TRENDS: THE NEXT OIL WAR IS DIFFERENT

Andrew McKillop
21st Century Wire

Was Iraq an ‘oil war? Probably in 50 years time, academics but not many other persons will still be talking about the subject. 

For plenty of historians, journalists, writers, paywrights and movie makers there is no problem at all: since the 1991 Liberation of Kuwait, the 9/11 atrocities in the US, the creation of ‘al Qaeda’ and the global war on terror, the Afghan war, the second Iraq war, and the overthrow and killing of Khadafi, we have had a succession of Oil Wars, either directly caused or promoted by the US and Great Britain. This is always denied, of course.

But 5 years ago – in 2008 – it would have been wildly controversial, or just plain wild to suggest that the US will soon stop being an oil importer: it will be oil self-sufficient. This year, US Dept of Energy and oil industry forecasters say that national oil production will rise at least another 7%, like it did last year, reaching about 11.4 million barrels a day at the end of 2013 – rivalling Saudi and Russian oil output, or even exceeding their output.

By 2020 or soon after it is logical and feasible to predict the US will become entirely self-sufficient for oil and a substantial exporter of natural gas – helped by its continuing near-flatline profile of domestic oil and energy demand, with 2007 still remaining a highwater mark.

Why would the US want oil wars in the Middle East, when it is oil self-sufficient? Is heavy US military presence in the Persian (or Arab) Gulf region a “protection service” it runs for the Europeans, Chinese, Japanese, South Koreans, Indians and any other major oil importer?

The idea of a global oil security protection service – designed by the US and applied by the US and for the moment, still free of charge – surely crops up, ever more frequently, in US political and strategic thinking. President Obama’s very recent announcement of a “zero military option” for Afghanistan – the complete removal of all US fighting forces perhaps this year – is basically a cost/benefit decision. The economic bottom line from staying in Afghanistan, despite the rumors of rare earths, gas, gold and high value buddhist prayer wheel trinkets in simply massive quantities, is negative. Also, no other major Western power wants to pay for the Afghan war. Ergo, the war is terminated.

IRAN WAR – ANOTHER COLLATERAL VICTIM

Despite the rabid tubthumping by Benyamin Netanyahu, and his supporters, lobbyists, activists and others, in Israel, the US, Europe and elsewhere beating the drum of Iran War, this is a failing theme and meme. To be sure, it is regularly recycled in the media by journalists short of supposedly “lurid” copy – because it would concern nuclear war – but the numbers simply do not add. Iran has plenty of oil reserves, certainly, it could produce more, probably, but who exactly needs radioactive crude oil? Iran war would be expensive, oh gosh yes, because the large and highly populated country would need military occupation on a long-term basis. Call it Afghanistan multiplied by 50 or Iraq times 10. Dreams that Iran’s “huge oil reserves” could one day, quite soon, bolster America’s failing reserves and output of oil are now as outdated as a bakelite telephone with a metal dial.

Much digital ink was spilled over the decade of about 1997-2007 on the theme that Peak Oil means Iran’s oil will be “vital to humanity”, that is Wal Mart shoppers and their ilk. Conversely, the oil and gas boom in the US, now subtitled “fracking”, was almost ignored until only the last 3 years. To be sure, a fuzzily defined lobby, including Lady Gaga, Yoko Ono, diehard global warmers and environmentalists say that fracking is close to Satanic, or in Yoko Ono’s gurgling prose “a death camp technology”, but the drilling goes on. Today, there is no longer any space or time for talking about whether or not it will lead to US energy independence: the US overtook Russia to become the world’s biggest natural gas producing nation in 2012, and by about 2014 can be the world’s biggest oil producer. Period.

The curious impacts and ramifications of this massive, unexpected and almost instant energy revolution are still hard to trace, and its results are hard to predict. One is however easy to predict: US Cow Boy Colonialism – or self elected world cop policing of the planet – is now as outdated as that Cold War era bakelite telephone for calling Krutschev’s translator to chat about mutually assured destruction. Another is easy to see and follow at this moment in time: Syria’s civil war and its outcome are of little interest to the US, today. The war’s spillover potential to the Gulf Petro-states with their curious blend of Islamic fundamentalism, dictatorial repression of their populations, and casino capitalism, is probably quite low but in any case, the US needs their oil less and less. Every day less, in fact.

