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T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
Politics of oil &
global systems of distribution Tom O’Donnell, Ph.D.The New School University, NYC
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com
2
ProjectionsHistory
World Primary Energy Demand
Source: IEA WEA reference scenario 2006
Oil #1
T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
peak oil alternatives energy independence big oil / IOCs OPEC / NOCs speculation prices resource wars north-south
energy security oil curse rentismo environment global warming development …
Oil Issues
T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
peak oil alternatives energy independence big oil / IOCs OPEC / NOCs speculation prices resource wars north-south
energy security oil curse rentismo environment global warming development …
Oil Issues
T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
global political
economy
Approach
• domestic politics• geopolitics• development • environment
T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
global political
economy
Approach
• domestic politics• geopolitics• development • environment
• resources• technology • production• distribution • governance / ownership• end use / consumption
T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
global political
economy
Approach
• domestic politics• geopolitics• development • environment
T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
global political
economy
Approach
• global system • regional / state strategieso US, EU, Japan o China, India o Russia, Caspian, E. Europe o Persian Gulf, Lat. America,
Maghreb, Africa
• domestic politics• geopolitics• development • environment
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 9T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 9
Oil
Gas
Coal
Nuclear
Hydro
Biomass
Geothermal
Wind
Solar & Etc.
0 20 40 60 80 100 120 140 160 180
Resource Use – Per Year
Exojoules
IPCC 2007
2004
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 10T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 10
Oil
Gas
Coal
Nuclear
Hydro
Biomass
Geothermal
Wind
Solar & Etc.
0 20 40 60 80 100 120 140 160 180
Resource Use – Per Year
Exojoules
IPCC 2007
2004
Non-renewable
Renewable
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 11
Uranium (U235+U238 fertility)
Uranium (U235 once through)
Coal
Gas
Conventional Oil
0 50,000 100,000 150,000 200,000 250,000
Primary Resources - non-renewable
Exojoules
IPCC 2007
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 12
Uranium (U235+U238 fertility)
Uranium (U235 once through)
Coal
Gas
Conventional Oil
0 50,000 100,000 150,000 200,000 250,000
Primary Resources
Exojoules
IPCC 2007
Fossil Fuels
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 13
Uranium (U235+U238 fertility)
Uranium (U235 once through)
Coal
Gas
Conventional Oil
0 50,000 100,000 150,000 200,000 250,000
Primary Resources
Exojoules
IPCC 2007
SuperNova
U235 / U238 = 1 / 138(also Thorium)
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 14T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 14
Uranium
Uranium w/ Breeding
Coal
Gas
Conventional Oil
IPCC 2007
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 15
Uranium
Coal
Gas
Conventional Oil
Solar WindGeothermalBiomassHydro
IPCC 2007
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 16
Uranium
Coal
Gas
Conventional Oil
Solar WindGeothermalBiomassHydro
IPCC 2007
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 17
Losses
Buildings
Industry
Transport
IPCC 2007
Two Categories of Primary Energy:
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 18
Global Energy System: - 2004Source: 4th IPCC, from IEA 2006
• Transport – 95% from oil
• Electricity – from diverse sources
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 19
Observation:
Two Categories of Primary Energy:
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 20
Global Energy System: - 2004Source: 4th IPCC, from IEA 2006
Two Categories of Primary Energy:
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 21
Global Energy System: - 2030Source: IPCC from IEA 2006
Thesis #1:
“The stone age did not end for a lack of stone”
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 22
“Peak Oil” not a problem …
or a solution
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 23
Reserves More Uncertain
Potential liquid hydrocarbon production (Gbbl)
Cost $/barrel
Oil & Substitutes
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 24
Reserves More Uncertain
Potential liquid hydrocarbon production (Gbbl)
Cost $/barrel
Oil & Substitutes
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 25
Reserves More Uncertain
Potential liquid hydrocarbon production (Gbbl)
Oil & Substitutes
Cost $/barrel
Thesis #2:
There are no abundant sustainable
“alternative” fuels
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 26
bio-alternativefailure
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 27
0
1
2
3
4
5
6
7
8
9
10
Bil
lio
n g
allo
ns
0
5
10
15
20
25
30
Per
cen
t
Ethanol Share of Corn Production
U.S. Corn Ethanol
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 28
0
1
2
3
4
5
6
7
8
9
10
Bil
lio
n g
allo
ns
0
5
10
15
20
25
30
Per
cen
t
Ethanol Share of Corn Production
9 b gals = 27% corn = 10 days’ oil
U.S. Corn Ethanol
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 29
Oil Consumption per capita
EIA 2003
Gallons per day
per capita
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 30
ethanol
Oil Consumption per capita
Gallons per day
per capita
Thesis #3:
Alternative fuels don’t address
the other crisis …
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 31
* congestion *
Hours Delay per
peak traveler
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 32
City Size
Congestion U.S. Cities – 20 Yrs.
