Rising Powers, Shrinking Planet | Michael T. Klare

Summary of: Rising Powers, Shrinking Planet: The New Geopolitics of Energy
By: Michael T. Klare

Introduction

In the book ‘Rising Powers, Shrinking Planet: The New Geopolitics of Energy’, Michael T. Klare delves into the global struggle over energy resources and how it shapes the emerging new world order. As global demand for energy grows, countries with abundant resources gain power and leverage, while those dependent on imports face precarious situations. Klare examines the political, economic, and military dimensions of energy geopolitics, including the role of national oil companies and the consequences of competing national interests. Key themes in the book include expansionism, global competition for resources, shifting alliances, and the growth of economically driven state powers.

The Emerging World Energy Order

The world is currently facing an international power struggle over energy resources, and this is set to result in a new world energy order. Developed and developing countries alike are competing for resources, leading to the formation of new alliances that are dangerous and unstable. In this new order, the strongest countries will not necessarily be the ones with the most powerful militaries, but rather the ones with abundant energy reserves. The US military, for instance, is one of the largest consumers of oil in the world. However, depleting energy reserves will lead to a decline in power, which will be transferred to countries that are rich in minerals and energy. Currently, both developed and developing nations have huge demands for oil, with China projected to become the largest energy consumer by 2030. As energy supplies are decreasing, the world population and demand for energy is rising, which is a major cause for concern. The US Department of Energy predicts that world oil production will have to increase by 57% over the next two decades to meet demand, but the limited easy-to-extract oil has already been exploited. Renewable energy sources are not sufficient, and only account for 8% of global energy needs by 2030. The world is heading towards an uncertain future, and nations must prepare accordingly.

Power Shifts in the Oil Industry

The emergence of national oil companies in countries like Iran, Venezuela and Saudi Arabia has led to a redistribution of power in the oil industry. National oil companies now control about 80% of the world’s proven oil reserves, with the NOCs aligning with one another to promote their economic and foreign interests. This has given rise to “resource nationalism,” which has become a way for leaders like Vladimir Putin and Hugo Chavez to advance their political agendas. Meanwhile, the U.S. and major nations have exploited their relationships with oil-producing nations to maintain their own positions of power. With nearly 50% of the world’s current oil production coming from 116 giant fields, each yielding over 100,000 barrels per day, the stakes are high and the competition is intense. The oil industry has reallocated monetary power, with oil-exporting nations receiving nearly a trillion dollars in 2006 alone from importing nations. As a result, countries like Russia and the Persian Gulf states have become extremely wealthy, using their “sovereign wealth funds” to purchase large interests in U.S. companies such as Citigroup, the Carlyle Group and Advanced Micro Devices.

State Control of Energy

Some countries have state-run energy policies, a concept known as “statism” or “neo-mercantilism.” This has been seen in nations like France, Italy, and Japan, with the United States even adopting a greater state role in energy procurement under the Bush administration. This can even extend to international relations, with Vice President Dick Cheney persuading Kazakhstan to ship oil to the U.S. rather than China. The U.S.’s need for oil has also influenced its involvement in Iraq. Compared to China, the U.S. has a more significant global role in procuring energy for its corporations.

China and India’s Pursuit of Petroleum

With huge populations and ambitious economic expansion plans, both China and India have aggressively sought after petroleum exploration and acquisition. China’s new middle class, with an average income nearing $6,000 per year, is eager to buy cars, leading to the construction of numerous auto plants in the country. Additionally, China’s infrastructure developments have resulted in the highest consumption rates of steel, copper, and aluminum globally. Projections from the US Department of Energy reveal that China will be responsible for 20% of the world’s energy consumption by 2030. India is also expanding economically, expected to have 115 million cars by 2030 and increasing its energy consumption 2.8% annually. As energy consumption increases, competition among the growing group of energy-consuming nations rises, resulting in tense competition or occasional collaboration between the US, China, Russia, India, and Japan for energy sources. In January 2006, China and India signed an agreement on joint energy cooperation and coordinated bidding. Japan, not to be outdone, has acquired drilling rights in the Middle East and North Africa.

Russia’s Emergence as an Energy Superpower

Russia has become a key energy provider, with large reserves of oil, coal, and natural gas. Led by state-owned companies, Russia has been able to use its resources to gain geopolitical power. Natural gas is at the heart of Russia’s energy strategy, with the country supplying many European countries via pipelines emanating from western Siberia. Putin’s nationalization of several major oil-producing firms has further consolidated the state’s control over energy resources. Russia has also sought to expand its influence into the Caspian Sea region, where significant oil and gas reserves remain largely untapped. The United States has sought to counter Russian influence in the region by courting non-Russian Caspian countries and building relationships with private and state-owned oil companies. Despite these efforts, analysts predict that the Caspian region’s production will peak in 2009 and begin a steady decline thereafter.

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