The Real Price of Oil

How much will we pay, for our own destruction?

Is Energo-fascism in Your Future?
The Global Energy Race and Its Consequences (Part 1)
By Michael T. Klare

It has once again become fashionable for the dwindling supporters of President Bush's futile war in Iraq to stress the danger of "Islamo-fascism" and the supposed drive by followers of Osama bin Laden to establish a monolithic, Taliban-like regime -- a "Caliphate" -- stretching from Gibraltar to Indonesia.

The President himself has employed this term on occasion over the years, using it to describe efforts by Muslim extremists to create "a totalitarian empire that denies all political and religious freedom." While there may indeed be hundreds, even thousands, of disturbed and suicidal individuals who share this delusional vision, the world actually faces a far more substantial and universal threat, which might be dubbed: Energo-fascism, or the militarization of the global struggle over ever-diminishing supplies of energy.

Unlike Islamo-fascism, Energo-fascism will, in time, affect nearly every person on the planet. Either we will be compelled to participate in or finance foreign wars to secure vital supplies of energy, such as the current conflict in Iraq; or we will be at the mercy of those who control the energy spigot, like the customers of the Russian energy juggernaut Gazprom in Ukraine, Belarus, and Georgia; or sooner or later we may find ourselves under constant state surveillance, lest we consume more than our allotted share of fuel or engage in illicit energy transactions. This is not simply some future dystopian nightmare, but a potentially all-encompassing reality whose basic features, largely unnoticed, are developing today.

These include:

* The transformation of the U.S. military into a global oil protection service whose primary mission is to defend America's overseas sources of oil and natural gas, while patrolling the world's major pipelines and supply routes.

* The transformation of Russia into an energy superpower with control over Eurasia's largest supplies of oil and natural gas and the resolve to convert these assets into ever increasing political influence over neighboring states.

* A ruthless scramble among the great powers for the remaining oil, natural gas, and uranium reserves of Africa, Latin America, the Middle East, and Asia, accompanied by recurring military interventions, the constant installation and replacement of client regimes, systemic corruption and repression, and the continued impoverishment of the great majority of those who have the misfortune to inhabit such energy-rich regions.

* Increased state intrusion into, and surveillance of, public and private life as reliance on nuclear power grows, bringing with it an increased threat of sabotage, accident, and the diversion of fissionable materials into the hands of illicit nuclear proliferators.

Together, these and related phenomena constitute the basic characteristics of an emerging global Energo-fascism. Disparate as they may seem, they all share a common feature: increasing state involvement in the procurement, transportation, and allocation of energy supplies, accompanied by a greater inclination to employ force against those who resist the state's priorities in these areas. As in classical twentieth century fascism, the state will assume ever greater control over all aspects of public and private life in pursuit of what is said to be an essential national interest: the acquisition of sufficient energy to keep the economy functioning and public services (including the military) running.

The Demand/Supply Conundrum

Powerful, potentially planet-altering trends like this do not occur in a vacuum. The rise of Energo-fascism can be traced to two overarching phenomena: an imminent collision between energy demand and energy supplies, and the historic migration of the center of gravity of planetary energy output from the global north to the global south.

For the past 60 years, the international energy industry has largely succeeded in satisfying the world's ever-growing thirst for energy in all its forms. When it comes to oil alone, global demand jumped from 15 to 82 million barrels per day between 1955 and 2005, an increase of 450%. Global output rose by a like amount in those years. Worldwide demand is expected to keep growing at this rate, if not faster, for years to come -- propelled in large part by rising affluence in China, India, and other developing nations. There is, however, no expectation that global output can continue to keep pace.

Quite the opposite: A growing number of energy experts believe that the global output of "conventional" (liquid) crude oil will soon reach a peak -- perhaps as early as 2010 or 2015 -- and then begin an irreversible decline. If this proves to be the case, no amount of inputs from Canadian tar sands, shale oil, or other "unconventional" sources will prevent a catastrophic liquid-fuel shortage in a decade or so, producing widespread economic trauma. The global supply of other primary fuels, including natural gas, coal, and uranium is not expected to contract as rapidly, but all of these materials are finite, and will eventually become scarce.

