 2004 IEO report stated emphatically.

Consistent with this view, the EIA reported one year later that global production would reach a staggering 122.2 million barrels per day in 2025, more than 50% above the 2002 level of 80.0 million barrels per day. This was about as close to an explicit rejection of peak oil that you could get from the EIA’s experts.

Where Did All the Oil Go?

Now, let’s turn back to the 2009 edition. In 2025, according to this new report, world liquids output, conventional and unconventional, will reach only a relatively dismal 101.1 million barrels per day. Worse yet, conventional oil output will be just 89.6 million barrels per day. In EIA terms, this is pure gloom and doom, about as deeply pessimistic when it comes to the world’s future oil output capacity as you’re likely to get.

The agency’s experts claim, however, that this will not prove quite the challenge it might seem, because they have also revised downward their projections of future energy demand. Back in 2005, they were projecting world oil consumption in 2025 at 119.2 million barrels per day, just below anticipated output at that time. This year — and we should all theoretically breathe a deep sigh of relief — the report projects that 2025 figure at only 101.1 million barrels per day, conveniently just what the world is expected to produce at that time. If this actually proves the case, then oil prices will presumably remain within a manageable range.

In fact, however, the consumption part of this equation seems like the less reliable calculation, especially if economic growth continues at anything like its recent pace in China and India. Indeed, all evidence suggests that growth in these countries will resume its pre-crisis pace by the end of 2009 or early 2010. Under those circumstances, global oil demand will eventually outpace supply, driving up prices again and threatening recurring and potentially disastrous economic disorders — possibly on the scale of the present global economic meltdown.

To have the slightest chance of averting such disasters means seeing a sharp rise in unconventional fuel output. Such fuels include Canadian oil sands, Venezuelan extra-heavy oil, deep-offshore oil, Arctic oil, shale oil, liquids derived from coal (coal-to-liquids or CTL), and biofuels. At present, these cumulatively constitute only about 4% of the world’s liquid fuel supply but are expected to reach nearly 13% by 2030. All told, according to estimates in the new IEO report, unconventional liquid production will reach an estimated 13.4 million barrels per day in 2030, up from a projected 9.7 million barrels in the 2008 edition.

But for an expansion on this scale to occur, whole new industries will have to be created to manufacture such fuels at a cost of several trillion dollars. This undertaking, in turn, is provoking a wide-ranging debate over the environmental consequences of producing such fuels.

For example, any significant increase in biofuels use — assuming such fuels were produced by chemical means rather than, as now, by cooking — could substantially reduce emissions of carbon dioxide and other greenhouse gases, actually slowing the tempo of future climate change. On the other hand, any increase in the production of Canadian oil sands, Venezuelan extra-heavy oil, and Rocky Mountain shale oil will entail energy-intensive activities at staggering levels, sure to emit vast amounts of CO2, which might more than cancel out any gains from the biofuels.

In addition, increased biofuels production risks the diversion of vast tracts of arable land from the crucial cultivation of basic food staples to the manufacture of transportation fuel. If, as is likely, oil prices continue to rise, expect it to be ever more attractive for farmers to grow more corn and other crops for eventual conversion to transportation fuels, which means rises in food costs that could price basics out of the range of the very poor, while stretching working families to the limit. As in May and June of 2008, when food riots spread across the planet in response to high food prices — caused, in part, by the diversion of vast amounts of corn acreage to biofuel production — this could well lead to mass unrest and mass starvation.

A Heavy Energy Footprint on the Planet

The geopolitical implications of this transformation could well be striking. Among other developments, the global clout of Canada, Venezuela, and Brazil — all key producers of unconventional fuels — is bound to be strengthened.

Canada is becoming increasingly important as the world’s leading producer of oil sands, or bitumen — a thick, gooey, viscous material that must be dug out of the ground and treated in various energy-intensive ways before it can be converted into synthetic petroleum fuel (synfuel). According to the IEO report, oil sands production, now at 1.3 million barrels a day and barely profitable, could hit the 4.4 million barrel mark (or even, according to the most optimistic scenarios, 6.5 million barrels) by 2030.

Given the IEA’s new projections, this would represent an extraordinary addition to global energy supplies just when key sources of conventional oil in places like Mexico and the North Sea are expected to suffer severe declines. The extraction of oil sands, however, could prove a pollution disaster of the first order. For one thing, remarkable infusions of old-style energy are needed to extract this new energy, huge forest tracts would have to be cleared, and vast quantities of water used for the steam necessary to dislodge the buried goo (just as the equivalent of “peak water” may be arriving).

What this means is that the accelerated production of oil sands is sure to be linked to environmental despoliation, pollution, and global warming. There is considerable doubt that Canadian officials and the general public will, in the end, be willing to pay the economic and environmental price involved. In other words, whatever the IEA may project now, no one can know whether synfuels will really be available in the necessary quantities 15 or 20 years down the road.

Venezuela has long been an important source of crude oil for the United States, generating much of the revenue used by President Hugo Chávez to sustain his social experiments at home and an ambitious anti-American political agenda abroad. In the coming years, however, its production of conventional petroleum is expected to fall, leaving the country increasingly reliant on the exploitation of large deposits of bitumen in the eastern Orinoco River basin. Just to develop these “extra-heavy oil” deposits will require significant financial and energy investments and, as with Canadian oil sands, the environmental impact could be devastating. Nevertheless, successful development of these deposits could prove an economic bonanza for Venezuela.

The big winner in these grim energy sweepstakes, however, is likely to be Brazil. Already a major producer of ethanol, it is expected to see a huge increase in unconventional oil output once its new ultra-deep fields in the “subsalt” Campos and Santos basins come on-line. These are massive offshore oil deposits buried beneath thick layers of salt some 100 miles off the coast of Rio de Janeiro and several miles beneath the ocean’s surface.

When the substantial technical challenges to exploiting these undersea fields are overcome, Brazil’s output could soar by as much as three million barrels per day. By 2030, Brazil should be a major player in the world energy equation, having succeeded Venezuela as South America’s leading petroleum producer.

New Powers, New Problems

The IEO report hints at other geopolitical changes occurring in the global energy landscape, especially an expected stunning increase in the share of the global energy supply consumed in Asia and a corresponding decline by the United States, Japan, and other “First World” powers. In 1990, the developing nations of Asia and the Middle East accounted for only 17% of world energy consumption; by 2030, that number, the report suggests, should reach 41%, matching that of the major First World powers.

All recent editions of the report have predicted that China would eventually overtake the United States as number one energy consumer. What’s notable is how quickly the 2009 edition expects that to happen. The 2006 report had China assuming the leadership position in a 2026-2030 timeframe; in 2007, it was 2021-2024; in 2008, it was 2016-2020. This year, the EIA is projecting that China will overtake the United States between 2010 and 2014.

It’s easy enough to overlook these shifting estimates, since the reports don’t emphasize how they have changed from year to year. What they suggest, however, is that the United States will face ever fiercer competition from China in the global struggle to secure adequate supplies of energy to meet national needs.

Given what we have learned about the dwindling prospects for adequate future oil supplies, we are sure to face increased geopolitical competition and strife between the two countries in those few areas that are capable of producing additional quantities of oil (and undoubtedly genuine desperation among many other countries with far less resources and power).

And much else follows: As the world’s leading energy consumer, Beijing will undoubtedly play a far more critical role in setting international energy policies and prices, undercutting the pivotal role long played by Washington. It is not hard to imagine, then, that major oil producers in the Middle East and Africa will see it as in their interest to deepen political and economic ties with China at the expense of the United States. China can also be expected to maintain close ties with oil providers like Iran and Sudan, no matter how this clashes with American foreign policy objectives.

At first glance, the International Energy Outlook for 2009 hardly looks different from previous editions: a tedious compendium of tables and text on global energy trends. Looked at another way, however, it trumpets the headlines of the future — and their news is not comforting.

The global energy equation is changing rapidly, and with it is likely to come great power competition, economic peril, rising starvation, growing unrest, environmental disaster, and shrinking energy supplies, no matter what steps are taken. No doubt the 2010 edition of the report and those that follow will reveal far more, but the new trends in energy on the planet are already increasingly evident — and unsettling.

Michael T. Klare is a professor of peace and world security studies at Hampshire College in Amherst, Massachusetts, and the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Henry Holt). A DVD of the documentary film based on his previous book, Blood and Oil, is available by clicking here.

Copyright 2009 Michael T. Klare

In all catastrophes, there are always winners among the host of losers and victims. Bad times, like good ones, generate profits for someone. In the case of the present global economic meltdown, with our world at the brink and up to 50 million people potentially losing their jobs by the end of this year, one winner is likely to be criminal activity and crime syndicates. From Mexico to Africa, Russia to China, the pool of the desperate and the bribable is expanding exponentially, pointing to a sharp upturn in global crime. As illicit profits rise, so will violence in the turf wars among competing crime syndicates and in the desperate efforts by panicked governments to put a clamp on criminal activity.

Take Mexico, just now in the headlines. In late March, during her first trip there as Secretary of State, Hillary Clinton was repeatedly asked about the burst of narcotics-related violence in that country, the thousands of deaths that have gone with it, the patent inability of the Mexican military to contain, no less repress, the drug trade, and the possibility that the country might be at risk of becoming a “failed state.” Mexico itself may not be in danger of collapse, she replied diplomatically, but a very real danger threatens both countries from a rise in violent crime along the U.S.-Mexican border. “The criminals and kingpins spreading violence are trying to corrode the foundations of law, order, friendship, and trust between us,” she declared at a press conference in Mexico City. To counter this danger, the secretary of state promised a militarized response that reflected the level of danger she imagined — a significant increase in U.S. anti-narcotics assistance, including the expedited delivery of Black Hawk helicopters.

The Mexican drug trade itself is nothing new. The illicit export traffic to the United States and the ensuing bloody competition among drug traffickers for access to the U.S. market have long concerned U.S. and Mexican law enforcement authorities. In the last two years, however, the violence associated with this commerce has grown to unprecedented levels as the leading crime syndicates — the Juárez Cartel, the Sinaloa Cartel, the Gulf Cartel, and Los Zetas — have successfully resisted a fierce government crackdown, while fighting among themselves for control over key border access points. According to Mexico’s Attorney General, Eduardo Medina-Mora, 5,376 Mexicans were killed in drug-related violence in the first 11 months of 2008 compared to 2,477 during the same period in 2007, an increase of 117%. And as times get ever tougher for ordinary Mexicans, recruiting for the trade grows ever easier while the killings only multiply. U.S. law enforcement officials now believe inter-gang warfare is spilling into the United States in a serious way, producing rising murder rates in border states like Arizona, California, and Texas.

The ongoing slaughter in Mexico may be monopolizing overseas crime headlines, but other parts of the world have also seen sharp rises in criminal violence in 2008 and the early months of 2009 as the global economic crisis has deepened. With legal jobs disappearing, growing numbers of unemployed youth are unsurprisingly drawn to what’s still available — illicit professions or jobs in the military and police that, in many countries, are ill-paid but allow access to bribes. Just such a process appears to be under way in impoverished parts of Africa, Asia, and Latin America.

Drug Traffickers and Pirates

In fact, it’s an irony that, as global trading and other aspects of economic globalization are breaking down, crime may be globalizing. Consider recent developments in Guinea-Bissau and Peru, when it comes to the growing reach and savagery of Latin America’s drug traffickers.

On March 1st, in Guinea-Bissau, a former Portuguese colony on the west coast of Africa, unknown assailants killed Army Chief of Staff General Batiste Tagme Na Waie and President João Bernardo Vieira within hours of each other. The two men had long been political rivals, and it is widely believed that President Vieira was behind Na Waie’s assassination and was then killed in retaliation by members of the country’s security forces.

Guinea-Bissau, however, has also become an important way station for the transshipment of illegal narcotics from Colombia to Europe. Many observers believe that the assassinations were tied to in-fighting among the drug cartels and their associates within Guinea-Bissau’s political and military elites. While the killings may have been sparked in part by “personal hatreds [and] ethnic rivalries,” said Joseph Sala, a former State Department official with knowledge of the country, a factor was also “the growing involvement of Latin American drug cartels.”

In Peru, the pervasive lure of illicit drug profits is reflected in the re-emergence of the Shining Path guerrilla movement — this time as a cocaine smuggling operation. Originally a revolutionary Maoist organization, the Shining Path largely disappeared after its messianic leader, Abimael Guzmán, was captured by Peruvian anti-terrorist agents in 1992. Recently, however, a surviving faction of the group has reappeared in a remote, impoverished jungle redoubt, promoting the growing of coca and its refinement into cocaine. Although still professing loyalty to its Maoist roots, the guerrilla faction appears to devote most of its time to fending off efforts by the Peruvian military to suppress drug trafficking in the area. The result has been a spike in armed violence with at least 22 soldiers and police officers killed in the region in 2008, the highest death toll in almost a decade.

As times get tougher, increased criminal violence is also evident in two other striking ways: as rising levels of piracy on the high seas and as a spike in capital punishment in China.

The increase in piracy has gained particular notoriety since Somali pirates hijacked the Sirius Star, a Saudi supertanker carrying more than $100 million worth of crude oil, in November 2008. In some sense, Somalia may be the poster child for what lies in store for far wider regions in a new era of criminalization. As a genuine failed state, after all, it has been experiencing the local equivalent of a great depression for years. While it has led the way on piracy, the phenomenon is on the rise elsewhere as well. The taking of the Sirius Star was only one of 293 incidents of piracy in 2008 – the highest number since the Piracy Reporting Centre (PRC) of the International Maritime Bureau began compiling such records in 1992. According to the PRC’s annual piracy report, 889 crew members were taken hostage in 2008, 11 were killed, and 21 are still missing and presumed dead; guns were fired in 139 of the incidents, up from 72 in 2007.

When it comes to China, whose booming economy was a global wonder until world trade took a tremendous hit last year, it’s hard to gauge the level of violent crime, as officials there are said to systematically under-report it. However, there are indications that it is on the rise and that organized crime has secured a stronger presence in the country. In what is evidently an effort on Beijing’s part to combat this trend, the government has vastly stepped up its executions of criminals found guilty of capital offenses. In 2007, according to Amnesty International, at least 470 convicted criminals were executed and another 1,860 (or more) sentenced to death. The just-released figures for 2008 show an enormous increase: 1,718-plus executions and another 7,003 people sentenced to death. Some of those killed may have been political prisoners falsely charged with criminal offenses, but most were, presumably, common criminals put to death to intimidate others who might engage in similar behavior.

The Rise of the Narco-state

These developments and others like them naturally beg the question: To what extent can any increases in violent crime in the coming period be attributed to the global economic meltdown?

Certainly the situation in Mexico suggests a close correlation. Like other countries dependent on exports to the United States, Mexico has been reeling from the current crisis. Total exports fell 32% in January, while automobile exports — a major source of economic activity in Mexico’s border states — fell by 50% in the first two months of 2009. By one account, Mexico’s export factories have lost 65,000 jobs since October, a number that experts believe understates the loss. Many economists now predict a painful 5% contraction in the Mexican economy in 2009.

One Mexican export business, however, is thriving in bad times: the drug trade. With so many people out of work or facing diminished incomes, the attraction of being employed by it has certainly risen. By some estimates, illegal trafficking, mainly to the United States, nets the Mexican drug cartels nearly $25 billion each year, making this one of the country’s most lucrative industries, and despite an attempted government crackdown, there seems to be no downturn in sight. True, narco-traffickers risk being apprehended and doing jail time, but so many of Mexico’s police and court officers are evidently on cartel payrolls that the likelihood of that happening remains modest for higher level operatives. With other job opportunities for poor young men dwindling, the appeal of easy money — not to mention the faux glamour of an outlaw’s life — must seem irresistible to many.

The crackdown on drug trafficking being conducted by the Mexican government with strong U.S. backing has, paradoxically, made the narcotics trade more appealing as a profession. This is so because increased drug seizures have driven up the street price of drugs, thereby increasing profits for those who succeed in eluding the police and antidrug agents. Given the general economic environment, this is certain to prove a self-perpetuating system that will continue to lure ambitious or desperate young men into the drug trade.

As Professor Francisco E. González of Johns Hopkins University suggests in explaining this predicament in Current History magazine, “[I]t goes without saying that conditions of hopelessness and extreme life choices abound in developing countries such as Mexico. As long as these conditions persist, and as long as the system put in place to counter the narcotics trade leads to the generation of exceptional profits, there will continue to be individuals willing to play this lottery.”

