Weekend Edition
March 25 - 27, 2011
The Price of the Ticket
The US, Libya and Oil
By CONN HALLINAN
Cynicism is not a healthy sentiment, and as the late Molly Ivins pointed out, it absolutely wrecks good journalism. But watching events in the Middle East unfold these days makes it a pretty difficult point of view to avoid.
Let's take the current U.S bombing of Libya. The rationale behind United Nations Security Council Resolution 1973 is to protect civilians from being beaten, shot up, and generally abused.
But while this applies to Libya, it does not apply to Bahrain, Saudi Arabia, or Yemen, where civilians are also being shot up, beaten, and generally abused. Is this because Moammar Gadhafi is uniquely evil? Crazier and odder, certainly, but being in the "opposition" in any of those countries is not a path to easy retirement. Civil liberties don't exist, prisons are chock full of political prisoners, and getting whacked if you don't like the leader is an operational hazard.
So what's it all about? Okay, here is the cynical joke: "Is it all about oil? Nope. Some of it is about natural gas."
Too simplistic? Maybe, but consider the following.
1) In 2009, the U.S. Energy Information Administration predicted that world oil reserves had "peaked" and that over the next several decades supplies would drop and prices would rise. There is some controversy over the study, but there is general agreement that easy-to-get petroleum sources are getting harder and harder to find.
2) Approximately 65 percent of the world's remaining oil reserves are in the Middle East, as well as considerable amounts of natural gas. Iran has the second greatest reserves of gas outside of Russia.
3) The U.S.—with the largest economy in the world—uses around 21 million barrels of oil per day (bpd). Since it produces only 7.5 million bpd domestically, it imports two thirds of its oil. Its major sources are (in descending order) Canada, Mexico, Saudi Arabia, Nigeria, Venezuela, and Iraq.
4) China—the world's number two economy—uses about 8 million bpd, a demand that is projected to rise to 11.3 million bpd by 2015. Since it only produces 3.7 million bpd domestically, it too relies on imported oil. It main suppliers are (in descending order) Saudi Arabia, Iran, Angola, Russia, Oman and Sudan.
It is estimated that, sometime between 2030 and 2050, China will surpass the U.S. and become the world's number one economy—provided that it can secure enough energy for its growing industrial needs. Insuring access to oil and gas is a major focus of Chinese foreign policy, particularly because Beijing is nervous about how it currently obtains its supplies. Some 80 percent are transported by sea, and all of those routes involve choke points currently controlled by the U.S. The U.S. Fifth Fleet based in Bahrain controls the Hormutz Straits, through which Saudi Arabian, Iranian, and Omanian oil passes. The Fifth also dominates the straits of Bab el-Mandab that control access to the Red Sea and through which Sudan's oil is shipped into the Indian Ocean. In addition the Malacca Straits between Sumatra and the Malay Peninsula is the major transit point for oil going to China. The U.S. Seventh Fleet controls that choke point.
China's nervousness over its sea-based oil supplies is one of the major reasons behind Beijing's crash naval program, its construction of ports in South and Southeast Asia, and its efforts to build land-based pipelines from Russia, Central Asia, and Pakistan.
The Chinese are also trying to cope with the fact that Iran, its second largest supplier of oil and gas, is currently under international sanctions that have reduced production and cut into China's supplies. Beijing has invested upwards of $120 billion to upgrade Iran's energy industry, but recently has had to cutback investments because its banks could end up being sanctioned for helping out the Teheran regime.
The Chinese are not the slightest bit cynical about why the U.S. is bombing Libya and not challenging Bahrain and Yemen: Bahrain hosts the U.S. Fifth Fleet, and Yemen's port of Aden dominates the Red Sea. China can play chess.
As for Libya. The U.S. doesn't get oil from Libya, but its allies in Europe do. And the current crisis is African Command's (Africom) coming out party. Up to now the record of the spanking new military formation has been less than impressive. First, no one would host it, because the U.S. military in Africa makes the locals nervous. So it is still based in Germany. Then it coordinated the absolutely disastrous Ethiopian invasion of Somalia that ended up turning most of the country over to the extremist Shabab.
But Libya is a fresh slate for Africom, and that is making the Chinese even more nervous (and explains why they have been so cranky about civilian casualties in Libya). When Africom was in its infancy it war-gamed a military intervention in the Gulf of Guinea in case "civil disturbances: caused any disruptions in oil supplies. Angola, China's other major African supplier, is in the Gulf of Guinea. It hardly seems like a coincidence that, at the very moment that African oil supplies become important, the U.S. creates a new military formation for the continent. Africom is currently advising and training the military forces of 53 countries in the region.
Okay, so here you are in Beijing. Your industries are clamoring for power. Media in the United States reflect a growing hostility toward you, with headlines in newspapers reading, "The Chinese Tiger Shows Its Claws," and U.S. politicians routinely blame you for America's economic problems. And the U.S. has basically puts its thumb on each one of your oil and gas sources. Nobody is cutting off any supplies at this point, but the implied threat is always there.
In end, it is not so much about oil and gas itself, as the control of energy. Any country that corners energy supplies in the coming decades will be in a powerful position to dictate a whole lot of things to the rest of the world. That's not cynicism, its cold-blooded calculation. And right now a lot of people in the Middle East are paying the price of the ticket.