Coal is the most plentiful of the three; if consumed at current rates, it can be expected to last for perhaps another century and a half. If, however, it is used to replace oil (in various coal-to-liquid schemes), it will disappear much more rapidly. This does not, of course, address coal's disproportionate contribution to global warming; if there is no change in the way it is burned in power plants, the planet will become inhospitable long before the last coal mine is exhausted.
Natural gas and uranium will outlast petroleum by a decade or two, but they too will eventually reach peak output and begin to decline. Natural gas will simply disappear, just like oil; any future scarcity of uranium can to some degree be overcome through the greater utilization of "breeder reactors," which produce plutonium as a byproduct; this substance can, in turn, be used as a reactor fuel in its own right. But any increased use of plutonium will also vastly increase the risk of nuclear-weapons proliferation, producing a far more dangerous world and a corresponding requirement for greater government oversight of all aspects of nuclear power and commerce.

Such future possibilities are generating great anxiety among officials of the major energy-consuming nations, especially the United States, China, Japan, and the European powers. All of these countries have undertaken major reviews of energy policy in recent years, and all have come to the same conclusion: Market forces alone can no longer be relied upon to satisfy essential national energy requirements, and so the state must assume ever-increasing responsibility for performing this role. This was, for example, the fundamental conclusion of the National Energy Policy adopted by the Bush administration on May 17, 2001 and followed slavishly ever since, just as it is the official stance of China's Communist regime. When resistance to such efforts is encountered, moreover, government officials only wield the power of the state more regularly and with a heavier hand to achieve their objectives, whether through trade sanctions, embargoes, arrests and seizures, or the outright use of force. This is part of the explanation for Energo-fascism's emergence.

Its rise is also being driven by the changing geography of energy production. At one time, most of the world's major oil and natural gas wells were located in North America, Europe, and the European sectors of the Russian Empire. This was no accident. The major energy companies much preferred to operate in hospitable countries that were close at hand, relatively stable, and disinclined to nationalize private energy deposits. But these deposits have now largely been depleted and the only areas still capable of satisfying rising world demand are located in Africa, Asia, Latin America, and the Middle East.

The countries in these regions were nearly all subject to colonial rule and still harbor deep distrust of foreign involvement; many also house ethnic separatist groups, insurgencies, or extremist movements that make them especially inhospitable to foreign oil companies. Oil production in Nigeria, for example, has been sharply curtailed in recent months by an insurgency in the impoverished Niger Delta. Members of poor tribal groups that have suffered terribly from the environmental devastation wrought by oil-company operations in their midst, while receiving few tangible benefits from the resulting oil revenues, have led it; most of the profits that remain in-country are pilfered by ruling elites in Abuja, the capital. Combine this sort of local resentment with lack of security and often shaky ruling groups, and it's hardly surprising that the leaders of the major consuming nations have increasingly been taking matters into their own hands -- arranging preemptive oil deals with compliant local officials and providing military protection, where needed, to ensure the safe delivery of oil and natural gas.

In many cases, this has resulted in the establishment of oil-driven, patron-client relations between major consuming nations and their leading suppliers, similar to the long-established U.S. protectorate over Saudi Arabia and the more recent U.S. embrace of Ilham Aliyev, the president of Azerbaijan. Already we have the beginnings of the energy equivalent of a classic arms race, combined with many of the elements of the "Great Game" as once played by colonial powers in some of the same parts of the world. By militarizing the energy policies of consuming nations and enhancing the repressive capacities of client regimes, the foundations are being laid for an Energo-fascist world.

