The Intensifying Global Struggle for Energy

From Washington to New Delhi, Caracas to Moscow and Beijing, national leaders and corporate executives are stepping up their efforts to gain control over major sources of oil and natural gas as the global struggle for energy intensifies. Never has the competitive pursuit of untapped oil and gas reserves been so acute, and never has so much money as well as diplomatic and military muscle been deployed in the contest to win control over major foreign stockpiles of energy. To an unprecedented degree, a government's success or failure in these endeavors is being treated as headline news, and provoking public outcry when a rival power is seen as benefiting unfairly from a particular transaction. With the officials of numerous governments coming under mounting pressure to satisfy the needs of their individual countries -- at whatever cost -- the battle for energy can only become more inflamed in the years ahead.

This struggle is being driven by one great inescapable fact: the global supply of energy is not growing fast enough to keep up with skyrocketing demand, especially from the United States and the developing nations of Asia. According to the U.S. Department of Energy (DoE), global energy consumption will grow by more than 50% during the first quarter of the 21st century -- from an estimated 404 to 623 quadrillion British thermal units (BTUs) per year. Oil and natural gas will be in particular demand. By 2025, global oil consumption is projected to rise 57%, from 157 to 245 quadrillion BTUs, while gas consumption is projected to have a 68% growth rate, from 93 to 157 quads. It appears increasingly unlikely, however, that the world's energy firms will actually be able to deliver such quantities of oil and gas in the coming decades, whether for political, economic, or geological reasons. With prices rising all over the world and serious shortages in the offing, every major consuming nation is coming under increasing pressure to maximize its relative share of the available energy supply. Inevitably, these pressures will pit one state against another in the competitive pursuit of oil and natural gas.

Frenzied Search

In the past, such zero-sum contests between major powers over valuable resources have often led to war. Whether that will prove to be true in the case of oil and gas remains to be seen. But the pressure to maximize supplies is already shaping the foreign policy decisions of many states and generating fresh international tensions. Consider, for example, the following recent developments:

• A decision by Japan to initiate natural gas production in a disputed area of the East China Sea sparked massive anti-Japanese protests in China on April 16, the worst outpouring of such animosities in over 30 years. Although leaders of both countries sought to diffuse the crisis by promising fresh efforts at reconciliation, neither side has backed off its claims to the offshore territories. While other issues also fed into Chinese popular discontent, notably Japan's reluctance to express regret for atrocities committed by its forces in China during World War II, Tokyo's unilateral move to extract natural gas from the East China Sea was the precipitating factor. At stake potentially is the ownership of a vast undersea gas field in disputed waters lying between China's central coast and Japan's Ryukyu island chain. Because the offshore boundary between China and Japan has not been established, neither side is willing to countenance the extraction of gas by the other in the disputed "national territory." Thus, when Tokyo announced on April 13 that it would allow drilling by Japanese companies in waters claimed by China, Beijing had no compunctions about allowing an unprecedented, weekend-long display of nationalistic fervor.
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