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The Future Should be Energy Efficient

Nader Elhefnawy | Survival | April/May 2008

Growing oil prices and diminishing supplies of natural resources increasingly give rise to doubts regarding the long-term stability of an economy that relies on fossil fuels. The underlying assumption of pessimistic analyses based on the "peak oil" theory is that oil production reached its highest level long ago and will decline continuously from now on - while demand keeps growing. This means we have reached the end of the oil era.

In this context, particular attention should be paid to five plausible consequences:

Oil exporters: The biggest oil exporting countries will gain both in terms of capital and influence. They can resort more decisively than ever before to radical measures when they believe their national interest to be at risk. Iran could, for instance, interrupt oil deliveries across the Persian Gulf so as to strengthen its position in political conflicts (for example in the case of the nuclear dispute).

Oil importers: Countries that are massively dependent on imports of natural resources will be threatened by economic stagnation - whether caused by the gap between supply and demand or because of the intentional price manipulations of natural resource providers. It is ever more likely that soon, productivity will be primarily measured in relation to energy consumption.

Disintegrating states: In some developing countries, energy prices are increasing the risk that the economy may end up in complete disarray. With this, the danger of state disintegration also grows. Especially in countries in which state institutions are weak, we could witness the return to neo-feudal patterns of behaviour, a situation in which warlords, private militias and rich businessmen hold the power.

A war for resources: Resources have forever caused armed conflict. Oil resources in particular appear to increase the risk of internal conflict (such as in Darfur), military intervention and interstate wars. In addition, alliances that are forged with the purpose of guaranteeing energy security often produce new conflicts. In central Asia, Russia and China are doing everything to resist the influence of the USA by means of bilateral military agreements and the creation of regional blocks such as the Shanghai Cooperation Organisation.

Nuclear threat: Due to the diminution of oil reserves, nuclear energy is increasingly being exploited, multiplying the risks its use brings with it, such as nuclear accidents. Every country in which a nuclear reactor is in use can sooner or later have access to plutonium to make weapons. This increases the chances that it lands in the wrong hands.

In the future, the fate of individual countries will be less dependent on their military capacities than on their ability to free their economy from dependence on fossil energy sources. Only the ones that practice sufficient energy efficiency will survive economically. However, similarly to climate change, this challenge is too big to be addressed alone, by individual actors. The international integration of the economy and the specific difficulties of developing countries mean that cooperation on a global level is the only possible solution.

This summary was prepared by the Atlantic Community editorial team from "The Impending Oil Shock" published here in Survival, Global Politics and Strategy, vol. 50 no. 2.

Related materials from the Atlantic Community:

• Eckart von Klaeden: The Need to Nurture the Latin American-European Relationship
• Marek Swierczynski: Gazprom Hardens its Grip on Europe
• Hans Ulrich Klose: The West Needs Russia as a Partner