There are many folks more qualified to comment on geopolitics than yours truly — swing a dead cat and you’ll hit one — but let me venture a thought.
It is sometimes said that coming shortages will render oil less fungible; the idea is that rather than simply dumping oil into the world market, oil-producing countries will use their leverage for geopolitically nefarious purposes. The leverage they can gain from the oil will come to be worth more than the price of the oil on the market.
Two things weigh against this. One, the more nefarious of the oil-producing countries tend to depend almost entirely on oil revenue. They might could hurt oil consuming countries by shutting off exports, but they’d hurt themselves as much or more.
The other just occurred to me after reading this Christian Science Monitor piece about Kuwait. Here’s the nut:
Kuwait’s energy sector has survived the past 30 odd years on fields explored and developed in the 1970s and 1980s. With most of these fields aging and declining, the government is eager to open new fields.
To do this, however, it needs the advanced and complex technology that only international oil companies can bring in.
Fields are aging and declining all over, and the need for technological means to squeeze out the last drops is sure to devil any country that depends on oil revenue. They can’t just shut the world out — the world contains not only geopolitical rivals and consumers, but experts.
I’m still inclined to think that oil will be fungible as fungible can be (I sure do like the word "fungible") right up until a) it runs out, or b) nobody needs it any more.
Of course I’m probably muddling all sorts of issues together here and making basic mistakes of ignorance, but hey — they gave me a blog, so I put words on it.