News / Africa

    Will Political Turmoil Collapse the Old Oil Order?

    A rebel walks inside a destroyed weapons dump near Benghazi, March 5, 2011
    A rebel walks inside a destroyed weapons dump near Benghazi, March 5, 2011

    Multimedia

    Audio
    Joe DeCapua

    The political turmoil in the Arab world may not only lead to much higher oil prices, but greater competition for resources and a shift in priorities for oil-producing nations.  So says the author of Rising Powers, Shrinking Planet.

    What’s happening in North Africa and the Middle East, says Michael Klare, is the collapse of what he calls the “Old Oil Order.”

    “The old oil order, as I see it, is a network, a constellation of governments in the region, largely authoritarian, that were devoted to producing oil and making it available for sale to international markets.  And these governments were supported to a great deal by the United States and the West, not all of them, but most of them, because these governments favored the international market – the trade in oil,” he says.

    Klare is a professor of peace and world security studies at Hampshire College in Amherst, Massachusetts.  He says some cracks were seen in the old oil order over the years in such countries as Iran and Iraq.

    Now what?

    The new oil order that’s emerging, he says, will cater less to Western desires.

    “I think it’ll look a lot like Venezuela, in some cases, where (President) Hugo Chavez rules the state oil company, PDVSA, and uses the money for social purposes and political purposes in his country and to promote what he sees as the welfare of his people.  And he’s not very interested in improving the capacity, the efficiency of the company.  So, Venezuela’s oil production has fallen since he’s been in power,” he says.

    He says any new governments that emerge in the Arab world, whatever their political orientation, will face “tremendous social and economic challenges.”  Those challenges will arise from growing populations and high unemployment.

    “Their priority is going to be to use their money from oil production to improve employment, not to feed the thirst for oil in the rest of the world,” he says.

    Pumped up price at the pump

    Klare says, “With the demise of the old oil order, we will see the end of cheap petroleum forever.”  That means much higher fuel prices.  How high?  That depends on Saudi Arabia.

    “Saudi Arabia,” he says, “is the linchpin of the global oil order because it has the world’s largest reserves.  It is the largest supplier of oil to international markets and it has the largest spare capacity – the ability to ramp up production in times of crisis like you have today.  So, as long as Saudi Arabia remains stable and keeps producing, I think oil won’t go beyond the record it set in 2008 of about $140-$150 a barrel.”

    But, he says, if Saudi Arabia goes the way of Egypt, Tunisia and Libya, then there are no limits to how high the price of oil could go.

    “$200 a barrel wouldn’t surprise me,” says Klare.

    That could mean gasoline costing at least $5 a gallon here in the United States.  He says tapping the U.S. Strategic Oil Reserve to hold down gasoline prices would only have a temporary effect.  One thing, he says, that could cause oil prices to drop suddenly is another global economic crisis like the one in 2008.

    What's food got to do with it?

    The professor of peace and world security studies says it’s important to remember that oil and food prices are intertwined. And that prior to the economic crisis, a food crisis gripped the world.

    “While the price of oil is rising, we have also seen a huge surge in the price of food, partly because oil is so expensive.  When oil rises, the price of food rises.  And it’s been the high price of food that triggered many of the uprisings, first in Algeria, then in Tunisia and Jordan and in some of the other cases.  And the price of food continues to rise, too.  And I expect that we’ll see more uprisings about food.  And I fear that there’ll be more of this in the future because of global climate change,” he says.

    Climate change has been blamed for many droughts and floods, both of which destroy agricultural land.

    Klare says the 21st Century brings greater competition for food, fuel and water among the western powers, as well as India, Russia and China.  Sub-Saharan African oil producing nations, such as Angola and Nigeria, he says, will be pressured to solve domestic problems, while trying to meeting growing demand for oil.

    Klare says the world must develop some type of new energy system soon, not only to meet greater demand, but to deal with climate change, as well.

