...In an age where cell phones have a lifespan approaching that of a mosquito-repellant or a toothbrush, our industries are revving in tandem with the fuel fed into it. More fuel for more industries for more products. This is known the Jevons paradox...
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Oil prices are rising again, with analysts wondering if the all-time record of $75.35 per barrel notched on April 21 will be surpassed this week.
All the usual earth-shattering parameters are missing in this latest episode. International enfants terrible like Iran and Venezuela, with their nukes and threats of supply cut offs, remain looming in the distant yet fearful market horizon, causing a semipermanent markup in global crude prices.
In the absence of such immediate "grave threats" to international peace, there are no "surprisingly larger" U.S. gasoline reports this time either, along with their helium-like psychological ability to relief market jitters each time a critical mass is reached somewhere. There is a stalemate on the Iranian front, and in the case of Hugo Chavez, his polemical repertoire has already run out of gas and originality.
So, what gives now? For a glimpse into our overstretched global supply lines, think of seven tankers blocked by an oil spill at Louisiana's Calcasieu Channel last week and refineries that couldn't process the crude trapped in their hulls for 10-odd days.
This sent enough ripples across the equator, and they are returning in time for the big bang, gas-guzzling July 4 rides today.
Was there ever a time when the American Independence Day gifted million dollar checks to its nemeses?
One nemesis - on another front - is China. Its economic expansion of 10.3 percent for the first quarter this year is only adding fuel to simmering oil prices. Greater demand from China will intensify a fatigue-immune resource competition, and expect some ugly geopolitical maneuvers alongside ballooning prices in the months to come.
There is more bad news. China is plunging headlong into energy efficiency, and those who think this will save planet earth of some of its precious, dwindling natural resources should do some real hard thinking again.
Greater efficiency in the production and consumption processes should naturally lead to decreased demand and competition over raw materials. Unfortunately, this is not the case. More fuel efficient cars, streamlined industrial production, and creature comforts paradoxically spark greater demand for anything encapsulated in the four letter word: MORE.
In an age where cell phones have a lifespan approaching that of a mosquito-repellant or a toothbrush, our industries are revving in tandem with the fuel fed into it. More fuel for more industries for more products. This is known the Jevons paradox.
It is not just China that wants more. The developed world wants more too. The accoutrements of the modern world keep aggregating in a manner that results in greater demand and throwaways. The days when autoclaves were used to sterilize surgical instruments are slowly disappearing; in its stead are disposable plastic suturing tools and knives, all because one industry lobby pounced on a sterilization incident turned tragic. Aren't humans prone to mistakes? Pefectionism leads to wastage. Sanitized trade regimes lead to starvation.
The latest round of WTO talks, aimed at removing agriculture tariffs and opening global trade, recently broke down due to resistence from the Third World. The Third World wants the Euopean Union and the United States to dismantle agricultural subsidies for local farmers, and in the process render products from developing nations cheaper.
The Indian Commerce and Industry Minister Kamal Nath reportedly walked out in disgust. India and China though have little to fear. With their huge markets, expertise and geopolitical clout, they are in far better position to lock and secure vital raw materials.
No questions were asked at the WTO over how impoverished nations will cope with crude oil over $70. This will not be a problem for China, which has stocked $1 trillion in U.S. Treasury securities - instant petrodollars that can grease its sweatshop industries while bankrupting rivals abroad. When competition intensifies - laissez-faire trade regime or not - impoverished nations will be further disadvantaged. Oil, copper, zinc and other raw materials are finite resources.
Energy security somehow doesn't blip on the trade regime radar when it should - in fact - have fluttering red flags lodged on it. All we get are tangential arguments that miss the bullseye.
The prodigious energy expended on ethanol efficiency debates at research insitutions are not matched by a primary school curricula on energy savings. There is no EQ that reads energy quotient. Don't blame the kids when adults chug along CO2-belching jalopies instead of public transport. And adults go on to elect leaders who keep the energy quotient at status quo ante, and who promise MORE.
In the end, can we keep up with such insatiability? Historically, no developed nation or political heavyweight has ever contemplated self-imposed austerity. That is possible neither in developed nations nor in emerging markets like China and India, which take up two fifths of the global population. The sales pitches here, that can run into exponentials of billions, do not make this a possibility either.
In the end, when energy supply ceases to be commensurate to demand, a resource war begins. They will be couched in quasi-nationalistic or religious overtones; all of which mask the inability to balance supply with demand.
Resource wars of course lead to outright conflict, as anyone with a historical quotient can testify.
In the meantime, those seven tankers have already made it to their Citgo destinations in Lousianna. The July 4 strain on gasoline will be over in a day or two.
So, what's next to rattle our global energy bank?
Written by Mathew Maavak [send him email] who specializes in energy geopolitics, and was trained in crisis management, psy-war, and propaganda at the University of Leeds, UK. He is an Associate Editor (Business) for The Korea Herald - http://www.koreaherald.com/ and a featured columnist at www.populistamerica.com