In fact, this observation applies no less well to many other countries suffering from severe economic distress. Take Guinea-Bissau and its neighbor Guinea, both essentially indigent countries that are widely described as “narco-states” (that is, states whose political and economic institutions have been thoroughly infiltrated by the Latin American drug cartels). Guinea-Bissau holds the ninth spot from the bottom on the overall U.N. human development index released in December, which measures living standards, health, and quality of life globally. In terms of gross domestic product per capita, however, it’s fifth from the bottom, just ahead of Liberia and Burundi. Hardly surprising, then, that a government almost incapable of otherwise generating income is thought to be heavily penetrated by the cartels.

According to UN officials, Guinea-Bissau reaps as much as $1 billion per year in illegal proceeds from the drug trade, a vast bounty in a country so poor. Drug trafficking “is indeed a factor in the current crisis,” observes Carlos Cardoso, a researcher at the Council for the Development of Social Science Research in Africa. “Drug trafficking seems to involve the military. Given the ubiquity of the military in political life, anything that affects it, affects the state.”

Neighboring Guinea, once known as French Guinea, presents a very similar picture. Ruled until December 2008 by the military dictator Lansana Conté, it, too, had become a haven for South American narco-traffickers. “In the past few years, as Mr. Conté’s health declined, Guinea drifted toward chaos,” Lydia Polgreen wrote in the New York Times. “South American drug traffickers, who ship cocaine to Europe via West Africa, infiltrated the government at the highest levels. Mr. Conté’s son Ousmane confessed on television [in February] to aiding the cocaine traffickers who had turned Guinea into a virtual narco-state.” Lansana Conté died on December 23rd and power was usurped by a military junta headed by Captain Moussa Dadis Camara; the junta’s young officers have pledged to clean up the country and oust the traffickers, but many Guineans express skepticism about their capacity to accomplish this Herculean task.

An environment of poverty and chaos has long prevailed in Somalia, home to the most determined and aggressive of the high-seas pirates. Of the 293 piracy incidents noted by the PRC in 2008, 111, or 38%, occurred in the Gulf of Aden or off the coast of Somalia. Many of the most daring incidents — including the seizure of the Sirius Star — also occurred in those waters. By their own account, many of the Somali pirates are former fishermen driven out of business when the collapsed Somali state could no longer protect the country’s rich fishing grounds against predation by the highly organized fleets of other countries. Now penniless, these onetime fishermen have taken up piracy to support their families. “Killing is not in our plans,” the hijacker of a guns-laden cargo ship told a reporter in October 2008. “We only want money so we can protect ourselves from hunger.”

A Syndrome of Crime, Violence, and Repression

China, of course, is no Guinea-Bissau. Millions of Chinese citizens live in relative luxury, the beneficiaries of a quarter-century of unparalleled growth; but millions more still live in extreme poverty, struggling to survive on minuscule farms in the countryside or working as migrant laborers in the cities, mostly in factories making consumer goods for the export market. So long as China’s economy was booming, migrant laborers were able to find work in the coastal export factories and send a bit of money back to their families in the countryside. Now, with Chinese trade figures in a major decline and many factories cutting back or closing due to the slump in exports, at least 20 million of these workers are locked out and Chinese officials fear a spike in social unrest and crime.

That 20 million figure was provided by Chen Xiwen, a senior official who heads the Chinese Communist Party’s office on rural policy. “For those migrant workers who have lost their jobs, what are they going to do for income when they return to their villages? How are they going to manage? This is a new factor affecting social stability this year,” he said at a news conference in February in Beijing.

That many of the migrants will be able to find remunerative work in their own villages is inconceivable — plots of farmable land are far too tiny and, despite a Chinese governmental stimulus package, there are as yet few other sources of income. As a result, most of these unemployed former peasants will head back to the cities in search of any sort of work. The danger is that many will be cheated out of their pay by unscrupulous factory owners taking advantage of their desperation or will simply find no work at all, leading to angry protests (known as “mass incidents” in China). Count on one thing: as in Mexico and elsewhere, some of them will be drawn into organized crime activities or other illicit pursuits.

Acknowledging these risks, Chen Xiwen spoke ominously of the need for greater government preparedness to contain mass incidents and other forms of social disorder. “If a mass incident occurs, leading cadres must all go to the front line, and talk to the people directly, face-to-face, to explain things,” he urged, rather than simply rely on police coercion and thereby provoke greater public anger.

This syndrome — declining employment in the core economy, growing reliance on jobs in marginal enterprises or in an unofficial black-market economy, and rising rates of violent crime leading to increased state repression — is likely to be repeated in a range of other countries suffering from the global economic crisis.

Russia is at particular risk from this syndrome. According to a World Bank report released in March, its economy is expected to contract by a staggering 4.5% in 2009 and unemployment is expected to reach 12%, doubling the 2008 figure. The consequences are sure to be severe: “[T]he number of poor people in Russia will likely increase by 2.75 million, wiping out part of the gains in reducing poverty in recent years.” This, in turn, will force more people to make ends meet by any means necessary, including participation in the informal economy, petty thievery, and organized crime — thereby inviting increased repression by state authorities.

Russia has, of course, long been plagued by high levels of individual and organized crime. “The U.S. Embassy receives numerous criminal incident reports from private and official Americans on a routine basis. These incidents include, but are not limited to, racial violence, theft, vandalism, robbery, physical assaults, and murder,” the Overseas Security Advisory Council (OSAC), a State Department agency, reported in February. The current economic crisis has, by all accounts, sharply increased the level of such lawlessness. Russian newspapers have reported increases in everything from shoplifting and aggravated assault to murder. “One of the most significant negative consequences of the crisis could be a change in crime trends,” the chief prosecutor of Moscow, Yuri Syomin, observed in February. “If life becomes worse, then crime will rise.”

One aspect of the growing violence in Russia likely to be replicated elsewhere is attacks on immigrants, who are often portrayed by racist and ultra-nationalist groups as taking jobs from native people at a time of employment scarcity. “There has been a steady increase in racially-motivated incidents and ethnically-motivated violence throughout Russia,” the February OSAC report noted. “Attacks on ethnic minorities by young Russian ultra-nationalists who profess a sentiment of ‘Russia is for Russians’ have risen for the third straight year.” These concerns were heightened last December when photos of the decapitated body of a Central Asian male, presumably an immigrant from one of the former Soviet republics, were sent to human rights organizations in the country by an ultra-nationalist group that claimed responsibility for his murder and mutilation.

Wherever one looks, then, the global economic crisis is destined to be accompanied by rising levels of crime, violence, and — increasingly — state repression. Worried governments may attempt to forestall the risk of criminal disorder by spending more on law enforcement or, as in the case of China, stepping up the rate of executions. In a world on the brink, this is unlikely to deter those like the Somali pirates who “only want money so we can protect ourselves from hunger.”

Without a global stimulus effort aimed at those at greatest risk of destitution, hunger, and homelessness, expect an epidemic of global crime and boom times for criminal syndicates and cartels everywhere.

Michael T. Klare is a professor of peace and world security studies at Hampshire College in Amherst, Mass. His most recent book, Rising Powers, Shrinking Planet: The New Geopolitics of Energy, has just been released in paperback by Henry Holt. A documentary film version of Klare’s previous book, Blood and Oil, is available from the Media Education Foundation by visiting Bloodandoilmovie.com. To catch an audio interview with Klare on the coming global crime wave, click here. This is his second piece in an ongoing series on a planet at the brink.

Copyright 2009 Michael T. Klare

The global economic meltdown has already caused bank failures, bankruptcies, plant closings, and foreclosures and will, in the coming year, leave many tens of millions unemployed across the planet. But another perilous consequence of the crash of 2008 has only recently made its appearance: increased civil unrest and ethnic strife. Someday, perhaps, war may follow.

As people lose confidence in the ability of markets and governments to solve the global crisis, they are likely to erupt into violent protests or to assault others they deem responsible for their plight, including government officials, plant managers, landlords, immigrants, and ethnic minorities. (The list could, in the future, prove long and unnerving.) If the present economic disaster turns into what President Obama has referred to as a “lost decade,” the result could be a global landscape filled with economically-fueled upheavals.

Indeed, if you want to be grimly impressed, hang a world map on your wall and start inserting red pins where violent episodes have already occurred. Athens (Greece), Longnan (China), Port-au-Prince (Haiti), Riga (Latvia), Santa Cruz (Bolivia), Sofia (Bulgaria), Vilnius (Lithuania), and Vladivostok (Russia) would be a start. Many other cities from Reykjavik, Paris, Rome, and Zaragoza to Moscow and Dublin have witnessed huge protests over rising unemployment and falling wages that remained orderly thanks in part to the presence of vast numbers of riot police. If you inserted orange pins at these locations — none as yet in the United States — your map would already look aflame with activity. And if you’re a gambling man or woman, it’s a safe bet that this map will soon be far better populated with red and orange pins.

For the most part, such upheavals, even when violent, are likely to remain localized in nature, and disorganized enough that government forces will be able to bring them under control within days or weeks, even if — as with Athens for six days last December — urban paralysis sets in due to rioting, tear gas, and police cordons. That, at least, has been the case so far. It is entirely possible, however, that, as the economic crisis worsens, some of these incidents will metastasize into far more intense and long-lasting events: armed rebellions, military takeovers, civil conflicts, even economically fueled wars between states.

Every outbreak of violence has its own distinctive origins and characteristics. All, however, are driven by a similar combination of anxiety about the future and lack of confidence in the ability of established institutions to deal with the problems at hand. And just as the economic crisis has proven global in ways not seen before, so local incidents — especially given the almost instantaneous nature of modern communications — have a potential to spark others in far-off places, linked only in a virtual sense.

A Global Pandemic of Economically Driven Violence

The riots that erupted in the spring of 2008 in response to rising food prices suggested the speed with which economically-related violence can spread. It is unlikely that Western news sources captured all such incidents, but among those recorded in the New York Times and the Wall Street Journal were riots in Cameroon, Egypt, Ethiopia, Haiti, India, Indonesia, Ivory Coast, and Senegal.

In Haiti, for example, thousands of protesters stormed the presidential palace in Port-au-Prince and demanded food handouts, only to be repelled by government troops and UN peacekeepers. Other countries, including Pakistan and Thailand, quickly sought to deter such assaults by deploying troops at farms and warehouses throughout the country.

The riots only abated at summer’s end when falling energy costs brought food prices crashing down as well. (The cost of food is now closely tied to the price of oil and natural gas because petrochemicals are so widely and heavily used in the cultivation of grains.) Ominously, however, this is sure to prove but a temporary respite, given the epic droughts now gripping breadbasket regions of the United States, Argentina, Australia, China, the Middle East, and Africa. Look for the prices of wheat, soybeans, and possibly rice to rise in the coming months — just when billions of people in the developing world are sure to see their already marginal incomes plunging due to the global economic collapse.

Food riots were but one form of economic violence that made its bloody appearance in 2008. As economic conditions worsened, protests against rising unemployment, government ineptitude, and the unaddressed needs of the poor erupted as well. In India, for example, violent protests threatened stability in many key areas. Although usually described as ethnic, religious, or caste disputes, these outbursts were typically driven by economic anxiety and a pervasive feeling that someone else’s group was faring better than yours — and at your expense.

In April, for example, six days of intense rioting in Indian-controlled Kashmir were largely blamed on religious animosity between the majority Muslim population and the Hindu-dominated Indian government; equally important, however, was a deep resentment over what many Kashmiri Muslims experienced as discrimination in jobs, housing, and land use. Then, in May, thousands of nomadic shepherds known as Gujjars shut down roads and trains leading to the city of Agra, home of the Taj Mahal, in a drive to be awarded special economic rights; more than 30 people were killed when the police fired into crowds. In October, economically-related violence erupted in Assam in the country’s far northeast, where impoverished locals are resisting an influx of even poorer, mostly illegal immigrants from nearby Bangladesh.

Economically-driven clashes also erupted across much of eastern China in 2008. Such events, labeled “mass incidents” by Chinese authorities, usually involve protests by workers over sudden plant shutdowns, lost pay, or illegal land seizures. More often than not, protestors demanded compensation from company managers or government authorities, only to be greeted by club-wielding police.

Needless to say, the leaders of China’s Communist Party have been reluctant to acknowledge such incidents. This January, however, the magazine Liaowang (Outlook Weekly) reported that layoffs and wage disputes had triggered a sharp increase in such “mass incidents,” particularly along the country’s eastern seaboard, where much of its manufacturing capacity is located.

By December, the epicenter of such sporadic incidents of violence had moved from the developing world to Western Europe and the former Soviet Union. Here, the protests have largely been driven by fears of prolonged unemployment, disgust at government malfeasance and ineptitude, and a sense that “the system,” however defined, is incapable of satisfying the future aspirations of large groups of citizens.

One of the earliest of this new wave of upheavals occurred in Athens, Greece, on December 6, 2008, after police shot and killed a 15-year-old schoolboy during an altercation in a crowded downtown neighborhood. As news of the killing spread throughout the city, hundreds of students and young people surged into the city center and engaged in pitched battles with riot police, throwing stones and firebombs. Although government officials later apologized for the killing and charged the police officer involved with manslaughter, riots broke out repeatedly in the following days in Athens and other Greek cities. Angry youths attacked the police — widely viewed as agents of the establishment — as well as luxury shops and hotels, some of which were set on fire. By one estimate, the six days of riots caused $1.3 billion in damage to businesses at the height of the Christmas shopping season.

Russia also experienced a spate of violent protests in December, triggered by the imposition of high tariffs on imported automobiles. Instituted by Prime Minister Vladimir Putin to protect an endangered domestic auto industry (whose sales were expected to shrink by up to 50% in 2009), the tariffs were a blow to merchants in the Far Eastern port of Vladivostok who benefited from a nationwide commerce in used Japanese vehicles. When local police refused to crack down on anti-tariff protests, the authorities were evidently worried enough to fly in units of special forces from Moscow, 3,700 miles away.

In January, incidents of this sort seemed to be spreading through Eastern Europe. Between January 13th and 16th, anti-government protests involving violent clashes with the police erupted in the Latvian capital of Riga, the Bulgarian capital of Sofia, and the Lithuanian capital of Vilnius. It is already essentially impossible to keep track of all such episodes, suggesting that we are on the verge of a global pandemic of economically driven violence.

A Perfect Recipe for Instability

While most such incidents are triggered by an immediate event — a tariff, the closure of local factory, the announcement of government austerity measures — there are systemic factors at work as well. While economists now agree that we are in the midst of a recession deeper than any since the Great Depression of the 1930s, they generally assume that this downturn — like all others since World War II — will be followed in a year, or two, or three, by the beginning of a typical recovery.

There are good reasons to suspect that this might not be the case — that poorer countries (along with many people in the richer countries) will have to wait far longer for such a recovery, or may see none at all. Even in the United States, 54% of Americans now believe that “the worst” is “yet to come” and only 7% that the economy has “turned the corner,” according to a recent Ipsos/McClatchy poll; fully a quarter think the crisis will last more than four years. Whether in the U.S., Russia, China, or Bangladesh, it is this underlying anxiety — this suspicion that things are far worse than just about anyone is saying — which is helping to fuel the global epidemic of violence.

The World Bank’s most recent status report, Global Economic Prospects 2009, fulfills those anxieties in two ways. It refuses to state the worst, even while managing to hint, in terms too clear to be ignored, at the prospect of a long-term, or even permanent, decline in economic conditions for many in the world. Nominally upbeat — as are so many media pundits — regarding the likelihood of an economic recovery in the not-too-distant future, the report remains full of warnings about the potential for lasting damage in the developing world if things don’t go exactly right.

Two worries, in particular, dominate Global Economic Prospects 2009: that banks and corporations in the wealthier countries will cease making investments in the developing world, choking off whatever growth possibilities remain; and that food costs will rise uncomfortably, while the use of farmlands for increased biofuels production will result in diminished food availability to hundreds of millions.

Despite its Pollyanna-ish passages on an economic rebound, the report does not mince words when discussing what the almost certain coming decline in First World investment in Third World countries would mean:

“Should credit markets fail to respond to the robust policy interventions taken so far, the consequences for developing countries could be very serious. Such a scenario would be characterized by… substantial disruption and turmoil, including bank failures and currency crises, in a wide range of developing countries. Sharply negative growth in a number of developing countries and all of the attendant repercussions, including increased poverty and unemployment, would be inevitable.”

In the fall of 2008, when the report was written, this was considered a “worst-case scenario.” Since then, the situation has obviously worsened radically, with financial analysts reporting a virtual freeze in worldwide investment. Equally troubling, newly industrialized countries that rely on exporting manufactured goods to richer countries for much of their national income have reported stomach-wrenching plunges in sales, producing massive plant closings and layoffs.

