Energy Wars and a Rumor of Wars

I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil ? Alan Greenspan (2008)

Alan Greenspan is not my favourite macroeconomist or central bank chief, although his presence on a bandstand with the great jazz saxophonist Stan Getz deserves almost as much respect as the above citation. Of course, when he says “everyone” he means persons in his social circle. Persons with the right ‘connections’, who wine and dine with similar ladies and gentlemen, and most important who were not confused by the sanctimonious pronouncements of the gentleman in the White House when the above statement was published.

Yesterday Michael T. Klare, professor of peace and security studies at Hampshire College, published an article in the European Energy Review with the title ‘The New Thirty Years War’ (2011), which is supposed to say something important about “The Great Global Energy Struggle to Come.”

What he says is meaningless, because the conflicts he is talking about have to do with corporations, and not states: corporations come and go, and their troubles are seldom referred to as wars, even in those special cases when this designation might be appropriate.

Put another way, in my forthcoming energy economics textbook (2011), given the opportunity, I would have said that Professor Klare’s work has no place in economic research because he deals with fantasy rather than fact.

For instance, we have had an energy war in Libya – a war for oil brilliantly examined in articles and comments in the forum OilPrice.Com. Moreover, for teachers of energy economics like myself, the basic issue in Libya was not oil but lies and misunderstandings, which unfortunately is par for the course where half-baked energy journalism and some economic research is concerned. In Dr Greenspan’s excellent book, a figure for global oil output in 2030 of 116 million barrels per day (= 116 mb/d) was given – courtesy of the International Energy Agency (IEA) – while a large portion of one of my lectures in my course on oil and gas economics at the Asian Institute of Technology (Bangkok) was devoted to ridiculing another  IEA estimate for the same year of 121 mb/d. 

The opinion here is that those figures will never be seen for oil, although they are not impossible for ‘liquids’ (i.e. oil plus biofuels plus natural gas liquids, etc). However if the maximum (oil/liquids) global production is in the vicinity of the one often bandied about in France, then a prophesy by an important contributor to the site EnergyPulse – Len Gould – deserves some attention: voters in many countries prefer war to being deprived of  the energy – particularly in oil products – that they are used to.

Like Professor Klare, I refer to the disaster at Fukushima in my book, but unlike the off-the-wall analyses of that scholar, I happen to know what the Japanese nuclear future will involve. The nuclear renaissance may or may not take place in most of the industrial countries in the world, but it is certain in those countries (like Russia and China) who are playing to win. Japan belongs in this category.

Finally, since the European Economic Review has its editorial offices in Holland – a country whose government recently renounced its holier-than-thou nuclear philosophy – I have no choice but to ask what were the editors of that publication were thinking  when they published an article that, from a scientific point of view,  is s hopelessly naïve.

By Professor Ferdinand E. Banks

REFERENCES

Banks, Ferdinand E. (2011). Energy and Economic Theory. London, New York and
      Singapore: World Scientific.
______. (2011). ‘Will France also play the nuclear fool’. Seminar Paper.
Greenspan, Alan (2008). ‘The Age of Turbulence’. London: Penguin Books.
Klare, Michael T. (2011). ‘The new thirty years’ war. European Energy Review
              (5 September)