2002
1992
1982
Federal Highway Administration
Net importer
Net importer
2006: 3.5 of 7.3 mbbd or 48%
Slıde: Ed Morse 2006
Recent studies show impact of emerging markets on demand
twod@umich.edu | TomOD.com 34
Vehicles 2002 to 2030: China: 20x India: 7x México: 2.5x
Brazil: 3xDargay, Gately & Sommer, July 06
History
Projections
Conclusion #1:
Not
alternative fuels …
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 35
but alternative modes
Conclusion #2a:
Meanwhile, (next 20-30 years) …
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 36
oil dependence continues
oil CO2
U.S. Carbon Dioxide Emissions From Energy Use
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 37
US DoE/EIA Annual Energy Review *– 2008 - Figure 65. Carbon Dioxide Emissions From Energy Use Figure source data2007 (December 2008), Tables 6-11; and EIA, Office of Integrated Analysis and Forecasting, estimates.
oil CO2
Conclusion #2b:
Meanwhile, (next 20-30 years) …
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 38
oil dependence means
foreign oil dependence
Analysis:
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 39
Global system: foreign dependencies
shifted to …
$
collective dependence on • the market• spare capacity • strategic reserves
Analysis:
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 40
U.S. geostrategy …
$
collective dependence on • the market• spare capacity • strategic reserves
Analysis:
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 41
China, Venezuela resist …
$
collective dependence on • the market• spare capacity • strategic reserves
Analysis:
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 42
$
OPEC two factions …
collective dependence on • the market• spare capacity • strategic reserves
Analysis:
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 43
price hawks: Iran, Iraq, Libya, Venezuela, …
v. moderates:
Saudis, Kuwait, UAE, Qatar, …
$
collective dependence on • the market• spare capacity • strategic reserves
44
political economy:
Globalized system
v.
Neo-colonial system
twod@umich.edu | TomOD.com
45
Producers
International oil companies
IOCConsumers
No market (“spot market”) or futures market
Neo-Colonial System
twod@umich.edu | TomOD.com 46
Producers
International oil companies
IOCConsumers
Neo-Colonial System
• control volatility• security of supply
twod@umich.edu | TomOD.com47
IOC
Producers
International oil companies
IOC Consumers
integrated
pipelines gas stationsfieldsconcessions
refiineriesships
Neo-Colonial System
twod@umich.edu | TomOD.com 48
Producers
International oil companies
IOCConsumers
Neo-Colonial System
• IOCs o eliminate marketo concessions o form cartelso produce the oilo decide rateo market oil
• home stateso enforce
concessionso mercantile-likeo contend
• bilateral dependencies
1970’s OPEC Revolution …
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 49
PETRÓLEO
twod@umich.edu | TomOD.com 10
OPEP Tiene 77% de las Reservas del Crudo Mundial - 2006
85 % reserves nationalized 77% OPEC
Marketplace
twod@umich.edu | TomOD.com
Producers Consumers
NYC WTI London Brent
$
Saudi Arabia
Global System
Marketplace
ships refineries gas stationswells
Producers Consumers
$
IOC & NOC
Saudi Arabia
Global System
NYC WTI London Brent
twod@umich.edu | TomOD.com
Producers ConsumersSPR
$
Security: Saudi excess + SPR
A.S.Saudi Arabia
‘one global barrel’ market
twod@umich.edu | TomOD.com 53
Elements of “One Global Barrel” system
Collective dependence: • On the market• Saudi spare capacity • IEA strategic reserves
twod@umich.edu | TomOD.com 54
Elements of “One Global Barrel” system
Collective dependence: • On the market• Saudi spare capacity • IEA strategic reserves
• U.S. dominant playero insures own
domestic oil security by insuring global system
twod@umich.edu | TomOD.com 55
Elements of “One Global Barrel” system
Security of SupplyThe main elements of today’s “one global barrel” oil security system are as follows:
1. The open market itself that forms a single, common, albeit virtual “global barrel” consisting of the spot and future markets, through which essentially all oil exports are circulated to consumers. This market operates in U.S. dollars.2.The emergency oil capacities of:
a. Saudi Arabia (and occasionally other OPEC states), which can be rapidly brought to market when there is a supply shortfallb. The Strategic Petroleum Reserves (SPR) system of the member states of the International Energy Agency (IEA) of the Organization of Economic Cooperation and Development (OECD), along with any commercial reserves held within these states at a given time, all of which can be brought to market during a severe supply crisis.
