The Energy World is Flat: Opportunities from the End of Peak Oil

Chapter FourFlattener #1 – Geopolitics: The Two Sides of the Energy Security Coin

The bad guy is the good guy of his own movie.

Mike Myers

On no one quality, on no one process, on no one country, on no one route, and on no one field must we be dependent. Safety and certainty in oil lie in variety and variety alone.

Winston Churchill, speaking to Parliament in July 1913.

The oil weapon

“With great power comes great responsibility” goes the saying. And this is certainly true for the Persian Gulf, which according to EIA data, holds over 60% of proven reserves and produces more than 25% of world oil output. The extraordinary concentration of cheap reserves has made it very influential in the world economy and politics.

During the colonialism era, from 1900 to 1960, the United States and the OECD countries relied upon cheap oil for economic growth by exerting political control on the producing countries, through “managed” regimes or direct colonialism. The creation of the Anglo-Persian Oil Company (Iran, 1908) and the discovery of Ghawar, the largest oil field in the world, in Saudi Arabia, are key milestones that fuelled the dependence on foreign cheap oil of Western economies. But the policy of extracting resources in one country to generate economic prosperity in another created the seed for resource nationalism and independence.

Eventually producing countries decided enough was enough, and aware of their power, founded OPEC in 1960, nationalized natural resources, displaced ...