IAGS logo Energy Security
Prepared by the
Institute for the Analysis of Global Security

October 20, 2003
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Focus: Iraq

Minding Its Business
Saudi Arabia, which has demonstrated its willingness to use its vast oil reserves as a foreign policy tool, has not acted to aid U.S. efforts to rebuild Iraq.

Fencing in looters and saboteurs in Iraq
Too many people in and outside of Iraq are hoping to deny Iraq a better future through a campaign of sabotage and plunder of the country's neglected oil facilities. The problem, and possible solutions.


Prospects on Russia’s stance towards OPEC
In September Saudi Arabia’s de facto ruler Prince Abdullah made the first visit to Russia by a Saudi head of state in over seven decades. The future of Moscow’s stance towards OPEC is a critical question for the world oil market. Will Russia be willing to cooperate with OPEC and thus further strengthen the power of the cartel to set a price range for oil?

Energy security and liquefied natural gas
Demand for natural gas has increased as have the security vulnerabilities presented by liquefied natural gas terminals and tankers.

Under the Radar

Oil, terrorism and drugs intermingle in Colombia
Seventy U.S. Special Forces soldiers are training Colombians to protect an oil pipeline.

Japan's struggle to secure future oil supply
Energy dependent Japan looks to Iran for oil, causing tension with the U.S.

Chad-Cameroon pipeline project put to test
Will the pipeline, partially financed by the World Bank, improve the lot of Chad and Cameroon or exacerbate existing corruption and strife?

Natural resource curse hits São Tomé
A tiny West African country illustrates a well known problem.

On the technology front

Fuel Cell Locomotive for Military and Commercial Railways
An international consortium is developing the world’s largest fuel cell vehicle, a 109 metric-ton, 1 MW locomotive.

Fuel cell power plant installed at NJ Sheraton
A stationary fuel cell will supply 250 kilowatts of electric power as well as heat to the Sheraton Edison Hotel, accounting for about 25 percent of the hotel's electricity and hot water.

Fuel cell scooters for Europe and China
Palcan's fuel cell powered scooter is designed to address the world's need for a low-end mass transport vehicle.

U.S. Air Force to get fuel cell bus
Fuel cell powered thirty-foot hybrid bus to be stationed at the Hickam Air Force Base in Hawaii.

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Back Issues

Dangerous Dependence

The United States should decrease its use of Middle Eastern oil and develop alternate fuel methods or risk even greater reliance on the Arab world, warns one energy expert.

This month’s 30th anniversary of the Yom Kippur War, when the Arab states imposed an oil embargo on the United States as punishment for supporting Israel, should serve as a reminder that dependence on Middle Eastern oil affects national security. Indeed, since Sept. 11, Americans have become increasingly aware that petrodollars earned by countries like Saudi Arabia, Iran and Libya have been used to sponsor terrorism, produce weapons of mass destruction and build schools preaching hatred of America and its values. It is imperative that Washington takes decisive action to free the United States from its dangerous addiction to Middle Eastern oil.

With mounting anti-Americanism throughout the Middle East—home to two-thirds of global oil reserves—many argue that the United States should shift oil supply away from this region to non-OPEC producers. Oil companies are investing billions of dollars in exploration and production in non-OPEC countries, particularly Russia, the Caspian Sea states and West Africa.

This strategy helps in the short run, but it is not a long-term solution to the problem of dependence on Middle Eastern oil.

OPEC's share of oil production will rise in coming years
The biggest concern about the rush for non-OPEC oil is that down the line it cannot prevent the emergence of even greater Middle East oil domination. Recent studies show that world oil production is projected to increase by about 65 percent in the next 30 years. Three-quarters of the production increase will come from OPEC countries. As a result, OPEC will account for 60 percent of total oil supply in 2030, compared to 40 percent today. Since most OPEC reserves are located in the Middle East, by 2030, according to the International Energy Agency, Middle Eastern producers will supply 50 percent of U.S. oil imports, 50 percent of Europe’s, 80 percent of China’s and 90 percent of Japan’s. When it comes to control over reserves the situation is even more alarming. Because reserves in non-OPEC countries are relatively small, they are being depleted more rapidly than OPEC’s. The overall reserves-to-production ratio—an indicator of how long proven reserves would last at current production rates—of non-OPEC producers is much lower than OPEC’s: about 15 years for non-OPEC and 80 years for OPEC.

Key reserves in non-OPEC countries are becoming depleted
Many of today’s large producers, such as the United States, Mexico, Norway, China and Brazil will cease to be relevant players in the oil market in less than three decades. According to a study by the European Commission, the percentage of world oil reserves concentrated in OPEC countries will reach 95 by 2030 in comparison to 80 percent today, greatly increasing dependence on OPEC resources and with it the ability of Middle Eastern producers to manipulate prices and increase their political leverage on U.S. foreign policy.

Hence, the rush for non-Middle Eastern oil—if done at the expense of investments in other strategies—is a problematic solution that, in the short run, is no more than a Band-Aid, and, in the long run, will only create a larger U.S. dependency on the club from which it is so eager to divorce.

The United States needs a strategy to find alternative fuel sources
To address the problem, the United States should adopt a comprehensive strategy combining near-term fuel-economy improvements in our vehicles with initiatives to commercialize new technologies and develop next-generation fuels. The last time the United States made such a concerted effort to improve energy efficiency—between 1973 and 1985 in response to the Arab oil embargo—oil consumption decreased 15 percent, oil imports 42 percent and imports from the Persian Gulf 87 percent. As a result, the world oil market shrank by a tenth.

Yet with the current growth in global demand, energy efficiency on its own will not even offset projected growth. A policy of increasing energy efficiency would be useful if accompanied by a no less vigorous policy of fuel diversification—meaning the introduction of non-oil-based, domestically produced transportation fuels such as hydrogen, methanol, ethanol, natural gas or bio-diesel.

President Bush’s proposal in his last State of the Union address to invest $1.2 billion in hydrogen fuel cell technology, so that “the first car driven by a child born today could be powered by made-in-U.S. hydrogen gas,” is an important contribution to the effort to curb Middle East influence on U.S. economy and security. But the United States has additional ways of reducing its energy dependence. While it lacks oil, it does have many other domestic resources, including 25 percent of the world’s coal reserves, natural gas, 2.5 billion tons a year of biomass, and hundreds of millions of tons of municipal waste, all of which can be utilized in the production of fuels that otherwise would have to be imported from the Middle East.

Nothing less than a high-priority, well-funded, three-pronged national effort to increase non-OPEC oil supply and improve fuel economy as a short-term fix, and, most importantly, develop alternatives to oil as a long-term solution, will make America independent of the whims of Middle East oil producers.

Gal Luft is Executive Director of the Institute for the Analysis of Global Security.

Published on October 20, 2003 by the Near East Report.