Natural Resources are Fuelling a New Cold War

Oil and gas supplies are becoming scarcer and more expensive. The hunt for the world's remaining resources is creating new alliances and the danger of fresh conflicts. China is moving aggressively to sate its growing appetite for energy, potentially setting up a confrontation with the United States for the dwindling resources of the Middle East and Africa.
 
Obioku, a village in Nigeria, West Africa. At first glance, this is the end of the world -- and at second glance, even more so. Muggy heat. A miserable set of wooden shacks; ragged children; a muddy hole from which women fetch water. The women use the few fish their husbands have caught to make a thin soup. The biting smell of sulphur lingers in the air. It seems absurd that anyone should fight over this piece of the earth.

But in recent months, hundreds have been killed here in the Niger delta. Rebels fight government troops and even demand the secession of the region from Lagos; they present ultimatums requesting billions from Shell, the Anglo-Dutch petroleum giant. Columns of smoke darken the sky where pipelines have been blown up. It's all about the petroleum that lies under the ground here in vast quantities -- petroleum of an especially light, sweetish, consumer-friendly variety.

The rebels claim they are concerned about the well-being of people like those in Obioku. It's a claim that is shared by Shell and the government. Shell CEOs say that three percent of their annual budget goes into local development funds. For their part, Nigerian politicians shrug their shoulders and insist that they are fighting fiercely against every kind of exploitation. Diepreye Alamieyeseigah, the governor of the state of Bayelsa, was arrested on suspicion of money laundering only in September. He's now on trial, and said to have diverted hundreds of millions of dollars into his own pockets.
 
But as long as the oil fields burn, as long as Shell and Italian oil company Agip employees are held hostage and as long as oil platforms are attacked with speedboats, exporting black gold from the country in sub-Saharan Africa that has the largest petroleum reserves will remain an uphill battle. Indeed, the volatility of oil regions like Nigeria are one of the key reasons that oil prices have risen so dramatically worldwide.

The Caucasian highlands, 70 kilometers (44 miles) southwest of the city of Vladikavkas in the Russian Republic of North Ossetia. Pipelines lie on the frozen ground in strangely twisted shapes, like modelling clay handled by an angry giant. Saboteurs destroyed the two gas pipelines that run through an almost deserted territory and towards Georgia at the end of January. The people in Georgia, whose energy supply is meagre anyhow, suffered the cold for more than a week, cut off from their most important energy source. No lights were turned on in the capital at night; desperate people burned their own furniture to stay warm. Moscow blamed Muslim rebels for the attacks. But Georgian President Mikhail Saakashvili complained that saboteurs controlled by the Kremlin had planted the bombs and accused his Russian colleague of "blackmail." Saakashvili believes Vladimir Putin wanted to teach Georgia, a country that is oriented towards the West, a lesson by demonstrating how dependent Georgia is on Russian energy.

So Russia is being pilloried once again, a short time after the Kremlin forced the Ukraine to strike a deal by turning off its gas supply. That raises questions about the energy security of the European Union, which is dependent on Russia for natural gas: Hungary gets 85 percent of its natural gas from Russia; Germany gets a still substantial 40 percent. This dependency is yet another reason why energy prices are climbing to record levels.
 
Fatah, a giant petroleum refinery two hours northwest of Baghdad by car. After almost 20 major attacks in the past year, Iraq's largest oil production facility was closed for the entire month of December. Then, only three days after the re-opening of the complex in Beiji in January, insurgents attacked a convoy consisting of 60 oil trucks and engaged security forces in a firefight that lasted hours. Meanwhile, the number of attacks on oil installations and pipelines across the country continues to rise.

"We repair the pipelines and they blow them up again, and then the game starts over," says former Iraqi oil minister Ibrahim Bahr al-Ulum. The violence isn't just directed at objects: In January, rebels murdered Ali al-Sudani, the Iraq Oil Ministry's general director. The two German engineers who were kidnapped in Iraq earlier this year (and have since been released) were also working at Baiji.