    You May Like

    Former US Envoys Urge Obama to Delay Troop Cuts in Afghanistan

    Keeping troop levels up during conflict with both Taliban and Islamic State is necessary to support Kabul government, they say

    First Lady to Visit Africa to Promote Girls' Education

    Michele Obama will be joined by daughters and actresses Meryl Streep and Freida Pinto

    Video NYSE Analyst: Brexit Will Continue to Place Pressure on Markets

    Despite orderly pricing and execution strategy at the New York Stock Exchange, analyst explains added pressure on world financial markets is likely

    This forum has been closed.
    Comments
         
    There are no comments in this forum. Be first and add one

    By the Numbers

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    Brexit Vote Plunges Global Markets Into Uncharted Territoryi
    X
    June 24, 2016 9:38 PM
    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Brexit Vote Plunges Global Markets Into Uncharted Territory

    British voters plunged global markets into unknown territory after they voted Thursday to leave the European Union. The results of the Brexit vote, the term coined to describe the referendum, caught many off guard. Analysts say the resulting volatility could last for weeks, perhaps longer. Mil Arcega reports.
    Video

    Video Orlando Shooting Changes Debate on Gun Control

    It’s been nearly two weeks since the largest mass shooting ever in the United States. Despite public calls for tighter gun control laws, Congress is at an impasse. Democratic lawmakers resorted to a 1960s civil rights tactic to portray their frustration. VOA’s Carolyn Presutti explains how the Orlando, Florida shooting is changing the debate.
    Video

    Video Tunisian Fishing Town Searches for Jobs, Local Development Solutions

    As the European Union tries to come to grips with its migrant crisis, some newcomers are leaving voluntarily. But those returning to their home countries face an uncertain future.  Five years after Tunisia's revolution, the tiny North African country is struggling with unrest, soaring unemployment and plummeting growth. From the southern Tunisian fishing town of Zarzis, Lisa Bryant takes a look for VOA at a search for local solutions.
    Video

    Video 'American Troops' in Russia Despite Tensions

    Historic battle re-enactment is a niche hobby with a fair number of adherents in Russia where past military victories are played-up by the Kremlin as a show of national strength. But, one group of World War II re-enactors in Moscow has the rare distinction of choosing to play western ally troops. VOA's Daniel Schearf explains.
    Video

    Video Experts: Very Few Killed in US Gun Violence Are Victims of Mass Shootings

    The deadly shooting at a Florida nightclub has reignited the debate in the U.S. over gun control. Although Congress doesn't provide government health agencies funds to study gun violence, public health experts say private research has helped them learn some things about the issue. VOA's Carol Pearson reports.
    Video

    Video Trump Unleashes Broadside Against Clinton to Try to Ease GOP Doubts

    Recent public opinion polls show Republican Donald Trump slipping behind Democrat Hillary Clinton in the presidential election matchup for November. Trump trails her both in fundraising and campaign organization, but he's intensifying his attacks on the former secretary of state. VOA National Correspondent Jim Malone reports.
    Video

    Video Muslim American Mayor Calls for Tolerance

    Syrian-born Mohamed Khairullah describes himself as "an American mayor who happens to be Muslim." As the three-term mayor of Prospect Park, New Jersey, he believes his town of 6,000 is an example of how ethnicity and religious beliefs should not determine a community's leadership. Ramon Taylor has this report from Prospect Park.
    Video

    Video Internal Rifts Over Syria Policy Could Be Headache for Next US President

    With the Obama administration showing little outward enthusiasm for adopting a more robust Syria policy, there is a strong likelihood that the internal discontent expressed by State Department employees will roll over to the next administration. VOA State Department correspondent Pam Dockins reports.
    Video

    Video Senegal to Park Colorful ‘Cars Rapide’ Permanently

    Brightly painted cars rapide are a hallmark of Dakar, offering residents a cheap way to get around the capital city since 1976. But the privately owned minibuses are scheduled to be parked for good in late 2018, as Ricci Shryock reports for VOA.
    Video

    Video Florida Gets $1 Million in Emergency Government Funding for Orlando

    The U.S. government has granted $1 million in emergency funding to the state of Florida to cover the costs linked to the June 12 massacre in Orlando. U.S. Attorney General Loretta Lynch announced the grant Tuesday in Orlando, where she met with survivors of the shooting attack that killed 49 people. Zlatica Hoke reports.
    Video

    Video How to Print Impossible Shapes with Metal

    3-D printing with metals is rapidly becoming more advanced. As printers become more affordable, the industry is partnering with universities to refine processes for manufacturing previously impossible things. A new 3-D printing lab aims to bring the new technology closer to everyday use. VOA's George Putic reports.
    Video

    Video Big Somali Community in Minnesota Observes Muslim Religious Feast

    Ramadan is widely observed in the north central US state of Minnesota, which a large Muslim community calls home. VOA Somali service reporter Mohmud Masadde files this report from Minneapolis, the state's biggest city.

    Special Report

    Adrift The Invisible African Diaspora