The World Bank’s 2008 survey also contains troubling data about the future availability of food. Although insisting that the planet is capable of producing enough foodstuffs to meet the needs of a growing world population, its analysts were far less confident that sufficient food would be available at prices people could afford, especially once hydrocarbon prices begin to rise again. With ever more farmland being set aside for biofuels production and efforts to increase crop yields through the use of “miracle seeds” losing steam, the Bank’s analysts balanced their generally hopeful outlook with a caveat: “If biofuels-related demand for crops is much stronger or productivity performance disappoints, future food supplies may be much more expensive than in the past.”

Combine these two World Bank findings — zero economic growth in the developing world and rising food prices — and you have a perfect recipe for unrelenting civil unrest and violence. The eruptions seen in 2008 and early 2009 will then be mere harbingers of a grim future in which, in a given week, any number of cities reel from riots and civil disturbances which could spread like multiple brushfires in a drought.

Mapping a World at the Brink

Survey the present world, and it’s all too easy to spot a plethora of potential sites for such multiple eruptions — or far worse. Take China. So far, the authorities have managed to control individual “mass incidents,” preventing them from coalescing into something larger. But in a country with a more than two-thousand-year history of vast millenarian uprisings, the risk of such escalation has to be on the minds of every Chinese leader.

On February 2nd, a top Chinese Party official, Chen Xiwen, announced that, in the last few months of 2008 alone, a staggering 20 million migrant workers, who left rural areas for the country’s booming cities in recent years, had lost their jobs. Worse yet, they had little prospect of regaining them in 2009. If many of these workers return to the countryside, they may find nothing there either, not even land to work.

Under such circumstances, and with further millions likely to be shut out of coastal factories in the coming year, the prospect of mass unrest is high. No wonder the government announced a $585 billion stimulus plan aimed at generating rural employment and, at the same time, called on security forces to exercise discipline and restraint when dealing with protesters. Many analysts now believe that, as exports continue to dry up, rising unemployment could lead to nationwide strikes and protests that might overwhelm ordinary police capabilities and require full-scale intervention by the military (as occurred in Beijing during the Tiananmen Square demonstrations of 1989).

Or take many of the Third World petro-states that experienced heady boosts in income when oil prices were high, allowing governments to buy off dissident groups or finance powerful internal security forces. With oil prices plunging from $147 per barrel of crude oil to less than $40 dollars, such countries, from Angola to shaky Iraq, now face severe instability.

Nigeria is a typical case in point: When oil prices were high, the central government in Abuja raked in billions every year, enough to enrich elites in key parts of the country and subsidize a large military establishment; now that prices are low, the government will have a hard time satisfying all these previously well-fed competing obligations, which means the risk of internal disequilibrium will escalate. An insurgency in the oil-producing Niger Delta region, fueled by popular discontent with the failure of oil wealth to trickle down from the capital, is already gaining momentum and is likely to grow stronger as government revenues shrivel; other regions, equally disadvantaged by national revenue-sharing policies, will be open to disruptions of all sorts, including heightened levels of internecine warfare.

Bolivia is another energy producer that seems poised at the brink of an escalation in economic violence. One of the poorest countries in the Western Hemisphere, it harbors substantial oil and natural gas reserves in its eastern, lowland regions. A majority of the population — many of Indian descent — supports President Evo Morales, who seeks to exercise strong state control over the reserves and use the proceeds to uplift the nation’s poor. But a majority of those in the eastern part of the country, largely controlled by a European-descended elite, resent central government interference and seek to control the reserves themselves. Their efforts to achieve greater autonomy have led to repeated clashes with government troops and, in deteriorating times, could set the stage for a full-scale civil war.

Given a global situation in which one startling, often unexpected development follows another, prediction is perilous. At a popular level, however, the basic picture is clear enough: continued economic decline combined with a pervasive sense that existing systems and institutions are incapable of setting things right is already producing a potentially lethal brew of anxiety, fear, and rage. Popular explosions of one sort or another are inevitable.

Some sense of this new reality appears to have percolated up to the highest reaches of the U.S. intelligence community. In testimony before the Senate Select Committee on Intelligence on February 12th, Admiral Dennis C. Blair, the new Director of National Intelligence, declared, “The primary near-term security concern of the United States is the global economic crisis and its geopolitical implications… Statistical modeling shows that economic crises increase the risk of regime-threatening instability if they persist over a one to two year period” — certain to be the case in the present situation.

Blair did not specify which countries he had in mind when he spoke of “regime-threatening instability” — a new term in the American intelligence lexicon, at least when associated with economic crises — but it is clear from his testimony that U.S. officials are closely watching dozens of shaky nations in Africa, the Middle East, Latin America, and Central Asia.

Now go back to that map on your wall with all those red and orange pins in it and proceed to color in appropriate countries in various shades of red and orange to indicate recent striking declines in gross national product and rises in unemployment rates. Without 16 intelligence agencies under you, you’ll still have a pretty good idea of the places that Blair and his associates are eyeing in terms of instability as the future darkens on a planet at the brink.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Metropolitan Books).

Copyright 2009 Michael T. Klare

Only yesterday, it seems, we were bemoaning the high price of oil. Under the headline “Oil’s Rapid Rise Stirs Talk of $200 a Barrel This Year,” the July 7 issue of the Wall Street Journal warned that prices that high would put “extreme strains on large sectors of the U.S. economy.” Today, oil, at over $40 a barrel, costs less than one-third what it did in July, and some economists have predicted that it could fall as low as $25 a barrel in 2009.

Prices that low — and their equivalents at the gas pump — will no doubt be viewed as a godsend by many hard-hit American consumers, even if they ensure severe economic hardship in oil-producing countries like Nigeria, Russia, Iran, Kuwait, and Venezuela that depend on energy exports for a large share of their national income. Here, however, is a simple but crucial reality to keep in mind: No matter how much it costs, whether it’s rising or falling, oil has a profound impact on the world we inhabit — and this will be no less true in 2009 than in 2008.

The main reason? In good times and bad, oil will continue to supply the largest share of the world’s energy supply. For all the talk of alternatives, petroleum will remain the number one source of energy for at least the next several decades. According to December 2008 projections from the U.S. Department of Energy (DoE), petroleum products will still make up 38% of America’s total energy supply in 2015; natural gas and coal only 23% each. Oil’s overall share is expected to decline slightly as biofuels (and other alternatives) take on a larger percentage of the total, but even in 2030 — the furthest the DoE is currently willing to project — it will still remain the dominant fuel.

A similar pattern holds for the planet as a whole: Although biofuels and other renewable sources of energy are expected to play a growing role in the global energy equation, don’t expect oil to be anything but the world’s leading source of fuel for decades to come.

Keep your eye on the politics of oil and you’ll always know a lot about what’s actually happening on this planet. Low prices, as at present, are bad for producers, and so will hurt a number of countries that the U.S. government considers hostile, including Venezuela, Iran, and even that natural-gas-and-oil giant Russia. All of them have, in recent years, used their soaring oil income to finance political endeavors considered inimical to U.S. interests. However, dwindling prices could also shake the very foundations of oil allies like Mexico, Nigeria, and Saudi Arabia, which could experience internal unrest as oil revenues, and so state expenditures, decline.

No less important, diminished oil prices discourage investment in complex oil ventures like deep-offshore drilling, as well as investment in the development of alternatives to oil like advanced (non-food) biofuels. Perhaps most disastrously, in a cheap oil moment, investment in non-polluting, non-climate-altering alternatives like solar, wind, and tidal energy is also likely to dwindle. In the longer term, what this means is that, once a global economic recovery begins, we can expect a fresh oil price shock as future energy options prove painfully limited.

Clearly, there is no escaping oil’s influence. Yet it’s hard to know just what forms this influence will take in the year. Nevertheless, here are three provisional observations on oil’s fate — and so ours — in the year ahead.

1. The Price of Oil Will Remain Low Until It Begins to Rise Again: I know, I know: this sounds totally inane. It’s just that there’s no other way to put it. The price of oil has essentially dropped through the floor because, in the past four months, demand collapsed due to the onset of a staggering global recession. It is not likely to approach the record levels of spring and summer 2008 again until demand picks up and/or the global oil supply is curbed dramatically. At this point, unfortunately, no crystal ball can predict just when either of those events will occur.

The contraction in international demand has indeed been stunning. After rising for much of last summer, demand plunged in the early fall by several hundred thousand barrels per day, producing a net decline for 2008 of 50,000 barrels per day. This year, the Department of Energy projects global demand to fall by a far more impressive 450,000 barrels per day — “the first time in three decades that world consumption would decline in two consecutive years.”

Needless to say, these declines were unexpected. Believing that international demand would continue to grow — as had been the case in almost every year since the last big recession of 1980 — the global oil industry steadily added to production capacity and was gearing up for more of the same in 2009 and beyond. Indeed, under intense pressure from the Bush administration, the Saudis had indicated last June that they would gradually add to their capacity until they reached an extra 2.5 million barrels per day.

Today, the industry is burdened with excess output and insufficient demand — a surefire recipe for plunging oil prices. Even the December 17 decision by members of the Organization of the Petroleum Exporting Countries (OPEC) to reduce their collective output by 2.2 million barrels per day has failed to lead to a significant increase in prices. (Saudi Arabia’s King Abdullah said recently that he considers $75 a barrel a “fair price” for oil.)

How long will the imbalance between demand and supply last? Until the middle of 2009, if not the end of the year, most analysts believe. Others suspect that a true global recovery will not even get under way until 2010, or later. It all depends on how deep and prolonged you expect the recession – or any coming depression — to be.

A critical factor will be China’s ability to absorb oil. After all, between 2002 and 2007, that country accounted for 35% of the total increase in world oil consumption — and, according to the DoE, it is expected to claim at least another 24% of any global increase in the coming decade. The upsurge in Chinese consumption, combined with unremitting demand from older industrialized nations and significant price speculation on oil futures, largely explained the astronomical way prices were driven up until last summer. But with the Chinese economy visibly faltering, such projections no longer seem valid. Many analysts now predict that a sharp drop-off in Chinese demand will only accelerate the downward journey of global energy prices. Under these conditions, an early price turnaround appears increasingly unlikely.

2. When Prices Do Rise Again, They Will Rise Sharply: At present, the world enjoys the (relatively) unfamiliar prospect of a global oil-production surplus, but there’s a problematic aspect to this. As long as prices remain low, oil companies have no incentive to invest in costly new production ventures, which means no new capacity is being added to global inventories, while available capacity continues to be drained. Simply put, what this means is that, when demand begins to surge again, global output is likely to prove inadequate. As Ed Crooks of the Financial Times has suggested, “The plunging oil price is like a dangerously addictive painkiller: short-term relief is being provided at a cost of serious long-term harm.”

Signs of a slowdown in oil-output investment are already multiplying fast. Saudi Arabia, for example, has announced delays in four major energy projects in what appears to be a broad retreat from its promise to increase future output. Among the projects being delayed are a $1.2 billion venture to restart the historic Damman oil field, development of the 900,000 barrel per day Manifa oil field, and construction of new refineries at Yanbu and Jubail. In each case, the delays are being attributed to reduced international demand. “We are going back to our partners and discussing with them the new economic circumstances,” explained Kaled al-Buraik, an official of Saudi Aramco.

In addition, most “easy oil” reservoirs have now been exhausted, which means that virtually all remaining global reserves are going to be of the “tough oil” variety. These require extraction technology far too costly to be profitable at a moment when the per barrel price remains under $50. Principal among these are exploitation of the tar sands of Canada and of deep offshore fields in the Gulf of Mexico, the Gulf of Guinea, and waters off Brazil. While such potential reserves undoubtedly harbor significant supplies of petroleum, they won’t return a profit until the price of oil reaches $80 or more per barrel — nearly twice what it is fetching today. Under these circumstances, it is hardly surprising that the oil majors are canceling or postponing plans for new projects in Canada and these offshore locations.

“Low oil prices are very dangerous for the world economy,” commented Mohamed Bin Dhaen Al Hamli, the United Arab Emirates’ energy minister, at a London oil-industry conference in October. With prices dropping, he noted, “a lot of projects that are in the pipeline are going to be reassessed.”

With industry cutting back on investment, there will be less capacity to meet rising demand when the world economy does rebound. At that time, expect the present situation to change with predictably startling rapidity, as rising demand suddenly finds itself chasing inadequate supply in an energy-deficit world.

When this will occur and how high oil prices will then climb cannot, of course, be known, but expect gas-pump shock. It’s possible that the energy shock to come will be no less fierce than the present global recession and energy price collapse. The Department of Energy, in its most recent projections, predicts that oil will reach an average of $78 per barrel in 2010, $110 in 2015, and $116 in 2020. Other analysts suggest that prices could go much higher much faster, especially if demand picks up quickly and the oil companies are slow to restart projects now being put on hold.

3. Low Oil Prices Like High Ones Will Have Significant Worldwide Political Implications: The steady run up in oil prices between 2003 and 2008 was the result of a sharp increase in global demand as well as a perception that the international energy industry was having difficulty bringing sufficient new sources of supply on line. Many analysts spoke of the imminent arrival of “peak oil,” the moment at which global output would commence an irreversible decline. All this fueled fierce efforts by major consuming nations to secure control over as many foreign sources of petroleum as they could, including frenzied attempts by U.S., European, and Chinese firms to gobble up oil concessions in Africa and the Caspian Sea basin — the theme of my latest book, Rising Powers, Shrinking Planet.

With the plunge in oil prices and a growing sense (however temporary) of oil plenty, this dog-eat-dog competition is likely to abate. The current absence of intense competition does not, however, mean that oil prices will cease to have an impact on global politics. Far from it. In fact, low prices are just as likely to roil the international landscape, only in new ways. While competition among consuming states may lessen, negative political conditions within producing nations are sure to be magnified.

Many of these nations, including Angola, Iran, Iraq, Mexico, Nigeria, Russia, Saudi Arabia, and Venezuela, among others, rely on income from oil exports for a large part of their government expenditures, using this money to finance health and education, infrastructure improvements, food and energy subsidies, and social welfare programs. Soaring energy prices, for instance, allowed many producer countries to reduce high youth unemployment — and so potential unrest. As prices come crashing down, governments are already being forced to cut back on programs that aid the poor, the middle class, and the unemployed, which is already producing waves of instability in many parts of the world.

Russia’s state budget, for example, remains balanced only when oil prices stay at or above $70 per barrel. With government income dwindling, the Kremlin has been forced to dig into accumulated reserves in order to meet its obligations and prop up sinking companies as well as the sinking ruble. The nation hailed as an energy giant is running out of money quickly. Unemployment is on the rise, and many firms are reducing work hours to save cash. Although Prime Minister Vladimir Putin remains popular, the first signs of public discontent have begun to appear, including scattered protests against increased tariffs on imported goods, rising public transit fees, and other such measures.

The decline in oil prices has been particularly damaging to natural gas behemoth Gazprom, Russia’s biggest company and the source (in good times) of approximately one quarter of government tax income. Because the price of natural gas is usually pegged to that of oil, declining oil prices have hit the company hard: last summer, CEO Alexei Miller estimated its market value at $360 billion; today, it’s $85 billion.

In the past, the Russians have used gas shut-offs to neighboring states to extend their political clout. Given the steep drop in gas prices, however, Gazprom’s January 1st decision to sever gas supplies to Ukraine (for failure to pay for $1.5 billion in past deliveries) is, at least in part, finance-based. Though the decision has triggered energy shortages in Europe — 25% of its natural gas arrives via Gazprom-fueled pipelines that traverse Ukraine — Moscow shows no sign of backing down in the price dispute. “They do need the money,” observed Chris Weafer of UralSib Bank in Moscow. “That is the bottom line.”

Plunging oil prices are also expected to place severe strains on the governments of Iran, Saudi Arabia, and Venezuela, all of which benefited from the record prices of the past few years to finance public works, subsidize basic necessities, and generate employment. Like Russia, these countries adopted expansive budgets on the assumption that a world of $70 or more per barrel gas prices would continue indefinitely. Now, like other affected producers, they must dip into accumulated reserves, borrow at a premium, and cut back on social spending — all of which risk a rise in political opposition and unrest at home.

The government of Iran, for example, has announced plans to eliminate subsidies on energy (gasoline now costs 36 cents per gallon) — a move expected to spark widespread protests in a country where unemployment rates and living costs are rising precipitously. The Saudi government has promised to avoid budget cuts for the time being by drawing on accumulated reserves, but unemployment is growing there as well.

