Friday, June 11, 2004

The Next World War?

I've been thinking about oil lately.

The price per barrel is approaching record highs when adjusted for inflation, but it's not the price that has me thinking. Most OPEC countries, save Saudi Arabia, are pumping near their capacity and it takes several years to build additional capacity and all the infrastructure that supports that capacity. Large oil companies - most infamously Shell - have "re-structured" their reserves or outright reduced the amount of oil they claim in known reserves. South East and Pacific-Rim nations, most especially China, have economies and populations that are expanding at unsustainable rates. And with growing economies and growing populations come rising demand for energy. The primary oil supplying region of the world is in perpetual turmoil.

So what happens when demand, whether temporary or permanently, outstrips supply? Of course prices go up. Way up. And demand will temporarily ease. But growing third-world populations will not stand by while their standards of living stagnate and that of the first-world continues to absorb resources at prodigious rates. The Chinese will not be denied their cars and their motorcylces and their washers and dryers and their internet connected refrigerators. Nor will the Indians, Pakistanis or Indonesians.

At what point will some leader emerge in what country and claim the need for - not leibensraum - but oil? And what will they do?

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