Energy Geopolitics

Michael J. Economides
University of Houston, Houston, TX

Energy has become a strategic factor in global geopolitics. It is a key to national power as well as a major requirement for economic growth. Energy consumption has become the most discernible national characteristic that separates rich from poor countries. The United States, the richest nation in the group, is also the most intense user of energy with an annual per capita consumption of about 360 million British thermal units (MMBTU).

The energy use in other developed countries while also well correlated with their wealth is also a function of their geography, the makeup of the countries and even the tastes and preferences of their denizens. China and India, by far the world's most populous nations languish considerably behind with far lower per capita incomes and per capita energy consumptions of 25 and 12.3 MMBTU, respectively. For these two nations to catch up with the developed world they will have to move up the curve. This may prove perhaps the most formidable international challenge of the twenty first century.

There is a substantial imbalance in the location of energy producers and consumers, an imbalance that has precipitated world conflicts and one that will likely cause future upheavals. Prominent among these areas is the Middle East where five of the six countries with 75 billion barrels of reserves are located. The Straits of Hormuz through which one third of all oil world trade passes is a geopolitical choke point. Other areas such as Venezuela, Nigeria and Indonesia have also caused or are causing difficulties in their ability to deliver oil. Russia's recent ascendancy in the energy world has been an important counterbalance to the power of OPEC. However, recent events surrounding Russia's energy industry have exposed fissures within the economic and political makeup of the country.