The Pentagon: A Global Oil-Protection Service

The most significant expression of this trend has been the transformation of the U.S. military into a global oil-protection service whose primary function is the guarding of overseas energy supplies as well as their global delivery systems (pipelines, tanker ships, and supply routes). This overarching mission was first articulated by President Jimmy Carter in January 1980, when he described the oil flow from the Persian Gulf as a "vital interest" of the United States, and affirmed that this country would employ "any means necessary, including military force" to overcome an attempt by a hostile power to block that flow.
When President Carter issued this edict, quickly dubbed the Carter Doctrine, the United States did not actually possess any forces capable of performing this role in the Gulf. To fill this gap, Carter created a new entity, the Rapid Deployment Joint Task Force (RDJTF), an ad hoc assortment of U.S-based forces designated for possible employment in the Middle East. In 1983, President Reagan transformed the RDJTF into the Central Command (Centcom), the name it bears today. Centcom exercises command authority over all U.S. combat forces deployed in the greater Persian Gulf area including Afghanistan and the Horn of Africa. At present, Centcom is largely preoccupied with the wars in Iraq and Afghanistan, but it has never given up its original role of guarding the oil flow from the Persian Gulf in accordance with the Carter Doctrine.

The greatest danger to the Persian Gulf oil flow is now said to emanate from Iran, which has threatened to choke off all oil shipments through the vital Strait of Hormuz (the narrow passageway at the mouth of the Gulf) in the event of an American air assault on its nuclear facilities. In possible anticipation of such a move, the Pentagon recently ordered additional air and naval forces into the Gulf and replaced General John Abizaid, the Centcom Commander, who favored diplomatic engagement with Iran and Syria, with Admiral William Fallon, the Commander of the Pacific Command (Pacom) and an expert in combined air and naval operations. Fallon arrived at Centcom just as President Bush, in a nationally televised speech on January 10, announced the deployment of an additional carrier battle group to the Gulf and warned of harsh military action against Iran if it failed to halt its support for insurgents in Iraq and its pursuit of uranium-enrichment technology.

When first promulgated in 1980, the Carter Doctrine was aimed principally at the Persian Gulf and surrounding waters. In recent years, however, American policymakers have concluded that the United States must extend this kind of protection to every major oil-producing region in the developing world. The logic for a Carter Doctrine on a global scale was first spelled out in a bipartisan task force report, "The Geopolitics of Energy," published by the Washington-based Center for Strategic and International Studies (CSIS) in November 2000. Because the United States and its allies are becoming increasingly dependent on energy supplies from unstable overseas suppliers, the report concluded, "[T]he geopolitical risks attendant to energy availability are not likely to abate."

Under these circumstances, "the United States, as the world's only superpower, must accept its special responsibilities for preserving access to worldwide energy supply."

This sort of thinking -- embraced by senior Democrats and Republicans alike -- appears to have governed American strategic thinking since the late 1990s. It was President Clinton who first put this policy into effect, by extending the Carter Doctrine to the Caspian Sea basin. It was Clinton who originally declared that the flow of oil and gas from the Caspian Sea to the West was an American security priority, and who, on this basis, established military ties with the governments of Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, and Uzbekistan. President Bush has substantially upgraded these ties -- thereby laying the groundwork for a permanent U.S. military presence in the region -- but it is important to view this as a bipartisan effort in accordance with a shared belief that protection of the global oil flow is increasingly not just a vital function, but the vital function of the American military.

More recently, President Bush has extended the reach of the Carter Doctrine to West Africa, now one of America's major sources of oil. Particular emphasis is being placed on Nigeria, where unrest in the Delta (which holds most of the country's onshore petroleum fields) has produced a substantial decline in oil output. "Nigeria is the fifth largest source of U.S. oil imports," the State Department's Fiscal Year 2007 Congressional Budget Justification for Foreign Operations declares, "and disruption of supply from Nigeria would represent a major blow to U.S. oil security strategy." To prevent such a disruption, the Department of Defense is providing Nigerian military and internal security forces with substantial arms and equipment intended to quell unrest in the Delta region; the Pentagon is also collaborating with Nigerian forces in a number of regional patrol and surveillance efforts aimed at improving security in the Gulf of Guinea, where most of West Africa's offshore oil and gas fields are located.
Of course, senior officials and foreign policy elites are generally loathe to acknowledge such crass motivations for the utilization of military force -- they much prefer to talk about spreading democracy and fighting terrorism. Every once in a while, however, a hint of this deep energy-based conviction rises to the surface. Especially revealing is a November 2006 task force report from the Council on Foreign Relations on "National Security Consequences of U.S. Oil Dependency." Co-chaired by former Secretary of Defense James R. Schlesinger and former CIA Director John Deutsch, and endorsed by a slew of elite policy wonks from both parties, the report trumpeted the usual to-be-ignored calls for energy efficiency and conservation at home, but then struck just the militaristic note first voiced in the 2000 CSIS report (which Schlesinger also co-chaired):

