Two questions…

Just two things I was thinking about today…

If the UKIP do well, what questions does it raise about whether the UK will stay in the EU or not? Kilroy-Silk was on Newsnight last night with John Redwood, Silk was articulate while also quoting polls saying the support for the UKIP is growing substantially.

If the UK ever left the EU what would it mean for transatlantic relations?

Secondly, with China and India growing up to 10% every year, will world oil supplies be able to meet demand? Car ownership in China doubled in one year – and India will go the same way. The US has managed to secure oil reserves in Iraq, but from where will China’s and India’s oil come?

Can we envisage resource wars going forward?

Curious…

7 thoughts on “Two questions…”

  1. You misunderstand the Oil market. Despite the presence of the opec cartel, it is still a global market. The only way the US has “secured” Iraq’s oil reserves is in the sense that Iraq will sell oil on the open market. This will go to whomever pays for it, US, China, India or Turkmenistan!

    As for oil supplies meeting demand: it will never reach a “crunch” because as demand increases or supply is reduced, prices will go up, this is a self-correcting mechanism. Further, incidentally, if this happens naturally it will prove a spur to the development of alternative fuels: you can forget about developing alternative fuels until oil becomes scarcer or demand oustrips supply, there’s simply no profit incentive in it until then.

    You are also mistaken if you think the UK will leave the EU, what’s more likely is the development of a two-tier Europe, which may not be a bad thing in itself – so long as Ireland is in the slow lane!

  2. Would anyone be interested in this new collaborative study of the oil market by a collection of educated laypeople I’m in the middle of organising?

    Generally the majority of analysts, including most environmentalists, don’t see problems with availability of oil, once there’s enough investment to get it out of the ground (lacking in Saudi Arabia’s strangled oil monopoly) and security to protect the pipelines and shipping lanes against attack.

    However, some, including Colin Campbell, the ex-head geologist at Amoco (who now lives in Co. Cork) are frantically warning of a shortfall and Monbiot, the Ecologist and others have picked this up.

    More details at: http://twenteenthcentury.com/uo/index.php/FossEvents

  3. Frank I was only asking questions, no need to jump in the deep end and criticise the questions themselves!

    In relation to UKIP, the question was ‘if’ the UK left the EU – i also think it a remote possibility. But I would also prefer Ireland being in the slow lane in any two tier Europe.

    In relation to oil, I am aware of how the market works – and how new energy sources may come on stream – but you just make it sound like it will all go like clock work, and no one will have any problems?

    Surely the de facto situation is that the US has ‘secured’ oil fields in Iraq, given the level of occupation, the level of political involvment with the new regime, and the number of military installations and bases that are likely to remain in the region for a very long period of time.

    If a situation were to arise, probably political, where oil supplies were cut off from a major nation – ie. Saudi Arabia, Venezuela, Russia, from where then would the US receive its oil? Would it not buy it from perhaps its most ‘secure’ source – Iraq?

    And if such a situation did arise, from where would China then get its oil?

    That was really the basis for my question…

    In a related story have a look at

    http://www.washingtonmonthly.com/archives/individual/2004_06/004051.php

    Interesting idea Paul – ill take a look!

  4. G: “But you just make it sound like it will all go like clock work, and no one will have any problems”

    Didn’t you know?: any Libertarian can tell you that all you need to do is sprinkle free-market fairy dust over any problem and make it go away! 🙂

    Seriously, the problem is that most “crunch” analyses assume that demand just rises while supply stays fixed. But the inevitable price rises will curtail demand. I’d be willing to bet that fossil fuels never run out. By the time they get scarce they will be so expensive that nobody will be buying. Alternative fuels haven’t been developed because there’s no payback, no reward because Oil is cheap. Once it becomes scarce or expensive because of increased demand, then there becomes a proper market for alternative fuels.

    Again, your analysis of oil supplies from this nation to that completely ignores that this is a global market and oil is traded between companies, not countries. It’s not like the US goes and buys oil from Iraq and then distributes to american companies. Companies from the US compete with international companies to buy oil from other international companies. If supply from one country is restricted, the price of oil will rise for all consumers, not just americans. Any cartel which tries to restrict oil sales to, say America, is inherently unstable: it is at risk from third party “defectors” who will buy and sell on.

  5. The crunch analysis is a fringe view, which a fairly small group outside the environmentalist mainstream put faith in. I’ll leave you to guess which side of the debate George Monbiot places himself.

    The analysis is pretty flawed for a number of reasons. Campbell plays around with the statistics for oil discoveries by backdating discoveries in existing fields to the time of their original discovery, which is nonsense as new reserves in existing fields are obviously a perfect substitute for finding new fields. He also seems somewhat conspiratorial in claiming that he has access to the real interal oil reserve data from the companies themselves.

    Him and like-minded researchers ignore the alternative oil sources available – the massive tar sands deposits, conveniently located for the US market in Alberta, Canada and the oil shales that became commercialised in the 70’s, but were abandoned as uncompetitive.

    Few dispute that there is plenty of natural gas, which is increasingly transported around the world, and a cornucopia of coal, enough for over two centuries’ use at present production with known reserves.

    Then there’s plenty of uranium, wind finally becoming competitive and the old stand-by of hydropower from dams.

    Even if he’s right, what will be the prospects? A slow adjustment, in all likelihood just like the other 10-20 year shifts between technologies, exactly as happened when steam replaced horse power, coal replaced wood, and oil supplanted coal.

    If energy costs, for the first time in 30 years, become a long-term constraint, we can imagine that a good deal of human ingenuity would focus on that problem for a while. In the long-run, I wouldn’t bet against the Saudis ending up like English coal miners, broke as their natural resources remain in the earth.

    A good book on ths is Vaclav Smil’s Energy at the Crossroads. I am planning to post relevant extracts on the web shortly.

    Peter

  6. Gavin,

    China is one of the world’s major producers in its own right, with massive fields in the north of the country. Unlike the US, it has large reserves within easy reach of its borders in the Russian far east; they and Japan are currently bidding for rights to this oil. Also, while the Caspian basin reserves aren’t the new Saudi Arabia that everyone has forecast, China will probably have easier pipeline access to Central Asia than anyone else except the Russians.

    Note as well their massive investment in hydro represented by the Three Gorges project, and others on the drawing board for three times that amount.

    They also have huge coal reserves domestically and close by in Mongolia and Russia.

    So in answer to your question, China’s and America’s energy security interests are not in conflict. It would be, as the Chinese saying goes, like a fight between the eagle, the bull and the fish – none can live by taking away what the others need.

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