Diminished spending in oil-producing states like Kuwait, Saudi Arabia, and the United Arab Emirates will also affect non-producing countries like Egypt, Jordan, and Yemen because young men from these countries migrate to the oil kingdoms when times are flush in search of higher-paying jobs. When times are rough, however, they are the first to be laid off and are often sent back to their homelands where few jobs await them.

All this is occurring against the backdrop of an upsurge in the popularity of Islam, including its more militant forms that reject the “collaborationist” politics of pro-U.S. regimes like those of Hosni Mubarak of Egypt and King Abdullah II of Jordan. Combine this with the recent devastating Israeli air attacks on, and ground invasion of, Gaza as well as the seemingly lukewarm response of moderate Arab regimes to the plight of the 1.5 million Palestinians trapped in that tiny strip of land, and the stage may be set for a major upsurge in anti-government unrest and violence. If so, no one will see this as oil-related, and yet that, in part, is what it will be.

In the context of a planet caught in the grip of a fierce economic downturn, other stormy energy scenarios involving key oil-producing countries are easy enough to imagine. When and where they will arise cannot be foreseen, but such eruptions are only likely to make any future era of rising energy prices all that much more difficult. And, indeed, prices will eventually rise again, perhaps some year soon, swiftly and to new record heights. At that point, we will be confronted with the sort of problems we faced in the spring and summer of 2008, when raging demand and inadequate supply drove petroleum costs ever skyward. In the meantime, it’s important to remember that, even with prices as low as they are, we cannot escape the consequences of our addiction to oil.

Michael T. Klare is the Five College Professor of Peace and World Security Studies at Hampshire College in Amherst, Massachusetts. He is the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Oil (Metropolitan Books). A documentary version of his previous book, Blood and Oil, is available at bloodandoilmovie.com. To listen to a TomDispatch audio interview in which Klare discusses the future of oil in 2009 and beyond, click here.

Copyright 2009 Michael T. Klare

Of all the challenges facing President Barack Obama next January, none is likely to prove as daunting, or important to the future of this nation, as that of energy. After all, energy policy — so totally mishandled by the outgoing Bush-Cheney administration — figures in each of the other major challenges facing the new president, including the economy, the environment, foreign policy, and our Middle Eastern wars. Most of all, it will prove a monumental challenge because the United States faces an energy crisis of unprecedented magnitude that is getting worse by the day.

The U.S. needs energy — lots of it. Day in and day out, this country, with only 5% of the world’s population, consumes one quarter of the world’s total energy supply. About 40% of our energy comes from oil: some 20 million barrels, or 840 million gallons a day. Another 23% comes from coal, and a like percentage from natural gas. Providing all this energy to American consumers and businesses, even in an economic downturn, remains a Herculean task, and will only grow more so in the years ahead. Addressing the environmental consequences of consuming fossil fuels at such levels, all emitting climate-altering greenhouse gases, only makes this equation more intimidating.

As President Obama faces our energy problem, he will have to address three overarching challenges:

1. The United States relies excessively on oil to supply its energy needs at a time when the future availability of petroleum is increasingly in question.

2. Our most abundant domestic source of fuel, coal, is the greatest emitter of greenhouse gases when consumed in the current manner.

3. No other source of energy, including natural gas, nuclear power, biofuels, wind power, and solar power is currently capable of supplanting our oil and coal consumption, even if a decision is made to reduce their importance in our energy mix.

This, then, is the essence of Obama’s energy dilemma. Let’s take a closer look at each of its key components.

Excessive Reliance on Oil

No other major power relies on getting so much of its energy from oil. Making that 40% figure especially daunting is this: the world supply of oil is about to contract. The competition for remaining supplies will then intensify, while most of what remains is located in inherently unstable regions, threatening to lead the U.S. into unceasing oil wars.

Just how much of the world’s untapped oil supply remains to be exploited, and how quickly we will reach a peak of sustainable daily world oil output, are matters of some contention, but recently the scope of debate on this question has narrowed appreciably.

Most energy experts now believe that we have consumed approximately half of the planet’s original petroleum inheritance and are very close to a peak in production. No one knows whether it will arrive in 2010, 2012, 2015, or beyond, but it is certainly near. In addition, most energy professionals now believe that global oil output will peak at far lower levels than only recently imagined — perhaps 90-95 million barrels per day, not the 115-125 million barrels once projected by the U.S. Department of Energy. (Here I’m speaking only of conventional, liquid petroleum; there are some "unconventional" sources of oil — Canadian tar sands, Venezuelan extra-heavy crude, and the like — that may boost these numbers by a few millions of barrels per day, without altering the global energy equation significantly.)

What underlies these more pessimistic assumptions? To begin with, the depletion rate of existing fields is accelerating. Most of the giant fields on which the world now relies for the bulk of its oil supplies were discovered 30 to 60 years ago and are now reaching the end of their productive life cycles.

It used to be thought that the depletion rate of these fields was about 4% to 5% a year, but in a study to be released November 12, the International Energy Agency (IEA), an affiliate of the Organization for Economic Cooperation and Development (the club of wealthy industrialized nations), is expected to report that the decline rate is closer to 9%, an astonishingly high figure. At this rate of decline, the world’s major fields will be depleted of their remaining supplies of oil relatively quickly, leaving us dependent on a constellation of smaller, less productive fields, often located in difficult to reach or unstable areas, as well as whatever new deposits the oil industry is able to locate and develop.

And this is the second big problem: Despite huge increases in the funds devoted to exploration, the oil companies are not finding giant new fields comparable to the "elephants" discovered in previous decades. Only two such fields were discovered between 1970 and 1990, and only one since — the Kashagan field in Kazakhstan’s corner of the Caspian Sea. True, the companies have discovered some large fields in the deep waters of the Gulf of Mexico and off the coasts of Angola and Brazil, but these are neither on a par with the largest fields now in production, nor anywhere near as easy to bring on line. They will not be able to reverse the coming decline in global output.

Given these factors, it is clear that the global supply of oil is destined to begin contracting in the not-too-distant future, and that the global peak in production — when it does arrive — will be at a level much lower than previously assumed. The current global economic downturn and the sudden fall in energy prices may, for a while, mask this phenomenon, but they won’t change it in any significant way.

Our excessive reliance on oil in good times and bad is made all the more problematic by the fact that, just as supplies are dwindling, global demand is expected to rise mainly because of increased consumption in China, India, and other developing nations.

As recently as 1990, the developing nations of Asia accounted for only a relatively small 10% of global oil consumption. Their economic growth has been so rapid, however, and their need for oil so voracious that they now consume about 18% of the world’s supply. If current trends persist, that will rise to 27% in 2030, exceeding North American net consumption for the first time. This means — if energy habits and present energy use don’t change radically — that Americans will be competing with Chinese and Indian consumers for every barrel of spare oil available on world markets, driving up prices and jeopardizing the health of our petroleum-dependent economy.

To make matters worse, more and more of the world’s remaining oil production will be concentrated in the Middle East, Central Asia, and sub-Saharan Africa. That these areas are chronically unstable is hardly accidental: many bear the scars of colonialism or are delineated by borders drawn up by the colonial powers that bear no resemblance to often fractious ethnic realities on the ground. Many also suffer from the "resource curse": the concentration of power in the hands of venal elites that seek to monopolize the collection of oil revenues by denying rights to the rest of the population, thereby inviting revolts, coups, and energy sabotage of every sort.

As it has grown more reliant on oil deliveries from these areas, the United States has attempted to enhance its energy "security" by an increasing reliance on military force, even though such efforts have largely proved ineffectual. Despite all the money and effort devoted to enforcement of what was once known as the Carter Doctrine — which stated that the uninterrupted flow of Persian Gulf oil to the United States is a vital national interest to be protected by any means necessary, including military force — the Persian Gulf is no more stable or peaceful today than it was in 1980, when President Jimmy Carter issued his famous decree.

Our over-reliance on oil, then, is our greatest energy vulnerability. But what are the alternatives?

The Problem with Coal

The energy source which the United States possesses in greatest abundance is coal. This country has the world’s largest reserves, 247 billion metric tons, and is second only to China in using coal. In this country, coal is primarily employed to produce electricity, but it can also be converted into a diesel fuel — known as coal-to-liquids or CTL — to power cars and trucks. Although CTL, widely used by Germany during World War II to power its war machine, is still in its infancy in the U.S., it could conceivably be used to supplement future declining gas supplies.

When coal is burned in the conventional manner, however, it emits more climate-altering greenhouse gases than any other fossil fuel — twice as much as natural gas and one-and-a-half times that of oil to produce the same amount of energy. As a result, any increase in our reliance on coal will lead to ever greater emissions of carbon dioxide, only accelerating the already perilous rate of global warming.

In addition, an increased U.S. reliance on coal would only flash a green light to China, India, and other countries eager to do likewise. The bottom line? Any hope of reversing the buildup of greenhouse gases in the atmosphere in time to avert the most severe consequences of climate change would go out the window (possibly quite literally).

During the recent election campaign, Barack Obama and John McCain both spoke of speeding the development of "clean coal technology." In the present context, however, clean coal is a deceptive term, if not an outright misnomer. It generally refers to pollution-free coal, not to coal free of carbon emissions. Coal that would burn without damaging the climate is best referred to as climate-friendly coal, or "safe coal." At present, there are no power plants anywhere on the planet capable of burning coal in a climate-safe manner.

Right now, there is only one technology being seriously discussed that would burn coal safely: carbon capture and storage, or carbon sequestration. Under this process, powdered coal is combined with steam and turned into a gas; then the carbon is stripped away and eventually buried. This is a tricky and costly technique that has yet to be fully tested. But at the moment, it is the only foreseeable path to using coal in a climate-friendly way. President-elect Obama has spoken of his interest in this technology, but without a lot more support and investment — no small matter in economically tough times — it will never get the boost it deserves.

Consider the Alternatives

So what’s left to satisfy our future energy needs?

Natural gas is the next biggest source and it possesses a number of advantages. Of all the fossil fuels, it releases the least amount of carbon dioxide when burned. We possess substantial, if not overwhelming, reserves of natural gas in this country. But like oil, it is a finite substance. Eventually, it, too, will peak and begin a decline of its own. Energy experts are less certain about when exactly this is likely to occur, but most see it coming a decade or so after oil’s peak.

Our biggest problem with natural gas is that we are gradually running out of North American reserves and so must increasingly rely on supplies from elsewhere — in this case, in the form of liquefied natural gas, or LNG. Fully 45% of the world’s remaining reserves are, however, held by just three countries, Russia, Iran, and Qatar, while large amounts are also held by Algeria, Iraq, Kazakhstan, Saudi Arabia, Turkmenistan, and Venezuela. This means, of course, that we face the same geopolitical problems relying on natural gas as we do with oil.

Some say we should increase our reliance on nuclear power. Nuclear power’s attraction is that, once in operation, it does not emit carbon dioxide. It does, however, raise enormous safety issues and produces toxic radioactive wastes that must be stored for thousands, or even tens of thousands, of years in ultra-safe containers — a technological challenge that has yet to be overcome. Given these problems, the rising costs and legal problems of building new reactors have deterred all but a few utilities from considering their construction, putting distinct limits on nuclear power’s capacity to overcome America’s energy crisis.

By far the most attractive alternative to oil and coal is obviously renewable energy, especially wind and solar power — much praised but inadequately supported by politicians of both parties. These need no fuel source (save the sun and wind), are never used up, and emit no carbon dioxide. They seem the perfect solution to the planet’s energy and climate crises.

The full potential of wind and solar power, however, cannot be realized until at least two other hurdles are overcome: the development of efficient storage systems to collect energy when the sun and wind are strong and release it when they are not, and the construction of an expanded nationwide electrical grid to connect areas of reliable wind (especially the mountain states and high plains) and sunshine (the Southwest) with the areas of greatest need. These are bound to be costly endeavors, but until they are fully funded, wind and solar power will not be capable of replacing more than a tiny fraction of oil and coal in the nation’s overall energy mix. Unfortunately, against a backdrop of bad times in a new era of "cheap" oil that will not last, the likelihood of such funding at the levels needed has declined precipitously.

Much can be said about the potential of advanced biofuels (those not reliant on food crops like corn), geothermal energy, wave power, hydrogen power, and nuclear fusion, but these all remain in the same category as wind and solar (only more so): they show a lot of potential, but without substantially more research, development, and investment, they cannot help wean us from our reliance on oil and coal.

The Challenge to be Met

If this assessment is accurate, President Obama will face a tough, if not overwhelming, challenge in attempting to get the nation’s long-term energy crisis in hand. On coming into office in increasingly tough times, he will be besieged by a host of immediate crises and demands for funds. On energy, his natural inclination, given limited financial resources, will undoubtedly be to make a series of modest gestures toward "green energy independence." This coming crisis, the central one of our lifetimes and those of our children and grandchildren, cannot, unfortunately, be solved via small-scale course corrections.

Needed is a major White House-led initiative on the scale of the World War II Manhattan Project that produced the first atomic bomb or the Apollo Moon Project. The principal goals of such an epic undertaking would have to include:

1. Reducing oil’s contribution to America’s total energy supply by half over the next quarter century. This would require a comprehensive program of conservation, increased development of public transport, the accelerated development of electric-powered vehicles and advanced biofuels, and other technological innovations.

2. Gradually reducing U.S. reliance on coal, unless consumed in a climate-friendly manner, as well as providing government support for the development of carbon capture and storage technology.

3. Increasing the contribution of renewable energy sources to America’s total energy mix from their current 6% to at least 25%, if not significantly more, by 2030. This would require substantial public investment in new technologies and electrical power lines.

4. Demilitarizing America’s reliance on imported petroleum. This means repudiating the Carter Doctrine, dismantling the vast military apparatus created since 1980 to enforce that policy, and using the resulting savings — as much as $150 billion per year, says a new report from the National Priorities Project — to help finance the initiatives described above.

Only by embracing such goals can President Obama hope to overcome the long-term, potentially devastating energy crisis now facing this nation.

Michael T. Klare is professor of peace and world security studies at Hampshire College and the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Metropolitan Books).

Copyright 2008 Michael T. Klare

Many Western analysts have chosen to interpret the recent fighting in the Caucasus as the onset of a new Cold War, with a small pro-Western democracy bravely resisting a brutal reincarnation of Stalin’s jack-booted Soviet Union. Others have viewed it a throwback to the age-old ethnic politics of southeastern Europe, with assorted minorities using contemporary border disputes to settle ancient scores.

Neither of these explanations is accurate. To fully grasp the recent upheavals in the Caucasus, it is necessary to view the conflict as but a minor skirmish in a far more significant geopolitical struggle between Moscow and Washington over the energy riches of the Caspian Sea basin — with former Russian President (now Prime Minister) Vladimir Putin emerging as the reigning Grand Master of geostrategic chess and the Bush team turning out to be middling amateurs, at best.

The ultimate prize in this contest is control over the flow of oil and natural gas from the energy-rich Caspian basin to eager markets in Europe and Asia. According to the most recent tally by oil giant BP, the Caspian’s leading energy producers, all former "socialist republics" of the Soviet Union — notably Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan — together possess approximately 48 billion barrels in proven oil reserves (roughly equivalent to those left in the U.S. and Canada) and 268 trillion cubic feet of natural gas (essentially equivalent to what Saudi Arabia possesses).

During the Soviet era, the oil and gas output of these nations was, of course, controlled by officials in Moscow and largely allocated to Russia and other Soviet republics. After the breakup of the USSR in 1991, however, Western oil companies began to participate in the hydrocarbon equivalent of a gold rush to exploit Caspian energy reservoirs, while plans were being made to channel the region’s oil and gas to markets across the world.

Rush to the Caspian

In the 1990s, the Caspian Sea basin was viewed as the world’s most promising new source of oil and gas, and so the major Western energy firms — Chevron, BP, Shell, and Exxon Mobil, among others — rushed into the region to take advantage of what seemed a golden opportunity. For these firms, persuading the governments of the newly independent Caspian states to sign deals proved to be no great hassle. They were eager to attract Western investment — and the bribes that often came with it — and to free themselves from Moscow’s economic domination.

But there turned out to be a major catch: It was neither obvious nor easy to figure out how to move all the new oil and gas to markets in the West. After all, the Caspian is landlocked, so tankers cannot get near it, while all existing pipelines passed through Russia and were hooked into Soviet-era supply systems. While many in Washington were eager to assist U.S. firms in their drive to gain access to Caspian energy, they did not want to see the resulting oil and gas flow through Russia — until recently, the country’s leading adversary — before reaching Western markets.