It was Washington's aim to finance the reconstruction of post-war Iraq from the oil industry's profits. In fact, the Oil Ministry was one of the few buildings in Baghdad US troops guarded from looters after the April 2003 invasion. And the US has spent millions to train an "Oil Protection Force." Unfortunately, however, Iraq's energy industry just isn't getting off the ground. And though its oil reserves are the fourth-largest in the world (after Saudi Arabia and Canada, and almost equal to Iran), Iraq's oil exports barely reach three-quarters of the pre-war level. That's yet another important reason for the nervous state of the markets.

And then there's that uncanny and unpredictable regime in Tehran: Many already consider Iraq's powerful neighbor state the great winner in the crusade for the "democratization of the Middle East" begun by US President George W. Bush and British Prime Minister Tony Blair. Iran's radical government wields great influence over the Shiite ruling elite in southern Iraq, many of whom received their training in the Iranian city of Ghom. Southern Iraq is also home to vast petroleum and natural gas fields.

Never mind the crisis surrounding Tehran's nuclear program -- China and India are aggressively courting Iran as a supplier of natural resources. Beijing closed a gigantic deal worth $70 billion with the Islamic Republic in fall 2004; Delhi has negotiators in Tehran discussing a strategic pipeline. No state on earth besides Russia has natural gas reserves as large as those of Iran, and Tehran is also the fourth-largest oil exporter in the world. "The West needs us more than we need the West," says Iranian President Mahmoud Ahmadinejad.

The man who wants to "wipe Israel off the map" is threatening to curb Iran's energy exports to the US and Europe. If the UN Security Council were to impose sanctions on Iran because of the country's patent efforts to develop a nuclear weapon, Ahamdinejad might cut off the supply altogether. What else should someone expect from an irrational politician, whose view of the world is obviously informed by an Islamist vision of the apocalypse.

Some good news and bad news

But the natural resource that greases the wheels of the global economy is running out. All oil-producing states are working close to capacity and slacks or stoppages on the part of one of the major producers can't be compensated by the others. Former White House energy advisor Matthew Simmons evokes a genuinely horrific scenario: He calculates that the price of a petroleum barrel may rise as high as "$200 to $250" in the coming years -- a far cry from today's $73 and July's nominal record of $78.40. Such an extreme price increase would unhinge the entire world economy and spell ruin even for large corporations.

Should the world be trembling in fear? Should everyone be afraid that gas and heating will soon no longer be affordable? Concern over such issues is certainly spreading in Germany, a country whose energy security is good compared to many others. Should we shiver with fear of anticipated bƖσσdshɛd over resource allocation? The superpower China is hunting these resources especially aggressively. Should we fear the war that comes from the cold?
 
The good news is that it's improbable, despite all the dangers and bottlenecks, that fossil fuels will become the much cited unaffordable "black gold" overnight, or that they will even no longer be available in sufficient quantities. Besides, human inventiveness has always been able to discover or invent new energy sources.

The bad news is that the age of cheap oil and natural gas is definitely over. At the very latest, the next generation will be bitterly punished for our reckless overconsumption of fossil fuels. Renewable energies and energy efficiency together won't be enough to cover the shortfall, either. In the longterm, even if renewable resources like solar power, wind power and biomass -- which are urgently needed -- are added into the energy mix with oil, natural gas, coal and nuclear energy, they will still only be able to cover one-quarter of the energy needs of industrialized nations. That's the best-case scenario.

Ideological trench fights over secure fuels aside, most reputable scientists agree that the historical "peak" of oil production will be reached in five to 10 years, despite improvements in drilling technology and the expansion of production to include oil shales and oil sands, which are difficult to process. From that point on, oil production will head downhill -- despite increasing worldwide demand.

Earth's population consumed 83 million barrels of oil per day last year. According to calculations by the International Energy Agency (IEA), the Paris-based club of oil-importing states, the number will have climbed to above 90 million by 2010, and it will have reached about 115 million in 2030. The more fiercely fossil fuels blaze in our ovens, burn in our engines and power our generators, the faster a country can develop. US energy analyst Daniel Yergin has written that "petroleum remains the motive force of industrial society."

Now, at a time when the oil age is irrevocably racing towards its conclusion, more and more people are trying to become a part of it. They are led by emerging nations like China and India -- two countries that know their growth engine will inevitably start to stutter without a constant supply of resources. Petroleum is their elixir for survival.