Another predictable impact and sequel is shaping up in the fuzzily defined, always growing Sahel African Islamic insurgency. US participation in military response to “the Islamists” promises or threatens to be low – very low. Policing and paying this post-colonial mess will be the purview and pain of the European nations which set up the mess, but somehow expected the USA to pay for it.The outlook is therefore sombre: the Europeans have a track record of not only walking away from their obligations – but also not even walking up to them in the first place!

With a home-brewed domestic economic crisis of 1930s proportions, desert adventures in low income Africa are surely nice stuff for thriller films and books, but taxpayers will shirk from paying the real thing which will feature tens of thousands of permanently stationed ground troops. The game wasnt worth the candle.

CHINA VERSUS USA

A surprising source – the German Bundesnachrichtendienst - or BND spy agency – in a “restricted circulation report” issued January 17, 2013, says that its readout of the geopolitical results coming from the US energy revolution is not what most persons would predict.  It however starts with an unsurprising but blunt-language analysis of the reasons – perhaps the only reason despite the pretexts – for the US being so deeply involved in the Middle East. The BND includes its long and expensive wars in the region, and why the US gives such slavish respect and support to the “highly unpalatable regime” of Saudi Arabia:

http://www.faz.net/aktuell/wirtschaft/wirtschaftspolitik/bnd-studie-amerika-wird-unabhaengig-von-der-golfregion-12028549.html

For German home consumers of spy stuff with an oil handle, the BND reports that the inevitably high price of oil, given the geopolitical intensity of action by the USA’s rivals inside and outside the region, and the belief that global oil production could only decline, led to post-communist Russia becoming a very dangerous and sombre force on the world stage. It says that the pending bailout of Cyprus which will cost German taxpayers a lot of money, will mainly and firstly be used to bail out rich Russians who placed their “petro money” stashes in Cypriot banks that are now collapsing as yet another blowback from the European and Eurozone crises. Russia, like Saudi Arabia got rich on petrodollars.

US independence from Gulf region oil will finally, and mostly affect the relationship and balance of power between the US and China, says the BND report. It suggests that China does not have enough time to ramp up its own shale gas, and then shale oil production. Struggling to meets its skyrocketing demand for oil, China will need to take about 50% of all the oil produced on the Arabian peninsula, and like the US before it, China’s dependence on Arab and Iranian oil will grow for decades. Due to China presently not having the military power to exert a permanent military presence in the region, and protect the region’s oil transport routes, China will have to kow-tow to the USA, which has the military hardware and the experience of policing the region.

The first and biggest loser in the worldwide geopolitical scramble caused by the US oil boom, will be China, but another if smaller loser will be Europe - including Germany.

The BND’s analysis is not simple: it argues that Putin’s Russia will become more aggressive and hostile to both the US and Europe, resulting in large-scale effort to drive Russian oil and natural gas out of the energy import mix, in Europe. This will cause Europe to much more intensely act to source more of its oil and gas supplies from Africa – notably Sahel Africa. Countries such as Nigeria, however, will be so intensely courted by China that they will break away from their traditional oil supply role to Europe – but will demand Chinese military presence in Africa to compensate. The BND also forecasts very siginficant, even massive increases in African oil and gas supply over the next 15 – 20 years, which will directly harm Russian producers and exporters facing ever-rising production costs in Russia’s frigid and remote northern and Arctic areas.

The bottom line is also not simple: for the BND, the US energy revolution spells the end of dependence of oil importer countries on Russia and OPEC and the end of their ability, with the banksters, brokers and traders who run the world’s oil markets to raise prices at the flick of a wrist. Conversely, it says, the US energy revolution will be slow to economically benefit the US – even if it liberates the US from its role of World Cop and Warmaker and gives the US the perspective of years of peace. Winners, according to the BND, will be those oil importers on a downward track in oil dependence – that is Germany – and those industries which are very energy intensive and can relocate to the US. With time, the BND says, even the USA’s gargantuan trade deficits can be trimmed, because US oil imports, and the barrel price, will both decline, propping up the dollar as a reserve currency for a while longer.

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