What, then, to do? Looking at the Caspian chessboard in the mid-1990s, President Bill Clinton conceived the striking notion of converting the newly independent, energy-poor Republic of Georgia into an "energy corridor" for the export of Caspian basin oil and gas to the West, thereby bypassing Russia altogether. An initial, "early-oil" pipeline was built to carry petroleum from newly-developed fields in Azerbaijan’s sector of the Caspian Sea to Supsa on Georgia’s Black Sea coast, where it was loaded onto tankers for delivery to international markets. This would be followed by a far more audacious scheme: the construction of the 1,000-mile BTC pipeline from Baku in Azerbaijan to Tbilisi in Georgia and then on to Ceyhan on Turkey’s Mediterranean coast. Again, the idea was to exclude Russia — which had, in the intervening years, been transformed into a struggling, increasingly impoverished former superpower — from the Caspian Sea energy rush.

Clinton presided over every stage of the BTC line’s initial development, from its early conception to the formal arrangements imposed by Washington on the three nations involved in its corporate structuring. (Final work on the pipeline was not completed until 2006, two years into George W. Bush’s second term.) For Clinton and his advisors, this was geopolitics, pure and simple — a calculated effort to enhance Western energy security while diminishing Moscow’s control over the global flow of oil and gas. The administration’s efforts to promote the construction of new pipelines through Azerbaijan and Georgia were intended "to break Russia’s monopoly of control over the transportation of oil from the region," Sheila Heslin of the National Security Council bluntly told a Senate investigating committee in 1997.

Clinton understood that this strategy entailed significant risks, particularly because Washington’s favored "energy corridor" passed through or near several major conflict zones — including the Russian-backed breakaway enclaves of Abkhazia and South Ossetia. With this in mind, Clinton made a secondary decision — to convert the new Georgian army into a military proxy of the United States, equipped and trained by the Department of Defense. From 1998 to 2000 alone, Georgia was awarded $302 million in U.S. military and economic aid — more than any other Caspian country — and top U.S. military officials started making regular trips to its capital, Tbilisi, to demonstrate support for then-president Eduard Shevardnadze.

In those years, Clinton was the top chess player in the Caspian region, while his Russian presidential counterpart, Boris Yeltsin, was far too preoccupied with domestic troubles and a bitter, costly, ongoing guerrilla war in Chechnya to match his moves. It was clear, however, that senior Russian officials were deeply concerned by the growing U.S. presence in their southern backyard — what they called their "near abroad" — and had already had begun planning for an eventual comeback. "It hasn’t been left unnoticed in Russia that certain outside interests are trying to weaken our position in the Caspian basin," Andrei Y. Urnov of the Russian Ministry of Foreign Affairs declared in May 2000. "No one should be perplexed that Russia is determined to resist the attempts to encroach on her interests."

Russia Resurgent

At this critical moment, a far more capable player took over on Russia’s side of the geopolitical chessboard. On December 31, 1999, Vladimir V. Putin was appointed president by Yeltsin and then, on March 26, 2000, elected to a full four-year term in office. Politics in the Caucasus and the Caspian region have never been the same.

Even before assuming the presidency, Putin indicated that he believed state control over energy resources should be the basis for Russia’s return to great-power status. In his doctoral dissertation, a summary of which was published in 1999, he had written that "[t]he state has the right to regulate the process of the acquisition and the use of natural resources, and particularly mineral resources [including oil and natural gas], independent of on whose property they are located." On this basis, Putin presided over the re-nationalization of many of the energy companies that had been privatized by Yeltsin and the virtual confiscation of Yukos — once Russia’s richest private energy firm — by Russian state authorities. He also brought Gazprom, the world’s largest natural gas supplier, back under state control and placed a protégé, Dmitri Medvedev — now president of Russia — at its helm.

Once he had restored state control over the lion’s share of Russia’s oil and gas resources, Putin turned his attention to the next obvious place — the Caspian Sea basin. Here, his intent was not so much to gain ownership of its energy resources — although Russian firms have in recent years acquired an equity share in some Caspian oil and gas fields — but rather to dominate the export conduits used to transport its energy to Europe and Asia.

Russia already enjoyed a considerable advantage since much of Kazakhstan’s oil already flowed to the West via the Caspian Pipeline Consortium (CPC), which passes through Russia before terminating on the Black Sea; moreover, much of Central Asia’s natural gas continued to flow to Russia through pipelines built during the Soviet era. But Putin’s gambit in the Caspian region evidently was meant to capture a far more ambitious prize. He wanted to ensure that most oil and gas from newly developed fields in the Caspian basin would travel west via Russia.

The first part of this drive entailed frenzied diplomacy by Putin and Medvedev (still in his role as board chairman of Gazprom) to persuade the presidents of Kazakhstan, Turkmenistan, and Uzbekistan to ship their future output of gas through Russia. Success was achieved when, in December 2007, Putin signed an agreement with the leaders of these countries to supply 20 billion cubic meters of gas per year through a new conduit along the Caspian’s eastern shore to southern Russia — for ultimate delivery to Europe via Gazprom’s existing pipeline network.

Meanwhile, Putin moved to undermine international confidence in Georgia as a reliable future corridor for energy delivery. This became a strategic priority for Moscow because the European Union announced plans to build a $10 billion natural-gas pipeline from the Caspian, dubbed "Nabucco" after the opera by Verdi. It would run from Turkey to Austria, while linking up to an expanded South Caucasus gas pipeline that now extends from Azerbaijan through Georgia to Erzurum in Turkey. The Nabucco pipeline was intended as a dramatic move to reduce Europe’s reliance on Russian natural gas — and so has enjoyed strong support from the Bush administration.

It is against this backdrop that the recent events in Georgia unfolded.

Checkmate in Georgia

Obviously, the more oil and gas passing through Georgia on its way to the West, the greater that country’s geostrategic significance in the U.S.-Russian struggle over the distribution of Caspian energy. Certainly, the Bush administration recognized this and responded by providing hundreds of millions of dollars in military aid to the Georgian military and helping to train specialized forces for protection of the new pipelines. But the administration’s partner in Tbilisi, President Mikheil Saakashvili, was not content to play the relatively modest role of pipeline protector. Instead, he sought to pursue a megalomaniacal fantasy of recapturing the breakaway regions of Abhkazia and South Ossetia with American help. As it happened, the Bush team — blindsided by their own neoconservative fantasies — saw in Saakashvili a useful pawn in their pursuit of a long smoldering anti-Russian agenda. Together, they walked into a trap cleverly set by Putin.

It is hard not to conclude that Russian prime minister goaded the rash Saakashvili into invading South Ossetia by encouraging Abkhazian and South Ossetian irregulars to attack Georgian outposts and villages on the peripheries of the two enclaves. Secretary of State Condoleezza Rice reportedly told Saakashvili not to respond to such provocations when she met with him in July. Apparently her advice fell on deaf ears. Far more enticing, it seems, was her promise of strong U.S. backing for Georgia’s rapid entry into NATO. Other American leaders, including Senator John McCain, assured Saakashvili of unwavering U.S. support. Whatever was said in these private conversations, the Georgian president seems to have interpreted them as a green light for his adventuristic impulses. On August 7th, by all accounts, his forces invaded South Ossetia and attacked its capital city of Tskhinvali, giving Putin what he long craved — a seemingly legitimate excuse to invade Georgia and demonstrate the complete vulnerability of Clinton’s (and now Bush’s) vaunted energy corridor.

Today, the Georgian army is in shambles, the BTC and South Caucasus gas pipelines are within range of Russian firepower, and Abkhazia and South Ossetia have declared their independence, quickly receiving Russian recognition. In response to these developments, the Bush administration has, along with some friendly leaders in Europe, mounted a media and diplomatic counterattack, accusing Moscow of barbaric behavior and assorted violations of international law. Threats have also been made to exclude Russia from various international forums and institutions, such as the G-8 club of governments and the World Trade Organization. It is possible, then, that Moscow will suffer some isolation and inconvenience as a result of its incursion into Georgia.

None of this, so far as can be determined, will alter the picture in the Caucasus: Putin has moved his most powerful pieces onto this corner of the chessboard, America’s pawn has been decisively defeated, and there’s not much of a practical nature that Washington (or London or Paris or Berlin) can do to alter the outcome.

There will, of course, be more rounds to come, and it is impossible to predict how they will play out. Putin prevailed this time around because he focused on geopolitical objectives, while his opponents were blindly driven by fantasy and ideology; so long as this pattern persists, he or his successors are likely to come out on top. Only if American leaders assume a more realistic approach to Russia’s resurgent power or, alternatively, choose to collaborate with Moscow in the exploitation of Caspian energy, will the risk of further strategic setbacks in the region disappear.

Michael T. Klare is professor of peace and world security studies at Hampshire College and the author, most recently, of Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Metropolitan Books).

Copyright 2008 Michael T. Klare

American policymakers have long viewed the protection of overseas oil supplies as an essential matter of "national security," requiring the threat of — and sometimes the use of — military force. This is now an unquestioned part of American foreign policy.

On this basis, the first Bush administration fought a war against Iraq in 1990-1991 and the second Bush administration invaded Iraq in 2003. With global oil prices soaring and oil reserves expected to dwindle in the years ahead, military force is sure to be seen by whatever new administration enters Washington in January 2009 as the ultimate guarantor of our well-being in the oil heartlands of the planet. But with the costs of militarized oil operations — in both blood and dollars — rising precipitously isn’t it time to challenge such "wisdom"? Isn’t it time to ask whether the U.S. military has anything reasonable to do with American energy security, and whether a reliance on military force, when it comes to energy policy, is practical, affordable, or justifiable?

How Energy Policy Got Militarized

The association between "energy security" (as it’s now termed) and "national security" was established long ago. President Franklin D. Roosevelt first forged this association way back in 1945, when he pledged to protect the Saudi Arabian royal family in return for privileged American access to Saudi oil. The relationship was given formal expression in 1980, when President Jimmy Carter told Congress that maintaining the uninterrupted flow of Persian Gulf oil was a "vital interest" of the United States, and attempts by hostile nations to cut that flow would be countered "by any means necessary, including military force."

To implement this "doctrine," Carter ordered the creation of a Rapid Deployment Joint Task Force, specifically earmarked for combat operations in the Persian Gulf area. President Ronald Reagan later turned that force into a full-scale regional combat organization, the U.S. Central Command, or CENTCOM. Every president since Reagan has added to CENTCOM’s responsibilities, endowing it with additional bases, fleets, air squadrons, and other assets. As the country has, more recently, come to rely on oil from the Caspian Sea basin and Africa, U.S. military capabilities are being beefed up in those areas as well.

As a result, the U.S. military has come to serve as a global oil protection service, guarding pipelines, refineries, and loading facilities in the Middle East and elsewhere. According to one estimate, provided by the conservative National Defense Council Foundation, the "protection" of Persian Gulf oil alone costs the U.S. Treasury $138 billion per year — up from $49 billion just before the invasion of Iraq.

For Democrats and Republicans alike, spending such sums to protect foreign oil supplies is now accepted as common wisdom, not worthy of serious discussion or debate. A typical example of this attitude can be found in an "Independent Task Force Report" on the "National Security Consequences of U.S. Oil Dependency" released by the Council on Foreign Relations (CFR) in October 2006. Chaired by former Secretary of Defense James R. Schlesinger and former CIA Director John Deutch, the CFR report concluded that the U.S. military must continue to serve as a global oil protection service for the foreseeable future. "At least for the next two decades, the Persian Gulf will be vital to U.S. interests in reliable oil supplies," it noted. Accordingly, "the United States should expect and support a strong military posture that permits suitably rapid deployment to the region, if necessary." Similarly, the report adds, "U.S. naval protection of the sea-lanes that transport oil is of paramount importance."

The Pentagon as Insecurity Inc.

These views, widely shared, then and now, by senior figures in both major parties, dominate — or, more accurately, blanket — American strategic thinking. And yet the actual utility of military force as a means for ensuring energy security has yet to be demonstrated.

Keep in mind that, despite the deployment of up to 160,000 U.S. troops in Iraq and the expenditure of hundreds of billions of dollars, Iraq is a country in chaos and the Department of Defense (DoD) has been notoriously unable to prevent the recurring sabotage of oil pipelines and refineries by various insurgent groups and militias, not to mention the systematic looting of government supplies by senior oil officials supposedly loyal to the U.S.-backed central government and often guarded (at great personal risk) by American soldiers. Five years after the U.S. invasion, Iraq is only producing about 2.5 million barrels of oil per day — about the same amount as in the worst days of Saddam Hussein back in 2001. Moreover, the New York Times reports, "at least one-third, and possibly much more, of the fuel from Iraq’s largest refinery… is [being] diverted to the black market, according to American military officials." Is this really conducive to American energy security?

The same disappointing results have been noted in other countries where U.S.-backed militaries have attempted to protect vulnerable oil facilities. In Nigeria, for example, increased efforts by American-equipped government forces to crush rebels in the oil-rich Niger Delta region have merely inflamed the insurgency, while actually lowering national oil output. Meanwhile, the Nigerian military, like the Iraqi government (and assorted militias), has been accused of pilfering billions of dollars’ worth of crude oil and selling it on the black market.

In reality, the use of military force to protect foreign oil supplies is likely to create anything but "security." It can, in fact, trigger violent "blowback" against the United States. For example, the decision by the senior President Bush to maintain an enormous, permanent U.S. military presence in Saudi Arabia following Operation Desert Storm in Kuwait is now widely viewed as a major source of virulent anti-Americanism in the Kingdom, and became a prime recruiting tool for Osama bin Laden in the months leading up to the 9/11 terror attacks. "For over seven years," bin Laden proclaimed in 1998, "the United States has been occupying the lands of Islam in the holiest of places, the Arabian Peninsula, plundering its riches, dictating to its rulers, humiliating its people, terrorizing its neighbors, and turning its bases in the Peninsula into a spearhead through which to fight neighboring Muslim peoples." To repel this assault on the Muslin world, he thundered, it was "an individual duty for every Muslim" to "kill the Americans" and drive their armies "out of all the lands of Islam."

As if to confirm the veracity of bin Laden’s analysis of U.S. intentions, then Secretary of Defense Donald Rumsfeld flew to Saudi Arabia on April 30, 2003 to announce that the American bases there would no longer be needed due to the successful invasion of Iraq, then barely one month old. "It is now a safer region because of the change of regime in Iraq," Rumsfeld declared. ”The aircraft and those involved will now be able to leave.”

Even as he was speaking in Riyadh, however, a dangerous new case of blowback had erupted in Iraq: Upon their entry into Baghdad, U.S. forces seized and guarded the Oil Ministry headquarters while allowing schools, hospitals, and museums to be looted with impunity. Most Iraqis have since come to regard this decision, which insured that the rest of the city would be looted, as the ultimate expression of the Bush administration’s main motive for invading their country. They have viewed repeated White House claims of a commitment to human rights and democracy there as mere fig leaves that barely covered the urge to plunder Iraq’s oil. Nothing American officials have done since has succeeded in erasing this powerful impression, which continues to drive calls for an American withdrawal.

And these are but a few examples of the losses to American national security produced by a thoroughly militarized approach to energy security. Yet the premises of such a global policy continue to go unquestioned, even as American policymakers persist in relying on military force as their ultimate response to threats to the safe production and transportation of oil. In a kind of energy "Catch-22," the continual militarizing of energy policy only multiplies the threats that call such militarization into being.

If anything, this spiral of militarized insecurity is worsening. Take the expanded U.S. military presence in Africa — one of the few areas in the world expected to experience an increase in oil output in the years ahead.

This year, the Pentagon will activate the U.S. Africa Command (AFRICOM), its first new overseas combat command since Reagan created CENTCOM a quarter century ago. Although Department of Defense officials are loathe to publicly acknowledge any direct relationship between AFRICOM’s formation and a growing U.S. reliance on that continent’s oil, they are less inhibited in private briefings. At a February 19th meeting at the National Defense University, for example, AFRICOM Deputy Commander Vice-Admiral Robert Moeller indicated that "oil disruption" in Nigeria and West Africa would constitute one of the primary challenges facing the new organization.

AFRICOM and similar extensions of the Carter Doctrine into new oil-producing regions are only likely to provoke fresh outbreaks of blowback, while bundling tens of billions of extra dollars every year into an already bloated Pentagon budget. Sooner or later, if U.S. policy doesn’t change, this price will be certain to include as well the loss of American lives, as more and more soldiers are exposed to hostile fire or explosives while protecting vulnerable oil installations in areas torn by ethnic, religious, and sectarian strife.