twod@umich.edu | TomOD.com56
Security of SupplyThe main elements of today’s “one global barrel” oil security system are as follows:
3.The International Energy Forum (IEF) and the IEF’s two standing Secretariats (IEFS): consisting, respectively, of representatives of major commercial oil companies and state energy ministries, involving over 80 states. 4. U.S. Persian-Gulf regional hegemony, with the aim of insuring none of the local major producing states can project sufficient power there to dominate the production of any other(s), thereby undermining the global oil market. Also, protects the Straits of Hormuz
Elements of “One Global Barrel” system
twod@umich.edu | TomOD.com
frompolitical economy
togeopolitics
twod@umich.edu | TomOD.com 58
US Gulf hegemony
1. Iraq – Kuwait paradigm
U.S. Gulf hegemony
59
U.S. Gulf hegemony
60
Prof.MichaelKlare,Blood& oil(2005))
US protectorates
twod@umich.edu | TomOD.com 61
“US Military Forces Surround Iran”
Clinton Admin. into Caspian oil basin
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 62Jan 1, 2005
Petroleum Reserves
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 63Jan 1, 2005
Petroleum Reserves
60% inPersian
Gulf
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 64Jan 1, 2005
Petroleum Reserves
Gulf market share will
grow
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 65
The future -- R/P ratios of producers
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 66
heavy oil
The future -- R/P ratios of producers
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 67
Heavy Oil TO’D
Heavy Oil TO’D
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 68Jan 1, 2005
Petroleum Reserves
Iraq + Kuwait
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 69Jan 1, 2005
Petroleum Reserves
Iraq + Kuwait
twod@umich.edu | TomOD.com 70
The Iraq – Kuwait occupation paradigm
Greenspan: Ouster Of Hussein Crucial For Oil SecurityBy Bob WoodwardWashington Post Staff WriterMonday, September 17, 2007; A03Alan Greenspan, the former Federal Reserve chairman, said in an interview that the removal of Saddam Hussein had been "essential" to secure world oil supplies, a point he emphasized to the White House in private conversations before the 2003 invasion of Iraq.
… "If Saddam Hussein had been head of Iraq and there was no oil under those sands," Greenspan said, "our response to him would not have been as strong as it was in the first gulf war. And the second gulf war is an extension of the first. My view is that Saddam,
looking over his 30-year history, very clearly was giving evidence of moving towards controlling the Straits of Hormuz, where there are 17, 18, 19 million barrels a day" passing through.
… Given that, "I'm saying taking Saddam out was essential," he said. But he added that he was not implying that the war was an oil grab.
