Energy resources as an essential part of international energy policy
We currently attend a significant drop in the price of oil, something that motorists in Germany clearly perceive in their pockets. The reasons are multiple. A fundamental fact is the commercial use of Shale Oil deposits in the United States that determined that in a very short time this country practically disappeared from the global market as a plaintiff of energy. Nor is an increase in the price of oil in the short term as a result of the energy policy of large oil producers. With an almost stoic parsimony, Saudi Arabia, the world’s largest oil exporter, rejects any possibility of limiting its exports. The price of crude could even continue to lower to the extent that new oil sources are added to the market. In that sense, the opening of the Iranian energy market is expected with interest.
At the same time, industrialized nations such as Germany redirect their energy sector towards renewable energy. Likewise, the increasingly threatening consequences of climate change create the necessary political conditions that promote CO2 free energy sources. Many states of the world can hardly be removed to this claim, so that one is already talking about a global energy change. These new trends impact energy geopolitics. Above all, the expansion of renewable energy, more independent of a certain location than fossil sources, could end the existing global energy dependencies and redraw the global energy map in the long term.
Erosion of the foreign policy of oil export states
Condition for the industrial development of a state is to have a safe energy supply. It is natural then that energy policy is fully integrated into the foreign policy of many states. In essence this policy responds to logical considerations;The states that have energy resources such as oil, gas or coal, and the respective distribution possibilities, have the power of supply or are the object of the foreign policy of those countries that demand these energy resources and that have the power of demand. Nor can transit countries be ignored that have decision -making power over the transport of energy resources and, therefore, are an essential part of international energy policy.
To date, the states of the Middle East, Russia, Norway and Venezuela have the largest natural and gas reserves. Some of these were grouped very soon in the Organization of Petroleum Exporting Countries (OPEC) (Organization of the Petroleum Exporting Countries, Opec), in order to control a substantial part of the global energy offer and set the international price of crude oil. The 1973 oil crisis was a clear demonstration of its power.
As a consequence of the Yom Kipur war, some countries nucleated in the OPEC reduced the exploitation volume to pressure Western countries that supported Israel in this conflict. In Germany, the oil embargo led to a drastic increase in gasoline prices and the introduction of restrictions on cars use. It was a painful and never forgotten limitation in that country in love with mobility.
However, after the crisis, the prevailing dependencies were modified until then in terms of energy policy. As the first measure the states of the current OECD created the International Energy Agency (AIE) (International Energie Agency, IEA). Its main function is to prevent its members about the possibility of sudden crisis in oil supply, and develop strategies for prevention. Many states worldwide, including Germany, also began to diversify their energy sector to reduce their unilateral dependence on OPEC countries. As a consequence, the organization began to lose influence, although for a long time it remained the determining factor of global energy policy.
Currently, OPEC states exert less influence on international energy policy. Important emerging countries such as China, India, Indonesia, Mexico and Brazil dominate much of the global energy market. Its power is product of both supply and energy demand. In the oil sector, the states that are not part of the OECD are the ones that demand the most raw and at the same time those that produce the most.
Some of the emerging countries have been nucleated in the BRICS (Brazil, Russia, India, China and South Africa) group in order to pursue their own political objectives. More recently Russia tries to give greater weight to energy policy in this alliance, presenting for example initiatives on the development of a common energy reserves policy.
However, there are currently technological innovations that are shaking the power of the energy supply of the OPEC and other states rich in natural resources. New extraction methods such as fracking lead to non -conventional gas and oil deposits, so far difficult to access. These new methods have allowed the United States, at the time one of the main hydrocarbon importers, practically stopped buying energy. On the other hand, high oil prices in the past have led to the industry to resort to alternative energy sources and seek technological solutions for more efficient oil consumption. The efforts to develop technologies that allow the gas to fluidize. While oil has a relative transport system proper functioning with a maritime transport system governed by world supply and demand, so far the gas depended mostly on regional gas pipelines. Today the gas, even when in very expensive conditions, can be fluidized and transported by means of ships.
Many states worldwide, including Germany, also began to diversify their energy sector to reduce their unilateral dependence on OPEC countries.
Therefore, gas can become a competition for oil and contribute to weakening its position in energy policy. So far, the OPEC reaction has been rather surprising. Instead of cutting the export of crude oil, as some members of the organization, Algeria and Venezuela, among them, Saudi Arabia, the largest oil exporter, has preferred not to modify their export volumes. The reasons that have led the Saudi country to make this decision have deserved very different interpretations. Some assume that it seeks to counteract the new energy independence acquired by the United States. The Saudi calculation would be that a low price of oil erodes the profitability of the exploitation of Shale Oil deposits in the United States. In fact, many of the investments made in unconventional oil deposits in this country are considered non -profitable. There is also talk of an alleged pact between Saudi Arabia and the United States to economically harm Russia in its oil exporter, in relation to the Ukrainian crisis. Regional political interests could also influence. In recent months they would recover regional influence.
A policy of low oil prices could also serve to increase the costs of global climate change policy, particularly from Western European countries. In the media, on the other hand, the fall in the price of oil has deserved very different interpretations. On the one hand, the negative impact that would have a sunset of the oil industry and the end of the OPEC;On the other, prices are considered a positive evolution tending to boost economic growth due to cheap energy. They are also clearly outlined who are the economic losers (geo) and who the winners.
The first beneficiaries are countries with high energy consumption and scarce own energy resources. Emerging countries such as India, China, Mexico, Brazil, but also Europe, are considered with high dependence on energy imports. Among the losers are the bidder countries of oil, because the deterioration of prices negatively affects their public income. It is worth mentioning large exporters such as Russia, Venezuela and Nigeria, who finance a good part of their public spending through income from oil exports and now face sensitive losses.
From a geopolitical vision, these trends could lead to a loss of political power, since these states often use their wealth in raw materials as a weapon of their foreign policy. In this context, the most recent efforts of states such as Russia to ensure energy resources of fossil origin – in the Arctic region, for example – can only be interpreted as a commitment to an increase in prices. We will have to wait to see the result.
Leave feedback