Why pay such a price? Given the all-but-unavoidable evidence of just how ineffective military force has been when it comes to protecting oil supplies, isn’t it time to rethink Washington’s reigning assumptions regarding the relationship between energy security and national security? After all, other than George W. Bush and Dick Cheney, who would claim that, more than five years after the invasion of Iraq, either the United States or its supply of oil is actually safer?

Creating Real Energy Security

The reality of America’s increasing reliance on foreign oil only strengthens the conviction in Washington that military force and energy security are inseparable twins. With nearly two-thirds of the country’s daily oil intake imported — and that percentage still going up — it’s hard not to notice that significant amounts of our oil now come from conflict-prone areas of the Middle East, Central Asia, and Africa. So long as this is the case, U.S. policymakers will instinctively look to the military to ensure the safe delivery of crude oil. It evidently matters little that the use of military force, especially in the Middle East, has surely made the energy situation less stable and less dependable, while fueling anti-Americanism.

This is, of course, not the definition of "energy security," but its opposite. A viable long-term approach to actual energy security would not favor one particular source of energy — in this case, oil — above all others, or regularly expose American soldiers to a heightened risk of harm and American taxpayers to a heightened risk of bankruptcy. Rather, an American energy policy that made sense would embrace a holistic approach to energy procurement, weighing the relative merits of all potential sources of energy.

It would naturally favor the development of domestic, renewable sources of energy that do not degrade the environment or imperil other national interests. At the same time, it would favor a thoroughgoing program of energy conservation of a sort notably absent these last two decades — one that would help cut reliance on foreign energy sources in the near future and slow the atmospheric buildup of climate-altering greenhouse gases.

Petroleum would continue to play a significant role in any such approach. Oil retains considerable appeal as a source of transportation energy (especially for aircraft) and as a feedstock for many chemical products. But given the right investment and research policies — and the will to apply something other than force to energy supply issues — oil’s historic role as the world’s paramount fuel could relatively quickly draw to a close. It would be especially important that American policymakers not prolong this role artificially by, as has been the case for decades, subsidizing major U.S. oil firms or, more recently, spending $138 billion a year on the protection of foreign oil deliveries. These funds would instead be redirected to the promotion of energy efficiency and especially the development of domestic sources of energy.

Some policymakers who agree on the need to develop alternatives to imported energy insist that such an approach should begin with oil extraction in the Arctic National Wildlife Refuge (ANWR) and other protected wilderness areas. Even while acknowledging that such drilling would not substantially reduce U.S. reliance on foreign oil, they nevertheless insist that it’s essential to make every conceivable effort to substitute domestic oil supplies for imports in the nation’s total energy supply. But this argument ignores the fact that oil’s day is drawing to a close, and that any effort to prolong its duration only complicates the inevitable transition to a post-petroleum economy.

A far more fruitful approach, better designed to promote American self-sufficiency and technological vigor in the intensely competitive world of the mid-21st century, would emphasize the use of domestic ingenuity and entrepreneurial skills to maximize the potential of renewable energy sources, including solar, wind, geothermal, and wave power. The same skills should also be applied to developing methods for producing ethanol from non-food plant matter ("cellulosic ethanol"), for using coal without releasing carbon into the atmosphere (via "carbon capture and storage," or CCS), for miniaturizing hydrogen fuel cells, and for massively increasing the energy efficiency of vehicles, buildings, and industrial processes.

All of these energy systems show great promise, and so should be accorded the increased support and investment they will need to move from the marginal role they now play to a dominant role in American energy generation. At this point, it is not possible to determine precisely which of them (or which combination among them) will be best positioned to transition from small to large-scale commercial development. As a result, all of them should be initially given enough support to test their capacity to make this move.

In applying this general rule, however, priority clearly should be given to new forms of transportation fuel. It is here that oil has long been king, and here that oil’s decline will be most harshly felt. It is thanks to this that calls for military intervention to secure additional supplies of crude are only likely to grow. So emphasis should be given to the rapid development of biofuels, coal-to-liquid fuels (with the carbon extracted via CCS), hydrogen, or battery power, and other innovative means of fueling vehicles. At the same time, it’s obvious that putting some of our military budget into funding a massive increase in public transit would be the height of national sanity.

An approach of this sort would enhance American national security on multiple levels. It would increase the reliable supply of fuels, promote economic growth at home (rather than sending a veritable flood of dollars into the coffers of unreliable petro-regimes abroad), and diminish the risk of recurring U.S. involvement in foreign oil wars. No other approach — certainly not the present traditional, unquestioned, unchallenged reliance on military force — can make this claim. It’s well past time to stop garrisoning the global gas station.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author of several books on energy politics, including Resource Wars (2001), Blood and Oil (2004), and, most recently, Rising Powers, Shrinking Planet: The New Geopolitics of Energy. A brief video of Klare discussing key subjects in his new book can be viewed by clicking here. A movie version of his book Blood and Oil is now available on DVD.

Copyright 2008 Michael T. Klare

Nineteen years ago, the fall of the Berlin Wall effectively eliminated the Soviet Union as the world’s other superpower. Yes, the USSR as a political entity stumbled on for another two years, but it was clearly an ex-superpower from the moment it lost control over its satellites in Eastern Europe.

Less than a month ago, the United States similarly lost its claim to superpower status when a barrel crude oil roared past $110 on the international market, gasoline prices crossed the $3.50 threshold at American pumps, and diesel fuel topped $4.00. As was true of the USSR following the dismantling of the Berlin Wall, the USA will no doubt continue to stumble on like the superpower it once was; but as the nation’s economy continues to be eviscerated to pay for its daily oil fix, it, too, will be seen by increasing numbers of savvy observers as an ex-superpower-in-the-making.

That the fall of the Berlin Wall spelled the erasure of the Soviet Union’s superpower status was obvious to international observers at the time. After all, the USSR visibly ceased to exercise dominion over an empire (and an associated military-industrial complex) encompassing nearly half of Europe and much of Central Asia. The relationship between rising oil prices and the obliteration of America’s superpower status is, however, hardly as self-evident. So let’s consider the connection.

Dry Hole Superpower

The fact is, America’s wealth and power has long rested on the abundance of cheap petroleum. The United States was, for a long time, the world’s leading producer of oil, supplying its own needs while generating a healthy surplus for export.

Oil was the basis for the rise of first giant multinational corporations in the U.S., notably John D. Rockefeller’s Standard Oil Company (now reconstituted as Exxon Mobil, the world’s wealthiest publicly-traded corporation). Abundant, exceedingly affordable petroleum was also responsible for the emergence of the American automotive and trucking industries, the flourishing of the domestic airline industry, the development of the petrochemical and plastics industries, the suburbanization of America, and the mechanization of its agriculture. Without cheap and abundant oil, the United States would never have experienced the historic economic expansion of the post-World War II era.

No less important was the role of abundant petroleum in fueling the global reach of U.S. military power. For all the talk of America’s growing reliance on computers, advanced sensors, and stealth technology to prevail in warfare, it has been oil above all that gave the U.S. military its capacity to "project power" onto distant battlefields like Iraq and Afghanistan. Every Humvee, tank, helicopter, and jet fighter requires its daily ration of petroleum, without which America’s technology-driven military would be forced to abandon the battlefield. No surprise, then, that the U.S. Department of Defense is the world’s single biggest consumer of petroleum, using more of it every day than the entire nation of Sweden.

From the end of World War II through the height of the Cold War, the U.S. claim to superpower status rested on a vast sea of oil. As long as most of our oil came from domestic sources and the price remained reasonably low, the American economy thrived and the annual cost of deploying vast armies abroad was relatively manageable. But that sea has been shrinking since the 1950s. Domestic oil production reached a peak in 1970 and has been in decline ever since — with a growing dependency on imported oil as the result. When it came to reliance on imports, the United States crossed the 50% threshold in 1998 and now has passed 65%.

Though few fully realized it, this represented a significant erosion of sovereign independence even before the price of a barrel of crude soared above $110. By now, we are transferring such staggering sums yearly to foreign oil producers, who are using it to gobble up valuable American assets, that, whether we know it or not, we have essentially abandoned our claim to superpowerdom.

According to the latest data from the U.S. Department of Energy, the United States is importing 12-14 million barrels of oil per day. At a current price of about $115 per barrel, that’s $1.5 billion per day, or $548 billion per year. This represents the single largest contribution to America’s balance-of-payments deficit, and is a leading cause for the dollar’s ongoing drop in value. If oil prices rise any higher — in response, perhaps, to a new crisis in the Middle East (as might be occasioned by U.S. air strikes on Iran) — our annual import bill could quickly approach three-quarters of a trillion dollars or more per year.

While our economy is being depleted of these funds, at a moment when credit is scarce and economic growth has screeched to a halt, the oil regimes on which we depend for our daily fix are depositing their mountains of accumulating petrodollars in "sovereign wealth funds" (SWFs) — state-controlled investment accounts that buy up prized foreign assets in order to secure non-oil-dependent sources of wealth. At present, these funds are already believed to hold in excess of several trillion dollars; the richest, the Abu Dhabi Investment Authority (ADIA), alone holds $875 billion.

The ADIA first made headlines in November 2007 when it acquired a $7.5 billion stake in Citigroup, America’s largest bank holding company. The fund has also made substantial investments in Advanced Micro Systems, a major chip maker, and the Carlyle Group, the private equity giant. Another big SWF, the Kuwait Investment Authority, also acquired a multibillion-dollar stake in Citigroup, along with a $6.6 billion chunk of Merrill Lynch. And these are but the first of a series of major SWF moves that will be aimed at acquiring stakes in top American banks and corporations.

The managers of these funds naturally insist that they have no intention of using their ownership of prime American properties to influence U.S. policy. In time, however, a transfer of economic power of this magnitude cannot help but translate into a transfer of political power as well. Indeed, this prospect has already stirred deep misgivings in Congress. "In the short run, that they [the Middle Eastern SWFs] are investing here is good," Senator Evan Bayh (D-Indiana) recently observed. "But in the long run it is unsustainable. Our power and authority is eroding because of the amounts we are sending abroad for energy…."

No Summer Tax Holiday for the Pentagon

Foreign ownership of key nodes of our economy is only one sign of fading American superpower status. Oil’s impact on the military is another.

Every day, the average G.I. in Iraq uses approximately 27 gallons of petroleum-based fuels. With some 160,000 American troops in Iraq, that amounts to 4.37 million gallons in daily oil usage, including gasoline for vans and light vehicles, diesel for trucks and armored vehicles, and aviation fuel for helicopters, drones, and fixed-wing aircraft. With U.S. forces paying, as of late April, an average of $3.23 per gallon for these fuels, the Pentagon is already spending approximately $14 million per day on oil ($98 million per week, $5.1 billion per year) to stay in Iraq. Meanwhile, our Iraqi allies, who are expected to receive a windfall of $70 billion this year from the rising price of their oil exports, charge their citizens $1.36 per gallon for gasoline.

When questioned about why Iraqis are paying almost a third less for oil than American forces in their country, senior Iraqi government officials scoff at any suggestion of impropriety. "America has hardly even begun to repay its debt to Iraq," said Abdul Basit, the head of Iraq’s Supreme Board of Audit, an independent body that oversees Iraqi governmental expenditures. "This is an immoral request because we didn’t ask them to come to Iraq, and before they came in 2003 we didn’t have all these needs."

Needless to say, this is not exactly the way grateful clients are supposed to address superpower patrons. "It’s totally unacceptable to me that we are spending tens of billions of dollars on rebuilding Iraq while they are putting tens of billions of dollars in banks around the world from oil revenues," said Senator Carl Levin (D-Michigan), chairman of the Armed Services Committee. "It doesn’t compute as far as I’m concerned."

Certainly, however, our allies in the region, especially the Sunni kingdoms of Kuwait, Saudi Arabia, and the United Arab Emirates (UAE) that presumably look to Washington to stabilize Iraq and curb the growing power of Shiite Iran, are willing to help the Pentagon out by supplying U.S. troops with free or deeply-discounted petroleum. No such luck. Except for some partially subsidized oil supplied by Kuwait, all oil-producing U.S. allies in the region charge us the market rate for petroleum. Take that as a striking reflection of how little credence even countries whose ruling elites have traditionally looked to the U.S. for protection now attach to our supposed superpower status.

Think of this as a strikingly clear-eyed assessment of American power. As far as they’re concerned, we’re now just another of those hopeless oil addicts driving a monster gas-guzzler up to the pump — and they’re perfectly happy to collect our cash which they can then use to cherry-pick our prime assets. So expect no summer tax holidays for the Pentagon, not in the Middle East, anyway.

Worse yet, the U.S. military will need even more oil for the future wars on which the Pentagon is now doing the planning. In this way, the U.S. experience in Iraq has especially worrisome implications. Under the military "transformation" initiated by Secretary of Defense Donald Rumsfeld in 2001, the future U.S. war machine will rely less on "boots on the ground" and ever more on technology. But technology entails an ever-greater requirement for oil, as the newer weapons sought by Rumsfeld (and now Secretary of Defense Robert Gates) all consume many times more fuel than those they will replace. To put this in perspective: The average G.I in Iraq now uses about seven times as much oil per day as G.I.s did in the first the Gulf War less than two decades ago. And every sign indicates that the same ratio of increase will apply to coming conflicts; that the daily cost of fighting will skyrocket; and that the Pentagon’s capacity to shoulder multiple foreign military burdens will unravel. Thus are superpowers undone.

Russia’s Gusher

If anything demonstrates the critical role of oil in determining the fate of superpowers in the current milieu, it is the spectacular reemergence of Russia as a Great Power on the basis of its superior energy balance. Once derided as the humiliated, enfeebled loser in the U.S.-Soviet rivalry, Russia is again a force to be reckoned with in world affairs. It possesses the fastest-growing economy among the G-8 group of major industrial powers, is the world’s second leading producer of oil (after Saudi Arabia), and its top producer of natural gas. Because it produces far more energy than it consumes, Russia exports a substantial portion of its oil and gas to neighboring countries, making it the only Great Power not dependent on other states for its energy needs.

As Russia has become an energy-exporting state, it has moved from the list of has-beens to the front rank of major players. When President Bush first occupied the White House, in February 2001, one of his highest priorities was to downgrade U.S. ties with Russia and annul the various arms-control agreements that had been forged between the two countries by his predecessors, agreements that explicitly conferred equal status on the USA and the USSR.

As an indication of how contemptuously the Bush team viewed Russia at that time, Condoleezza Rice, while still an adviser to the Bush presidential campaign, wrote, in the January/February 2000 issue of the influential Foreign Affairs, "U.S. policy… must recognize that American security is threatened less by Russia’s strength than by its weakness and incoherence." Under such circumstances, she continued, there was no need to preserve obsolete relics of the dual superpower past like the Anti-Ballistic Missile (ABM) Treaty; rather, the focus of U.S. efforts should be on preventing the further erosion of Russian nuclear safeguards and the potential escape of nuclear materials.

In line with this outlook, President Bush believed that he could convert an impoverished and compliant Russia into a major source of oil and natural gas for the United States — with American energy companies running the show. This was the evident aim of the U.S.-Russian "energy dialogue" announced by Bush and Russian President Vladimir Putin in May 2002. But if Bush thought Russia was prepared to turn into a northern version of Kuwait, Saudi Arabia, or Venezuela prior to the arrival of Hugo Chávez, he was to be sorely disappointed. Putin never permitted American firms to acquire substantial energy assets in Russia. Instead, he presided over a major recentralization of state control when it came to the country’s most valuable oil and gas reserves, putting most of them in the hands of Gazprom, the state-controlled natural gas behemoth.

Once in control of these assets, moreover, Putin has used his renascent energy power to exert influence over states that were once part of the former Soviet Union, as well as those in Western Europe that rely on Russian oil and gas for a substantial share of their energy needs. In the most extreme case, Moscow turned off the flow of natural gas to Ukraine on January 1, 2006, in the midst of an especially cold winter, in what was said to be a dispute over pricing but was widely viewed as punishment for Ukraine’s political drift westwards. (The gas was turned back on four days later when Ukraine agreed to pay a higher price and offered other concessions.) Gazprom has threatened similar action in disputes with Armenia, Belarus, and Georgia — in each case forcing those former Soviet SSRs to back down.

When it comes to the U.S.-Russian relationship, just how much the balance of power has shifted was evident at the NATO summit at Bucharest in early April. There, President Bush asked that Georgia and Ukraine both be approved for eventual membership in the alliance, only to find top U.S. allies (and Russian energy users) France and Germany blocking the measure out of concern for straining ties with Russia. "It was a remarkable rejection of American policy in an alliance normally dominated by Washington," Steven Erlanger and Steven Lee Myers of the New York Times reported, "and it sent a confusing signal to Russia, one that some countries considered close to appeasement of Moscow."