"No, no, no," he said. Getting rid of Hussein achieved the purpose of "making certain that the existing system [of oil markets] continues to work, frankly, until we find other [energy supplies], which ultimately we will.“ [emphasis added – T.O’D.]© 2007 The Washington Post Company
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 71Jan 1, 2005
Petroleum Reserves
Iran
twod@umich.edu | TomOD.com 72
Aim of US Gulf hegemony
2. basis for two OPEC factionsand
two U.S. policies
twod@umich.edu | TomOD.com73
Barriles Exportados Por Capita 2006
0,00
0,10
0,20
0,30
0,40
0,50
0,60
0,70
0,80
Mill
ones
/ m
il
Calculado con cifras de OPEP
Barrels exported per capita, 2006
twod@umich.edu | TomOD.com 74
Barriles Exportados Por Capita 2006
0,00
0,10
0,20
0,30
0,40
0,50
0,60
0,70
0,80
Mill
ones
/ m
il
High Absorbers
Low Absorbers
Calculado con cifras de OPEP
Barrels exported per capita, 2006
?
twod@umich.edu | TomOD.com 7575
POLITICAL ECONOMY OF GLOBAL OIL ORDER
1 Oil demand up2 Alternatives?
3 Gulf share growing
4 U.S. Gulf hegemony
Value of Petroleum Exports per Capita Real $2006 (CPI-U)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
1960
1963
1966
1969
1972
1975
1978
1981
1984
1987
1990
1993
1996
1999
2002
2005
*
Year
$ U
.S.
Iraq
Source: OPEC Annual Statistical Outlook 2006 (original OPEC and other data)
Iran
Value of Petroleum Exports per Capita Real $2006 (CPI-U)
0
10,000
20,000
30,000
40,000
50,000
60,000
Year
$ U
.S.
Kuwait
Saudi Arabia
Source: OPEC Annual Statistical Outlook 2006 (original OPEC and other data)
UAE
Value of Petroleum Exports per Capita Real $2006 (CPI-U)
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
Year
$ U
.S.
Venezuela
Algeria
Source: OPEC Annual Statistical Outlook 2006 (original OPEC and other data)
I. high absorbers
II. low absorbers
Basis for two OPEC factions
Export revenue / capita
TO’D from OPEC data, Real $2008 (CPU)
twod@umich.edu | TomOD.com 76
77
Iran’s Oil Production & Consumption 1971 – 2008
06 08
78
2006E
War
Sanctions
1979
Rev
olut
ion
Shah
Rebuild
06 08
Iran’s Oil Production & Consumption 1971 – 2008
79
2006E
War
Sanctions
1979
Rev
olut
ion
Shah
Rebuild
06 08
Iran’s Oil Production & Consumption 1971 – 2008
• IEA Strategic Petroleum Reserves: 4.0 x 10+9 barrels
• Iranian daily exports: 2.4 x 10+6 barrels / day
• So: IEA reserves cover Iran exports: 4.5 years
No oil weapon
80
2006E
War
Sanctions
1979
Rev
olut
ion
Shah
Re-build
• IEA Strategic Petroleum Reserves: 4.0 x 10+9 barrels• Iranian daily exports: 2.4 x 10+6 barrels / day • So: IEA reserves cover Iranian output
for: 4.6 years
06 08
Iran’s Oil Production & Consumption 1971 – 2008
twod@umich.edu | TomOD.com 81
US MENA Progress Bush added 2 new states
Gulf :Saudi Arabia, Kuwait, UAE & Iraq*
North Africa : Libya, Egypt, Algeria
Remaining :Iran
twod@umich.edu | TomOD.com 82
“Resource Wars”
~ either ~neo-colonial
mercantilist / privatize for big oil ?
~ or ~ global
market-protection for collective security ?
83
I. OPEC “High Absorber” Faction States
China’s “go abroad” aligns with Chavez’ ‘escape market of el imperio’
yet, not ‘axis of evil’MOU / Accords of Dec 2007, May 2008, Sep 2008, early 2010
Venezuela differentChina – Venezuela – Iran – Algeria
(example from Mommer of PDVSA)
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 84
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 85
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 86
T. O’Donnell, Ph.D. | twod@umich.edu | TomOD.com 87
T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
global political
economy
Approach
• domestic politics• geopolitics• development • environment
• resources,• technology / science• production• distribution • governance / ownership• end use / consumption
T. O’Donnell, Ph.D. | twod@umich.edu | http://TomOD.com
global political
economy
Approach
• domestic politics• geopolitics• development • environment
• resources,• technology / science• production• distribution • governance / ownership• end use / consumption
• capitalist colonial• capitalist neo-colonial• capitalist global• socialist• socialist public /
private• capitalist public /
private
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