worth its weight in oil PART 2

The shift of influence from the USA to the Middle East
Shifts in influence and power are inevitable, and even constant. Let’s focus first on one of the most obvious developments of the last one or two hundred years: the rise to global prominence of the USA.

Of course, the USA is only a few hundred years old, but it has been a very distinctive emergence. In particular, an enormous shift of influence away from Europe to North America, particularly the USA, has developed in the last hundred years or so.

After several prior centuries in which European empires have been prominent worldwide (such as the Roman Empire or the colonization of the Americas by the British, Spanish, and French), for at least the last one hundred years, European authority has been receding. The USA is widely identified as the subsequent center of imperialism, with the only major competition to the imperial dominance of the USA in the 20th century coming from the USSR.

In the 20th century, what distinguished the USA (and the USSR) from the previously dominant regions of Europe? How about the most important new commodity in the world: oil?

The USA was the home of the development of the oil industry. The USSR was the host of some of the largest deposits of oil discovered in the early 20th century. By the 1940s, Germany and Italy, two of the last of the old European powers, surged across Europe into the USSR. The UK and later the USA partnered with the USSR to oppose the advance led by Germany. By the end of the conflict, Germany and the UK (and France among others) were ravaged and receded from global prominence.

The USSR had 22 million casualties, yet still emerged as a primary global influence, second only to the USA (or first, depending on who is ranking the two). But beyond the rivalry of these two, no other rivals were even close as of the 1950s or 1960s.

Русский: Марка СССР English: June 14, day of A...

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So, oil brought the USA and USSR to global prominence. By the mid-20th century, the world’s two leading producers of oil were the USA and the USSR, which were military allies in World War 2. These two countries were also the leading exporters of oil.

Countries that produce and export oil can be called “oil producing and exporting countries,” as in O.P.E.C. By 1973, the term OPEC became associated not so much with the original leaders in the oil industry (the USA and USSR), but with Middle Eastern nations such as Saudi Arabia and Iran, where recent discoveries of oil- indeed a majority of the world’s remaining oil deposits- catapulted that region into global prominence. That brings us to a predictable shift in the near future: the continuing rise to global prominence of the Middle East, with the foundation for riches and influence still being oil and the associated petrochemical industry (including gasoline, plastic, pesticides, medicines, etc).

However, there are many contrasts between the rise of the USA and USSR compared to the rise of the Middle East. Note that Middle Eastern countries have a single dominant language, Arabic, and the populations are overwhelming of the Muslim traditions (Shi’ite in particular).

That internal consistency constrasts sharply with the previously dominant regions of the world, the USA, USSR, and Europe. In those areas, populations are predominantly of Christian heritage, even if not actively religious. But even more dramatic is the tremendous variety of languages across the regions prominent in the 20th and 19th centuries. Even the written alphabets vary considerably, ranging from Russian with Cyrillic characters to vowels with a variety of complex accent marks across Europe.

If the USA and USSR had a more harmonious heritage and a common language, perhaps they would have remained allied beyond the 1940s. What if the advancing oil-rich Middle Eastern countries unite their influence under their common language and cultural heritage? Consider further that the USSR and Japan (another major economic force) deteriorated quickly as of the late 1980s. More recently, the USA, UK, and EU have also been reeling economically, perhaps heading for the same fate as Japan and the USSR.

Notice also the increasing criticism by the West toward Islam. Islam is not only a prominent part of the Middle Eastern nations, but also of the emerging economic powers of India, Indonesia, Malaysia, and so on. Should Westerners be concerned about the rising economic influence of the growing Islamic populations of the world?

The West is de-stabilizing economically and internal tensions are escalating. There is conflict between Greeks wanting to be bailed out by Germans, riots within italy and Mexico, and new animosity between political parties in the USA. At the same time, there is also a growing religious bias that is reminiscent of the beginnings of the Spanish Inquisition against the Muslims (or the Nazi crusades against the Jews). Is that all a coincidence?

Consider the issue of the treatment of women in Islamic countries. In some countries, it is about the same as it has been for quite a while. In other Muslim countries, treatment of women has shifted toward equality.

However, only recently (as distinct from in the 1930s or 1950s when this issue was ignored), Westerners are more frequently making critical references to the treatment of women in certain parts of the Middle East in particular. Is there much criticism of the treatment of women in Asian sweatshops? Walmart shoppers do not ask about the treatment of the garment makers much, yet the treatment of women in the Middle East may suddenly emerge as a target of scorn and moral outrage.

Could it be that the oil reserves of the Middle Easterners are attracting more and

Traditional definition of the Middle East G8 d...

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more attention from Americans and Europeans and Russians? Could it be that some of that attention is openly belligerent or at least condemning (“passive aggressive”)? Could there be new fear about cultural differences that simply were not relevant for the USA or USSR in 1930 or 1950, when those were the oil-rich nations on which importers like Germany and Japan depended for exports? Note that German and Japanese belligerence eventually was targeted at the USSR and USA, who were, by the 1940s, the world’s new emerging superpowers as “oil-producing and exporting countries.”

Are Westerners now organizing their attention on justifications for exerting military influence in the Middle East? In the mid-20th century, the US championed the Shah of Iran, marking a new level of direct involvement in Middle Estern politics by the USA. Western support for the formation of Israel is also distinctive, as well as lesser-known involvements such as in the case of the island of Diego Garcia. More openly admitted was the so-called civil war in Afghanistan in the 1980s, which was largely a conflict between the USSR and USA.

Western countries today may be overly dependent on imports of oil. If these western countries implode economically in debt crises (similar to that of Japan and the USSR by the early 1990s), will suburban populations begin to focus more on access to oil? Will westerners divide against themselves politically? Will they realize that cheap Chinese imports (from sweatshops or otherwise) are insignificant practically when compared to access to oil?

 

Will the baby boomers realize that oil is far more valuable to them than gold or any paper contracts, including any contracts relating to future possibilities involving gold or real estate or even oil itself? Thinking back to the oil shortages of 1973, would you rather have a paper coupon that might be redeemable for a gallon of gasoline… or the actual gallon of gasoline?

P.S. Note that the above is something of a follow-up to my article of five years ago in which I connected the idea of US dependence on foreign oil imports to a coming spike in oil prices and associated de-stabilizing of the US economy (which was headline news by 2008).

 
http://321energy.com/editorials/fibonacci/fibonacci090705.html
Navigating the New Economy, Lesson 1: “Worth its Weight in OIL”

 

 

 

J.R. Fibonacci
September 9th, 2005

That article was further cited in an MBA thesis by a Columbia University student:

http://www.google.com/url?sa=t&source=web&cd=1&ved=0CBMQFjAA&url=http%3A%2F%2Fwww.ldeo.columbia.edu%2F~odland%2FOdland_PeakOilMgt_Dissertation.pdf&ei=oG7KTISwB4musAOhraXmDg&usg=AFQjCNGsbUPEJzzjurbXiFSwTQCFqhkdeA&sig2=oqeMDB4NCZ05WLvb8jsBHQ

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