For Russian officials, however, the restoration of their country’s great power status is not the product of deceit or bullying, but a natural consequence of being the world’s leading energy provider. No one is more aware of this than Dmitri Medvedev, the former Chairman of Gazprom and new Russian president. "The attitude toward Russia in the world is different now," he declared on December 11, 2007. "We are not being lectured like schoolchildren; we are respected and we are deferred to. Russia has reclaimed its proper place in the world community. Russia has become a different country, stronger and more prosperous."

The same, of course, can be said about the United States — in reverse. As a result of our addiction to increasingly costly imported oil, we have become a different country, weaker and less prosperous. Whether we know it or not, the energy Berlin Wall has already fallen and the United States is an ex-superpower-in-the-making.

Michael Klare is a professor of peace and world security studies at Hampshire College and author of the just-released Rising Powers, Shrinking Planet: The New Geopolitics of Energy (Metropolitan Books). A documentary film based on his previous book, Blood and Oil, is available from the Media Education Foundation and can be ordered at bloodandoilmovie.com. A brief video of Klare discussing key subjects in his new book can be viewed by clicking here.

Copyright 2008 Michael T. Klare

Tom Engelhardt of TomDispatch.com interviews Michael Klare, author of the new book Rising Powers, Shrinking Planet: The New Geopolitics of Energy.

Oil at $110 a barrel. Gasoline at $3.35 (or more) per gallon. Diesel fuel at $4 per gallon. Independent truckers forced off the road. Home heating oil rising to unconscionable price levels. Jet fuel so expensive that three low-cost airlines stopped flying in the past few weeks. This is just a taste of the latest energy news, signaling a profound change in how all of us, in this country and around the world, are going to live — trends that, so far as anyone can predict, will only become more pronounced as energy supplies dwindle and the global struggle over their allocation intensifies.

Energy of all sorts was once hugely abundant, making possible the worldwide economic expansion of the past six decades. This expansion benefited the United States above all — along with its "First World" allies in Europe and the Pacific. Recently, however, a select group of former "Third World" countries — China and India in particular — have sought to participate in this energy bonanza by industrializing their economies and selling a wide range of goods to international markets. This, in turn, has led to an unprecedented spurt in global energy consumption — a 47% rise in the past 20 years alone, according to the U.S. Department of Energy (DoE).

An increase of this sort would not be a matter of deep anxiety if the world’s primary energy suppliers were capable of producing the needed additional fuels. Instead, we face a frightening reality: a marked slowdown in the expansion of global energy supplies just as demand rises precipitously. These supplies are not exactly disappearing — though that will occur sooner or later — but they are not growing fast enough to satisfy soaring global demand.

The combination of rising demand, the emergence of powerful new energy consumers, and the contraction of the global energy supply is demolishing the energy-abundant world we are familiar with and creating in its place a new world order. Think of it as: rising powers/shrinking planet.

This new world order will be characterized by fierce international competition for dwindling stocks of oil, natural gas, coal, and uranium, as well as by a tidal shift in power and wealth from energy-deficit states like China, Japan, and the United States to energy-surplus states like Russia, Saudi Arabia, and Venezuela. In the process, the lives of everyone will be affected in one way or another — with poor and middle-class consumers in the energy-deficit states experiencing the harshest effects. That’s most of us and our children, in case you hadn’t quite taken it in.

Here, in a nutshell, are five key forces in this new world order which will change our planet:

1. Intense competition between older and newer economic powers for available supplies of energy: Until very recently, the mature industrial powers of Europe, Asia, and North America consumed the lion’s share of energy and left the dregs for the developing world. As recently as 1990, the members of the Organization of Economic Cooperation and Development (OECD), the club of the world’s richest nations, consumed approximately 57% of world energy; the Soviet Union/Warsaw Pact bloc, 14% percent; and only 29% was left to the developing world. But that ratio is changing: With strong economic growth in the developing countries, a greater proportion of the world’s energy is being consumed by them. By 2010, the developing world’s share of energy use is expected to reach 40% and, if current trends persist, 47% by 2030.

China plays a critical role in all this. The Chinese alone are projected to consume 17% of world energy by 2015, and 20% by 2025 — by which time, if trend lines continue, it will have overtaken the United States as the world’s leading energy consumer. India, which, in 2004, accounted for 3.4% of world energy use, is projected to reach 4.4% percent by 2025, while consumption in other rapidly industrializing nations like Brazil, Indonesia, Malaysia, Thailand, and Turkey is expected to grow as well.

These rising economic dynamos will have to compete with the mature economic powers for access to remaining untapped reserves of exportable energy — in many cases, bought up long ago by the private energy firms of the mature powers like Exxon Mobil, Chevron, BP, Total of France, and Royal Dutch Shell. Of necessity, the new contenders have developed a potent strategy for competing with the Western "majors": they’ve created state-owned companies of their own and fashioned strategic alliances with the national oil companies that now control oil and gas reserves in many of the major energy-producing nations.

China’s Sinopec, for example, has established a strategic alliance with Saudi Aramco, the nationalized giant once owned by Chevron and Exxon Mobil, to explore for natural gas in Saudi Arabia and market Saudi crude oil in China. Likewise, the China National Petroleum Corporation (CNPC) will collaborate with Gazprom, the massive state-controlled Russian natural gas monopoly, to build pipelines and deliver Russian gas to China. Several of these state-owned firms, including CNPC and India’s Oil and Natural Gas Corporation, are now set to collaborate with Petróleos de Venezuela S.A. in developing the extra-heavy crude of the Orinoco belt once controlled by Chevron. In this new stage of energy competition, the advantages long enjoyed by Western energy majors has been eroded by vigorous, state-backed upstarts from the developing world.

2. The insufficiency of primary energy supplies: The capacity of the global energy industry to satisfy demand is shrinking. By all accounts, the global supply of oil will expand for perhaps another half-decade before reaching a peak and beginning to decline, while supplies of natural gas, coal, and uranium will probably grow for another decade or two before peaking and commencing their own inevitable declines. In the meantime, global supplies of these existing fuels will prove incapable of reaching the elevated levels demanded.

Take oil. The U.S. Department of Energy claims that world oil demand, expected to reach 117.6 million barrels per day in 2030, will be matched by a supply that — miracle of miracles — will hit exactly 117.7 million barrels (including petroleum liquids derived from allied substances like natural gas and Canadian tar sands) at the same time. Most energy professionals, however, consider this estimate highly unrealistic. "One hundred million barrels is now in my view an optimistic case," the CEO of Total, Christophe de Margerie, typically told a London oil conference in October 2007. "It is not my view; it is the industry view, or the view of those who like to speak clearly, honestly, and [are] not just trying to please people."

Similarly, the authors of the Medium-Term Oil Market Report, published in July 2007 by the International Energy Agency, an affiliate of the OECD, concluded that world oil output might hit 96 million barrels per day by 2012, but was unlikely to go much beyond that as a dearth of new discoveries made future growth impossible.

Daily business-page headlines point to a vortex of clashing trends: worldwide demand will continue to grow as hundred of millions of newly-affluent Chinese and Indian consumers line up to purchase their first automobile (some selling for as little as $2,500); key older "elephant" oil fields like Ghawar in Saudi Arabia and Canterell in Mexico are already in decline or expected to be so soon; and the rate of new oil-field discoveries plunges year after year. So expect global energy shortages and high prices to be a constant source of hardship.

3. The painfully slow development of energy alternatives: It has long been evident to policymakers that new sources of energy are desperately needed to compensate for the eventual disappearance of existing fuels as well as to slow the buildup of climate-changing "greenhouse gases" in the atmosphere. In fact, wind and solar power have gained significant footholds in some parts of the world. A number of other innovative energy solutions have already been developed and even tested out in university and corporate laboratories. But these alternatives, which now contribute only a tiny percentage of the world’s net fuel supply, are simply not being developed fast enough to avert the multifaceted global energy catastrophe that lies ahead.

According to the U.S. Department of Energy, renewable fuels, including wind, solar, and hydropower (along with "traditional" fuels like firewood and dung), supplied but 7.4% of global energy in 2004; biofuels added another 0.3%. Meanwhile, fossil fuels — oil, coal, and natural gas — supplied 86% percent of world energy, nuclear power another 6%. Based on current rates of development and investment, the DoE offers the following dismal projection: In 2030, fossil fuels will still account for exactly the same share of world energy as in 2004. The expected increase in renewables and biofuels is so slight — a mere 8.1% — as to be virtually meaningless.

In global warming terms, the implications are nothing short of catastrophic: Rising reliance on coal (especially in China, India, and the United States) means that global emissions of carbon dioxide are projected to rise by 59% over the next quarter-century, from 26.9 billion metric tons to 42.9 billion tons. The meaning of this is simple. If these figures hold, there is no hope of averting the worst effects of climate change.

When it comes to global energy supplies, the implications are nearly as dire. To meet soaring energy demand, we would need a massive influx of alternative fuels, which would mean equally massive investment — in the trillions of dollars — to ensure that the newest possibilities move rapidly from laboratory to full-scale commercial production; but that, sad to say, is not in the cards. Instead, the major energy firms (backed by lavish U.S. government subsidies and tax breaks) are putting their mega-windfall profits from rising energy prices into vastly expensive (and environmentally questionable) schemes to extract oil and gas from Alaska and the Arctic, or to drill in the deep and difficult waters of the Gulf of Mexico and the Atlantic Ocean. The result? A few more barrels of oil or cubic feet of natural gas at exorbitant prices (with accompanying ecological damage), while non-petroleum alternatives limp along pitifully.

4. A steady migration of power and wealth from energy-deficit to energy-surplus nations: There are few countries — perhaps a dozen altogether — with enough oil, gas, coal, and uranium (or some combination thereof) to meet their own energy needs and provide significant surpluses for export. Not surprisingly, such states will be able to extract increasingly beneficial terms from the much wider pool of energy-deficit nations dependent on them for vital supplies of energy. These terms, primarily of a financial nature, will result in growing mountains of petrodollars being accumulated by the leading oil producers, but will also include political and military concessions.

In the case of oil and natural gas, the major energy-surplus states can be counted on two hands. Ten oil-rich states possess 82.2% of the world’s proven reserves. In order of importance, they are: Saudi Arabia, Iran, Iraq, Kuwait, the United Arab Emirates, Venezuela, Russia, Libya, Kazakhstan, and Nigeria. The possession of natural gas is even more concentrated. Three countries — Russia, Iran, and Qatar — harbor an astonishing 55.8% of the world supply. All of these countries are in an enviable position to cash in on the dramatic rise in global energy prices and to extract from potential customers whatever political concessions they deem important.

The transfer of wealth alone is already mind-boggling. The oil-exporting countries collected an estimated $970 billion from the importing countries in 2006, and the take for 2007, when finally calculated, is expected to be far higher. A substantial fraction of these dollars, yen, and euros have been deposited in "sovereign-wealth funds" (SWFs), giant investment accounts owned by the oil states and deployed for the acquisition of valuable assets around the world. In recent months, the Persian Gulf SWFs have been taking advantage of the financial crisis in the United States to purchase large stakes in strategic sectors of its economy. In November 2007, for example, the Abu Dhabi Investment Authority (ADIA) acquired a $7.5 billion stake in Citigroup, America’s largest bank holding company; in January, Citigroup sold an even larger share, worth $12.5 billion, to the Kuwait Investment Authority (KIA) and several other Middle Eastern investors, including Prince Walid bin Talal of Saudi Arabia. The managers of ADIA and KIA insist that they do not intend to use their newly-acquired stakes in Citigroup and other U.S. banks and corporations to influence U.S. economic or foreign policy, but it is hard to imagine that a financial shift of this magnitude, which can only gain momentum in the decades ahead, will not translate into some form of political leverage.

In the case of Russia, which has risen from the ashes of the Soviet Union as the world’s first energy superpower, it already has. Russia is now the world’s leading supplier of natural gas, the second largest supplier of oil, and a major producer of coal and uranium. Though many of these assets were briefly privatized during the reign of Boris Yeltsin, President Vladimir Putin has brought most of them back under state control — in some cases, by exceedingly questionable legal means. He then used these assets in campaigns to bribe or coerce former Soviet republics on Russia’s periphery reliant on it for the bulk of their oil and gas supplies. European Union countries have sometimes expressed dismay at Putin’s tactics, but they, too, are dependent on Russian energy supplies, and so have learned to mute their protests to accommodate growing Russian power in Eurasia. Consider Russia a model for the new energy world order.

5. A Growing Risk of Conflict: Throughout history, major shifts in power have normally been accompanied by violence — in some cases, protracted violent upheavals. Either states at the pinnacle of power have struggled to prevent the loss of their privileged status, or challengers have fought to topple those at the top of the heap. Will that happen now? Will energy-deficit states launch campaigns to wrest the oil and gas reserves of surplus states from their control — the Bush administration’s war in Iraq might already be thought of as one such attempt — or to eliminate competitors among their deficit-state rivals?

The high costs and risks of modern warfare are well known and there is a widespread perception that energy problems can best be solved through economic means, not military ones. Nevertheless, the major powers are employing military means in their efforts to gain advantage in the global struggle for energy, and no one should be deluded on the subject. These endeavors could easily enough lead to unintended escalation and conflict.

One conspicuous use of military means in the pursuit of energy is obviously the regular transfer of arms and military-support services by the major energy-importing states to their principal suppliers. Both the United States and China, for example, have stepped up their deliveries of arms and equipment to oil-producing states like Angola, Nigeria, and Sudan in Africa and, in the Caspian Sea basin, Azerbaijan, Kazakhstan, and Kyrgyzstan. The United States has placed particular emphasis on suppressing the armed insurgency in the vital Niger Delta region of Nigeria, where most of the country’s oil is produced; Beijing has emphasized arms aid to Sudan, where Chinese-led oil operations are threatened by insurgencies in both the South and Darfur.

Russia is also using arms transfers as an instrument in its efforts to gain influence in the major oil- and gas-producing regions of the Caspian Sea basin and the Persian Gulf. Its urge is not to procure energy for its own use, but to dominate the flow of energy to others. In particular, Moscow seeks a monopoly on the transportation of Central Asian gas to Europe via Gazprom’s vast pipeline network; it also wants to tap into Iran’s mammoth gas fields, further cementing Russia’s control over the trade in natural gas.

The danger, of course, is that such endeavors, multiplied over time, will provoke regional arms races, exacerbate regional tensions, and increase the danger of great-power involvement in any local conflicts that erupt. History has all too many examples of such miscalculations leading to wars that spiral out of control. Think of the years leading up to World War I. In fact, Central Asia and the Caspian today, with their multiple ethnic disorders and great-power rivalries, bear more than a glancing resemblance to the Balkans in the years leading up to 1914.

What this adds up to is simple and sobering: the end of the world as you’ve known it. In the new, energy-centric world we have all now entered, the price of oil will dominate our lives and power will reside in the hands of those who control its global distribution.

In this new world order, energy will govern our lives in new ways and on a daily basis. It will determine when, and for what purposes, we use our cars; how high (or low) we turn our thermostats; when, where, or even if, we travel; increasingly, what foods we eat (given that the price of producing and distributing many meats and vegetables is profoundly affected by the cost of oil or the allure of growing corn for ethanol); for some of us, where to live; for others, what businesses we engage in; for all of us, when and under what circumstances we go to war or avoid foreign entanglements that could end in war.

This leads to a final observation: The most pressing decision facing the next president and Congress may be how best to accelerate the transition from a fossil-fuel-based energy system to a system based on climate-friendly energy alternatives.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author of Resource Wars and Blood and Oil. Consider this essay a preview of his newest book, Rising Powers, Shrinking Planet: The New Geopolitics of Energy, which has just been published by Metropolitan Books. A brief video of Klare discussing key subjects in his new book can be viewed by clicking here.

Copyright 2008 Michael T. Klare

On Monday March 3, the price of crude oil reached $103.95 per barrel on the New York Mercantile Exchange, surpassing the record set nearly 30 years ago during another moment of chaos in the Middle East. Will that new mark prove distinctive in the annals of world history or will it be forgotten as energy prices drop, just as they did following their April 1980 peak?

When oil costs are plotted over time, the 1980 oil crisis — prompted by Ayatollah Khomeini’s Iranian revolution — stands out as a sharp spike on that price curve. Both before and after that moment, however, oil supplies proved largely sufficient to meet rising global demand, in part because the Saudis and other major producers were capable of compensating for declining Iranian production. They simply increased their output substantially, dumping a surplus of oil onto the global market. Aided by the development of new fields in Alaska and the North Sea, prices dropped precipitously and stayed low through the 1990s (except for a brief spike following the Iraqi invasion of Kuwait in August 1990).

