Articles by Michael T. Klare

It’s official — the era of cheap oil is over

This was originally published on TomDispatch and is republished here with Tom’s kind permission. Every summer, the Energy Information Administration (EIA) of the U.S. Department of Energy issues its International Energy Outlook (IEO) — a jam-packed compendium of data and analysis on the evolving world energy equation. For those with the background to interpret its […]

Cheap oil: Be careful what you wish for

This guest essay was originally published on TomDispatch and is republished here with Tom's kind permission.

-----

Only yesterday, it seems, we were bemoaning the high price of oil. Under the headline "Oil's Rapid Rise Stirs Talk of $200 a Barrel This Year," the July 7 issue of the Wall Street Journal warned that prices that high would put "extreme strains on large sectors of the U.S. economy." Today, oil, at over $40 a barrel, costs less than one-third what it did in July, and some economists have predicted that it could fall as low as $25 a barrel in 2009.

Prices that low -- and their equivalents at the gas pump -- will no doubt be viewed as a godsend by many hard-hit American consumers, even if they ensure severe economic hardship in oil-producing countries like Nigeria, Russia, Iran, Kuwait, and Venezuela that depend on energy exports for a large share of their national income. Here, however, is a simple but crucial reality to keep in mind: No matter how much it costs, whether it's rising or falling, oil has a profound impact on the world we inhabit -- and this will be no less true in 2009 than in 2008.

The main reason? In good times and bad, oil will continue to supply the largest share of the world's energy supply. For all the talk of alternatives, petroleum will remain the number one source of energy for at least the next several decades. According to December 2008 projections from the U.S. Department of Energy (DoE), petroleum products will still make up 38 percent of America's total energy supply in 2015; natural gas and coal only 23 percent each. Oil's overall share is expected to decline slightly as biofuels (and other alternatives) take on a larger percentage of the total, but even in 2030 -- the furthest the DoE is currently willing to project -- it will still remain the dominant fuel.

A similar pattern holds for the planet as a whole: Although biofuels and other renewable sources of energy are expected to play a growing role in the global energy equation, don't expect oil to be anything but the world's leading source of fuel for decades to come.

Keep your eye on the politics of oil and you'll always know a lot about what's actually happening on this planet. Low prices, as at present, are bad for producers, and so will hurt a number of countries that the U.S. government considers hostile, including Venezuela, Iran, and even that natural-gas-and-oil giant Russia. All of them have, in recent years, used their soaring oil income to finance political endeavors considered inimical to U.S. interests. However, dwindling prices could also shake the very foundations of oil allies like Mexico, Nigeria, and Saudi Arabia, which could experience internal unrest as oil revenues, and so state expenditures, decline.

No less important, diminished oil prices discourage investment in complex oil ventures like deep-offshore drilling, as well as investment in the development of alternatives to oil like advanced (non-food) biofuels. Perhaps most disastrously, in a cheap oil moment, investment in non-polluting, non-climate-altering alternatives like solar, wind, and tidal energy is also likely to dwindle. In the longer term, what this means is that, once a global economic recovery begins, we can expect a fresh oil price shock as future energy options prove painfully limited.

Clearly, there is no escaping oil's influence. Yet it's hard to know just what forms this influence will take in the year. Nevertheless, here are three provisional observations on oil's fate -- and so ours -- in the year ahead.

Challenging the militarization of U.S. energy policy

This essay originally ran on TomDispatch; it is reprinted here with Tom's kind permission.

-----

American policymakers have long viewed the protection of overseas oil supplies as an essential matter of "national security," requiring the threat of -- and sometimes the use of -- military force. This is now an unquestioned part of American foreign policy.

On this basis, the first Bush administration fought a war against Iraq in 1990-1991 and the second Bush administration invaded Iraq in 2003. With global oil prices soaring and oil reserves expected to dwindle in the years ahead, military force is sure to be seen by whatever new administration enters Washington in January 2009 as the ultimate guarantor of our well-being in the oil heartlands of the planet. But with the costs of militarized oil operations -- in both blood and dollars -- rising precipitously, isn't it time to challenge such "wisdom"? Isn't it time to ask whether the U.S. military has anything reasonable to do with American energy security, and whether a reliance on military force, when it comes to energy policy, is practical, affordable, or justifiable?

How energy policy got militarized

The association between "energy security" (as it's now termed) and "national security" was established long ago. President Franklin D. Roosevelt first forged this association way back in 1945, when he pledged to protect the Saudi Arabian royal family in return for privileged American access to Saudi oil. The relationship was given formal expression in 1980, when President Jimmy Carter told Congress that maintaining the uninterrupted flow of Persian Gulf oil was a "vital interest" of the United States, and attempts by hostile nations to cut that flow would be countered "by any means necessary, including military force."

How rising oil prices are obliterating America’s superpower status

The following was originally published on Tom's Dispatch, which has graciously permitted us to use it here.

-----

Nineteen years ago, the fall of the Berlin Wall effectively eliminated the Soviet Union as the world's other superpower. Yes, the USSR as a political entity stumbled on for another two years, but it was clearly an ex-superpower from the moment it lost control over its satellites in Eastern Europe.

Less than a month ago, the United States similarly lost its claim to superpower status when a barrel crude oil roared past $110 on the international market, gasoline prices crossed the $3.50 threshold at American pumps, and diesel fuel topped $4.00. As was true of the USSR following the dismantling of the Berlin Wall, the U.S. will no doubt continue to stumble on like the superpower it once was; but as the nation's economy continues to be eviscerated to pay for its daily oil fix, it, too, will be seen by increasing numbers of savvy observers as an ex-superpower-in-the-making.

That the fall of the Berlin Wall spelled the erasure of the Soviet Union's superpower status was obvious to international observers at the time. After all, the USSR visibly ceased to exercise dominion over an empire (and an associated military-industrial complex) encompassing nearly half of Europe and much of Central Asia. The relationship between rising oil prices and the obliteration of America's superpower status is, however, hardly as self-evident. So let's consider the connection.

Dry hole superpower

The fact is, America's wealth and power has long rested on the abundance of cheap petroleum. The United States was, for a long time, the world's leading producer of oil, supplying its own needs while generating a healthy surplus for export.