Environmental Engineering Reference
In-Depth Information
Rising resource nationalism
The very value of fossil fuels has always fostered possessiveness among the
haves and envy among the have-nots. It is somehow hard to imagine one
country invading another for its wind-power farms, as Saddam Hussein's Iraq
invaded Kuwait for its oil. Indirectly, the possession of oil may make a state
somewhat less politically stable internally. For there is a strong correlation,
inside petro-states, between oil and autocracy and corruption. This is the so-
called oil curse (see p.100 in Part Four). Coming straight into government cof-
fers (as it usually does), oil revenue lays politicians and bureaucrats open to the
temptation of corruption. As a highly valuable revenue source, it can remove
the need for governments to tax their people (which is nice), but also the need
for governments to justify taxation through democratic representation (which
is not so nice).
The history of the international oil industry is one of early dominance by the
Western oil companies until the early 1970s, which turned out to be a stormy
decade when countries belonging to the Organization of Petroleum Exporting
Countries (OPEC) flexed their muscles, raised prices and nationalized some of
the Western companies' assets on their soil (see p.154). Today, dominance lies
with national oil companies. These state NOCs - as they are always called in the
oil world - hold most of the world's reserves and account for a share of world
oil production that is expected to rise from 57 percent in 2007 to 62 percent by
2030, according to the International Energy Agency (IEA). This has an implica-
tion for supply. Increasing amounts of oil and gas acreage are off-limits to the
Western oil majors.
The priorities of the state companies are frequently very different to the majors.
A country's national company is almost always in less of a hurry to develop its
oil and gas fields than an outside company would be, and may well pursue a
more cautious policy on the rate of extraction from oil or gas fields. They may
also, perhaps surprisingly, have fewer means to invest in extraction than their
private-company counterparts. For they are liable to be told by their govern-
ment shareholder to subsidize fuel prices out of their profits, or divert oil profits
to other parts of the economy. As for OPEC, cutting production to raise prices is
a regular and open part of the cartel's policy and practice.
and electorates of nations holding these reserves will be happy, from an
environmental viewpoint, to exploit them.)
Nonetheless, there is every reason to believe that the growth in oil out-
put will hit a plateau over the next two decades. In the Middle East, oil is
relatively easy to extract, though it is often off-limits to foreign companies
and rigorously controlled by governments which are usually members of
the Organization of Petroleum Exporting Countries (OPEC). Outside the
Middle East, oil is getting harder to find and to exploit.