Nothing similar is likely to happen now. For the present surge in prices — crude oil costs have risen by 74% over the past year — no such easy solution is in sight. To begin with, we face not a sudden spike, but the results of a steady, relentless climb that began in 2002 and shows no signs of abating; nor can this rise be attributed to a single, chaos-causing factor in the energy business or in global politics. It is instead the product of multiple factors endemic to energy production and characteristic of the current era. There is no prospect of their vanishing any time soon.

Three factors, in particular, are responsible for the current surge: intensifying competition for oil between the older industrial powers and rising economic dynamos like China and India; the inability of the global energy industry to expand supplies to keep pace with growing demand; and intensifying instability in the major oil-producing areas.

A Tsunami of Energy Needs

The crucial role of the developing economic dynamos in Asia on the global energy market was already evident as this century dawned. With their phenomenal rates of growth, these countries must have more oil (and other forms of energy) to power their expanding industries, fuel their new cars and trucks, and satisfy the aspirations of their burgeoning middle classes. According to the U.S. Department of Energy (DoE), combined oil demand from China and India, already at 8.9 million barrels per day in 2004, is expected to hit 12.1 million barrels by 2010 and 15.5 million barrels by 2020. These are staggering rises. If you include anticipated consumption by Brazil, Mexico, South Korea, and other rapidly industrializing nations, demand from the developing world is truly expected to soar.

To this tsunami of new energy needs must be added an already high level of consumption by the mature industrial powers led by the United States, the European Union, and Japan. This shows little sign of lessening, which means we face an unprecedented surge in the total demand for oil. According to the DoE, combined world oil consumption, which reached 83.7 million barrels per day in 2006, is projected to hit 90.7 million barrels in 2010 and 103.7 million in 2020. We’re talking about an increase of 20 million barrels per day in just 15 years. To achieve this would require a mammoth, unbelievably costly effort on the part of the world’s giant oil companies (and their lenders and government backers), and even then it might not be possible.

American consumers, facing gas-pump hell, are, at the moment, being further punished by the fact that most global oil transactions are denominated in dollars. Given the declining value of the dollar relative to other currencies, we wind up paying more per barrel than competitors who can convert their euros, yen, or other strong currencies into dollars before bidding against us on the international energy market. Global investors, sensing the trend, are dumping the dollar for these other currencies or buying oil futures, only adding to the slide of the U.S. currency and the rising price of crude.

A Tough Oil World

Lurking behind soaring demand is another crisis entirely — a crisis of production. The energy industry is now in the difficult process of transitioning from a world of easily tapped oil supplies to one in which mainly tough-oil options prevail. Those "easy-oil" supplies are the ones we’ve long been familiar with: the giant petroleum reservoirs in friendly, stable countries that provided most of the world’s oil during the formative years of the Petroleum Age, stretching from the late nineteenth century until the Arab oil embargo of 1973.

These mammoth reservoirs include Ghawar in Saudi Arabia, Burgan in Kuwait, and Cantarell in Mexico — monster fields that produce hundreds of thousands or even millions of barrels of crude per day. In the last quarter-century, however, discoveries of "elephant" fields like these have been almost nonexistent. The world is, as a result, becoming increasingly dependent on smaller fields, often in remote, unwelcoming locations that require far more expense to develop and bring online. This, too, is adding to the price of oil.

As an illustration of this trend, take Kashagan, a giant oil field discovered in 2000 in Kazakhstan’s sector of the Caspian Sea. It represents the single largest discovery worldwide in the past 40 years. Although it does harbor significant reserves of oil and gas, the field poses staggering challenges to the international consortium of energy companies attempting to develop it. It contains, for example, high concentrations of poisonous hydrogen sulfide gas, which makes its development using conventional (and so cheaper) production technology impossible. Development costs to bring the field online have already soared from an estimated $57 billion to $135 billion with no end in sight. In the meantime, the projected date for the start-up of production at Kashagan has been continually pushed back. Once expected to come online in 2005, it’s now slated for 2011 — at the earliest. This, in turn, has led a frustrated Kazakh government to demand that the state-owned KazMunaiGaz energy company be given a larger stake in the field’s operating consortium.

Most of the other big discoveries of recent years — the "Jack" field in the deep waters of the Gulf of Mexico, the Doba field in Chad, fields off Russia’s Sakhalin Island, and the Tupi field in the deep Atlantic off Brazil — exhibit similar characteristics. They are either far offshore and difficult to develop or entail problematic relationships with unreliable governments — or, worse yet, some combination of the two. You can essentially do the math yourself when it comes to the future cost of oil produced at such sites.

So here’s the bad news at the pump: The inability of the global energy industry to keep pace with rising demand is only likely to become more pronounced as, in the years ahead, the world reaches maximum sustainable daily petroleum output and commences what just about all energy experts now agree will be an irreversible decline. No one can be sure when exactly this will occur, but a growing chorus of specialists believes that we are moving ever closer to that moment of "peak" oil output — with some specialists placing it as soon as 2010-12.

Oil as a Conflict-producer

Finally, let’s not forget that the equivalent of the Iranian Revolution of 1980 remains with us. The oil heartlands of the planet are increasingly in crisis and the price of oil is regularly driven up by that as well. Iraq, with the world’s second largest reserves of petroleum, is convulsed by war. Nigeria, a major supplier to the United States and Europe, has experienced a significant reduction in output recently due to ethnic violence in the oil-rich Niger Delta region. Venezuela’s production has fallen because many anti-Chávez oil technocrats have been purged from the state-owned oil monopoly PdVSA. Iran’s output has suffered as a result of the economic sanctions imposed by the United States. Political violence, corruption, and state interference in the energy sector have also led to depressed output in Chad, Mexico, Russia, and Sudan.

At one time, the world’s major oil producers could compensate for a downturn in output in any area by ramping up production from the "spare" (or reserve) capacity at their disposal. This was critical in 1990, following the Iraq invasion of Kuwait, and again in 2001, following the attacks of 9/11. Both times, Saudi Arabia simply upped production, adding hundreds of thousands of barrels per day in spare capacity, thereby averting a catastrophic energy crisis in the United States. But the Saudis and the other members of OPEC no longer possess significant spare capacity. They’re pumping oil for all they’re worth in order to benefit from the current surge in prices. Hence, any sudden loss of production in conflict-torn areas translates quickly into rising prices.

Can we expect the levels of conflict in oil-producing regions to subside sooner or later, bringing prices down? Unfortunately, this is a wholly unrealistic prospect because oil production itself increasingly acts as a goad to conflict. While extracting petroleum generates enormous wealth for privileged elites, it leaves others in many countries, usually of a different ethnic or religious identity, with few benefits from the resource in their midst. Take the Niger Delta area, where ethnic minorities continue to fight to obtain a larger share of oil revenues that historically have been monopolized by elites in the distant national capital, Abuja. The Kurds in Iraq have similarly been struggling to take control over the oil revenues generated by the giant fields in portions of that war-ravaged country they claim. This threatens to turn the oil-producing city of Kirkuk, in particular, into a future battleground.

While no one can predict just where the next conflicts will break out over the allocation of oil revenues or the control of valuable oil fields, it is safe to predict that such conflicts will remain an abiding, price-hiking feature of the global political landscape. Instability is now not only the norm, but spreading in these areas, and high oil prices are an inevitable corollary.

An Energy "Black Monday"

The bottom line: Oil prices are high today not, as in 1980, due to a temporary disruption in the global flow of petroleum but for systemic reasons that are, if anything, becoming more pronounced. This means news headlines with the phrase "record oil price" are likely to be commonplace for a long time to come. The only good news may lie in just how bad the news really is. Sooner or later, ever rising energy costs are likely to push the United States and other oil-consuming nations into deep recession, thus depressing demand and possibly beginning to bring energy prices down. But this is hardly a recipe for lower prices that anyone would voluntarily choose.

What, then, will be the lasting consequences of higher energy costs? For the ordinary American consumer the answer is simple, if grim: A diminished quality of life, as discretionary expenses disappear in the face of higher costs for transportation, home heating, and electricity, not to speak of basics like food (for which, from fertilizers to packaging, oil is a necessity). For the poor and elderly, the implications are dire: In some cases, it will undoubtedly mean choosing among heat in winter, adequate nutrition, and medicine.

Finally, there are the implications for the United States as a whole. Because the U.S. relies on petroleum for approximately 40% of its total energy supply, and because nearly two-thirds of its crude oil must be imported, this country will be forced to devote an ever-increasing share of its national wealth to energy imports. If oil remains at or above the $100 per barrel mark in 2008, and, as expected, the United States imports some 4.75 billion barrels of the stuff, the net outflow of dollars is likely to be in the range of $475 billion. This will constitute the largest single contribution to America’s balance-of-payments deficit and will surely prove a major factor in the continuing erosion of the dollar.

The principal recipients of petro-dollars — the major oil-producing states of the Persian Gulf, the former Soviet Union, and Latin America — will undoubtedly use their accumulating wealth to purchase big chunks of prime American assets or, as in the case of Hugo Chávez of Venezuela or the Saudi princes, pursue political aims inconsistent with American foreign policy objectives. America’s vaunted status as the world’s "sole superpower" will prove increasingly ephemeral as new "petro-superpowers" — a term coined by Senator Richard Lugar of Indiana — come to dominate the geopolitical landscape.

So, while March 3 may have only briefly made the headlines here, it may well be remembered as the true "black Monday" of our new century, the moment when energy costs became the decisive factor in the balance of global economic power.

Michael T. Klare, the author of Resource Wars (2001) and Blood and Oil (2004), is a professor of Peace and World Security Studies at Hampshire College in Amherst, Mass. His latest book, Rising Powers, Shrinking Planet: The New Geopolitics of Energy, will be published on April 15th by Metropolitan Books.

Copyright 2008 Michael T. Klare

Ever since the collapse of the Soviet Union, foreign policy analysts have struggled to find a term to characterize the epoch we now inhabit. Although the “Post-Cold War Era” has been the reigning expression, this label now sounds dated and no longer does justice to the particular characteristics of the current period. Others have spoken of the “Post-9/11 Era,” as if the September 11 attacks on the Twin Towers and the Pentagon were defining moments for the entire world. But this image no longer possesses the power it once wielded—even in the United States.

I propose instead another term that better captures the defining characteristics of the current period: the Post-Abundance Era.

If there is one thing that most inhabitants of the late 20th century shared in common, it was a perception of rising global abundance in virtually all fields: energy, food, housing, consumer goods, fashion, mass culture, and so on. Yes, there were pockets of poverty in many areas, but most people in most places around the world were seeing a rise in their personal income and an increase in the number of things in their possession, along with the supply of energy with which to move or power their many personal goods.

At least some strata of the global population will continue to experience an increase in personal wealth in the 21st century, but the sense of abundance that characterized the late 20th century is likely to evaporate for the great majority of us. One day affordable luxuries like overseas vacations and meals out will become unattainable, and even basic necessities like energy, electricity, water, and food are likely to become less plentiful and more expensive. This global austerity will produce great hardship for the poor and will force even lower-middle class families to choose between long car trips, restaurant meals, air-conditioning in summer, and high thermostats in winter.

Less Supply, More Demand

Lying behind this historic shift in global fortunes is a fundamental reversal in the balance between resource supply and demand. For most of the 20th century, global stockpiles of vital materials like oil, natural gas, coal, and basic minerals expanded as giant multinational corporations (MNCs) poured billions of dollars into exploring every corner of the Earth in the drive to locate and exploit valuable deposits of extractible materials. This permitted consumers around the world to increase their consumption of virtually everything, safe in the knowledge that even more of these commodities would be available next year and the year after that, and so on infinitely into the future.

But this condition no longer prevails. Many of the world’s most promising sources of supply have been located and exploited, and all of the additional billions spent by MNCs on exploration and discovery are producing increasingly meager results. Ever since the 1960s, the most fruitful decade in the worldwide discovery of new oilfields, there has been a steady decline in the identification of new deposits, according to a recent study by the U.S. Army Corps of Engineers. Even more worrisome, the rate of oil field discovery fell below the rate of global petroleum consumption in the 1980s, and since then has fallen to approximately half the rate of consumption. This means we are increasingly relying on deposits found in previous decades to slake our insatiable thirst for petroleum—a pattern that cannot continue for much longer before we will begin to experience an irreversible and traumatic decline in the global supply of oil.

The same is true of other vital resources, including natural gas, uranium, copper, and many minerals. There may be adequate stocks of these materials on global markets today, but the MNCs are not finding enough new deposits of these commodities to replace what we’re consuming. So future shortages are inevitable.

Water is somewhat different, in that we receive a fresh supply of it each year through evaporation from the oceans and precipitation on land—but even this precious resource will become scarcer in the years ahead due to population growth, urbanization, industrialization, the over-exploitation of underground aquifers, and global warming (through persistent drought and the accelerated evaporation of rivers and lakes).

This contraction in the global supply of vital resources will affect our lives in myriad ways. On a personal level, it will force us to consume less—for example, by buying smaller, more fuel-efficient cars and smaller, more energy-efficient homes. We will have to make other accommodations as well: fewer long-distance trips to the seaside or distant amusement parks; fewer long-distance airplane rides; lowered thermostats in winter; and so on. These cutbacks will be minor inconveniences for some, but significant hardships for others—especially the poor, the elderly, and others on a fixed income. Farmers will have a particularly hard time, as the cost of virtually everything associated with modern, mechanized agriculture—diesel fuel, pesticides, herbicides, fertilizers, food supplements—will become far more expensive.

Less Stuff, More Conflict

At the national level, we can expect a significant change in foreign policy. As supplies of energy and other basic necessities become scarce, senior officials will come under enormous pressure to “solve” the problem by any means necessary, including the use of military force.

In the case of energy, this could lead to future wars over oil. Even if oil were not the only motive for the U.S. invasion of Iraq, the United States has long sought to maintain a dominant position in the oil-rich Persian Gulf area and a permanent U.S. military presence in Iraq will facilitate American efforts to seize the oil of Iran and neighboring countries if a decision were ever made to do so. The Department of Defense is also beefing up its capacity to “project” military power into the oil-producing areas of Africa and the Caspian Sea basin. No one in official circles will admit that “guarding foreign oil fields” is the ultimate objective of Pentagon war plans, but it is becoming increasingly evident that the American military is being reconfigured to accomplish exactly this task.

Nor is the United States alone in thinking along these lines. China also seeks to enhance its capacity to project power into foreign oil-producing areas. And Russia, with a surplus of energy, seeks to exploit its advantageous position in order to extract concessions from less privileged nations.

Future shortages of water are also likely to prove a source of international friction and conflict. Egypt, which relies on the Nile River for virtually all of its water, has threatened to attack Sudan and Ethiopia if they proceed with plans to dam the Nile and divert some of its waters into irrigation schemes desperately needed to feed their rapidly growing populations. Israel has also threatened to go to war with neighboring Arab states if they move ahead with plans to dam the Yarmuk River (one of the tributaries of the Jordan) or otherwise jeopardize Israel’s already over-stretched water supply. Such threats—and possibly actual outbreaks of conflict—are likely to become more common as the demand for water rises and global supplies dwindle.

The Gestalt of Austerity

The end of abundance is not the same thing as outright scarcity. Some commodities, like oil, may become truly scarce in later decades of the 21st century, but they will not disappear altogether. Those with means will still be able to purchase gasoline and air conditioning and other soon-to-be luxury items. But the end of abundance will create a new international environment—a new gestalt, if you will—in which expectations are lowered and struggles over what remains become fiercer and more violent.

Ideological, political, and ethnic differences will have their place in this new environment, but increasingly these will be infused with or subordinated to resource pressures. The growing edginess evident in Sino-American relations, for example, can be traced at least in part to a perception that the United States and China are becoming bitter competitors in the global hunt for new sources of petroleum. Likewise, the growing frostiness in U.S.-Russian relations can be attributed in part to Moscow’s heavy-handed use of its natural gas monopoly to browbeat neighboring countries like Ukraine and Georgia. This is exactly how we would expect international affairs to evolve in a Post-Abundance Era.

Prediction is always risky, and it is entirely possible that some unanticipated event on the scale of 9/11 or World War II will come along and redefine the current epoch. But such a calamity aside, the end of global abundance and the resulting scramble for resources is likely to prove the most conspicuous feature of the emerging international landscape.