"Several standard operations of U.S. regionally deployed forces [presumably Centcom and Pacom] have made important contributions to improving energy security, and the continuation of such efforts will be necessary in the future. U.S. naval protection of the sea-lanes that transport oil is of paramount importance."

The report also called for stepped up U.S. naval engagement in the Gulf of Guinea off the coast of Nigeria.

When expressing such views, U.S. policymakers often adopt an altruistic stance, claiming that the United States is performing a "social good" by protecting the global oil flow on behalf of the world community. But this haughty, altruistic posture ignores crucial aspects of the situation:

* First, the United States is the world's leading gas guzzler, accounting for one out of every four barrels of oil consumed daily around the world.

* Second, the pipelines and sea lanes being protected by American soldiers and sailors at risk of life and limb are largely those oriented toward the United States and close allies like Japan and the NATO countries.

* Third, it is often specifically American-based corporations whose overseas operations are being protected by U.S. forces in turbulent areas abroad, again at significant risk to the military personnel involved.

* Fourth, the Pentagon is itself one of the world's great oil guzzlers, consuming 134 million barrels of oil in 2005, as much as the entire nation of Sweden.
So while it is true that other countries may obtain some benefits from the activities of the American military, the primary beneficiaries are the American economy and giant U.S. corporations; the primary losers are the American soldiers who risk their lives every day to protect the pipelines and refineries, the poor of these countries who see little or no benefit from the extraction of their natural resources, and the global environment as a whole.

The cost of this immense undertaking, in both blood and treasure, is enormous and it's still on the rise. There is, first of all, the war in Iraq, which may have been sparked by a variety of motives, but cannot in the end be separated from the historic mission first laid out by President Carter of eliminating any potential threat to the free flow of oil from the Persian Gulf. An assault on Iran would also have a number of motives, but it, too, would be tied to this mission in the final analysis -- even if it had the perverse effect of closing off oil supplies, driving up energy prices, and throwing the global economy into a tailspin. And there are sure to be more wars over oil after these, with more American casualties and more victims of American missiles and bullets.

The cost in dollars will also be great. Even if the war in Iraq is excluded from the tally, the United States spends about one-fourth of its defense budget, or some $100 billion per year, on Persian Gulf-related expenses -- the approximate annual price-tag for enforcement of the Carter Doctrine. One can argue about what percentage of the approximately $1 trillion cost of the war in Iraq should be added to this tally, but surely we are minimally talking about many hundreds of billions of dollars with no end in sight. Protection of pipelines and tanker routes in the Indian Ocean, the Pacific, the Gulf of Guinea, Colombia, and the Caspian Sea region adds additional billions to this figure.

These costs will snowball in the future as the United States becomes predictably more dependent on energy from the global south, as resistance to Western exploitation of its oil fields grows, as an energy race with newly ascendant China and India revs up, and as American foreign-policy elites come to rely increasingly on the U.S. military to overcome this resistance. Eventually, the escalation of these costs will require higher domestic taxes or diminished social benefits, or both; at some point, the growing need for manpower to guard all these overseas oil fields, refineries, pipelines, and tanker routes could entail resumption of the military draft. This will generate widespread resistance to these policies at home -- and this, in turn, may trigger the sorts of repressive government crackdowns that would throw an ever darkening shadow of Energo-fascism over our world.

Michael T. Klare is a professor of peace and world security studies at Hampshire College and the author of Blood and Oil: The Dangers and Consequences of America's Growing Dependence on Imported Petroleum (Owl Books).

[Note: Look for part two of Michael Klare's "Is Energo-fascism in Your Future?" -- "Petro-power and the Nuclear Renaissance" -- later this week.]

Copyright 2007 Michael T. Klare