Globalization (2008)

Beyond Peak Oil and World Geopolitical Implications

James Leigh
Asst. Professor Cultural Geography
University of Nicosia, Cyprus

This paper forms the basis of a chapter in the forthcoming book: “Death of Nations in Civilization Clash”


Oil has been the cheap energy source that has fired the industrial society for the last century. However, ominous signs of oil depletion are ringing an eerie gong. The implications for dwindling supplies of cheap oil are catastrophic for industrial societies, and also the yearned-for economic development of the less developed countries. These less developed countries have already set their will towards becoming industrialized, to have economic development similar to that of the Western more developed countries. However, the bare facts of oil depletion show there are considerable barriers to thwart the expansion of economic development to the world’s less developed as oil prices head higher. This may all work together to facilitate civilization clash in a grab for the world’s oil resources. Nations may weld together to forge continent-wide civilization superpowers, to prevail for advantage in the looming new worldwide post-oil era, when cheap readily available oil cannot be taken for granted. This will prove to be a test of how the newly formed superpowers will cooperate or compete with each other.

Key words: Peak Oil, The Olduvai Theory, geopolitics, OPEC, industrial civilization, civilization clash, globalization


Oil, in March 2008, has broken through the psychological ceiling of $100 a barrel and risen well beyond that on the way to $120 a barrel. Even comments of late have warned of the black liquid gold climbing to an incredible $300 a barrel in the foreseeable future (Ferris-Lay, 2008).

History and dwindling energy-resource supplies show that the oil-fired industrial age is destined to be short lived. The bell curve below shows the levels of historic and prospective oil production over two millennia. This graph illustrates the assertion that the life expectancy of Industrial Civilization is around 100 years – from 1930 to 2030 (Duncan, 2000; Rempel).

graph: oil production over 2000 years (bell curve around 2000)

It was the plentiful supply of cheap oil (increasingly from less developed countries) that was the main factor, along with the necessary natural resources and skilled manpower, that made the miracle of the industrial era, of about 100 years, possible in the Western more developed countries, and particularly in Europe and the United States.

However, the plentiful supply of cheap oil has been short lived. Even as predicted, the peak for oil production in the United States was reached way back in 1970. By 2006 not only had most countries reached their peak oil production, but declining world oil production levels set in, heralding dwindling oil reserves in the ground. The graph below shows this dramatic state of affairs with world oil production having peaked in early 2006, and from there we see continual decline (Bowman).

graph: world oil production over time (2002-2006)

Even further, there is not only a problem of falling availability of oil, but at this critical time, the demand for oil supplies is rapidly escalating. Increasingly rapid economic development in several less developed countries around the world (including China and India) is producing an insatiable demand for oil and other energy resources.

In China alone the daily consumption has increased from 3.4 million barrels per day to 6.7 million barrels, a massive increase of approaching 100 % in the years 1995 to 2004. China alone consumed almost 13% of the world’s total oil production in 2004. Similar trends in oil demand have occurred and are projected for India, although not from the same high base level. Even so China and India together in 2004 consumed a massive amount of about 18% of the world oil supply. The chart below from Stanford (2005) shows the historic continuing increase in demand for oil, in China and India, to fire up their impressive economic development.

graph: India and China oil production over time

The underlying problem

In January, 2008 Abdalla Salem El-Badri, the Secretary General of OPEC, gave an address for the Nicosia Chamber of Commerce. In his address “Oil Outlook and Investment Challenges” he raised some of the problem issues of the international oil sector and pointed out the following:

Actually these are steep problems for the oil sector to surmount, as we reach global exhaustion point for extractable oil. The necessary investments to boost production, to keep pace with demand, have not been made, and he highlights that such investment requires huge sums of money and long lead times. However, as El-Badri points out, energy is crucial for maintaining economic development. The problem is that free supply of cheap oil is dwindling, causing price rises, because of limited crude availability and refineries that are already working at full tilt. Not to mention the serious geopolitical problems unfolding around the world.

The world may be confronting a problem of gigantic magnitude as the global demand for oil escalates at a time when the production levels are sagging. And an incredible 54 of 65 largest oil producing countries in the world have passed their production peak (Aleklett, 2005).

Even if the oil price was to significantly retreat, this should not lull us into complacency, as there have been several precedents of oil retreating in price over recent decades, only to spring again into new record price hikes (see graphs in Williams, 2007). However, the likely overall trend will be aggressive price rises from the underlying causes of low supply and high demand.

As Kerr and Service (2005, p. 101) suggest it is not IF there will be a problem with inadequate oil supply but WHEN:

There is little disagreement that the world will soon be running short of oil. The debate is over how soon. Global demand for oil has been rising at 1% or 2% each year, and we are now sucking almost 1000 barrels of oil from the ground every second.

So can the earth’s oil reserves sustain such extraction levels? Even though the estimates of unknown oil reserves are controversial and problematic, there have been no large oil-field finds since the 1960s. And many believe that the declared “known” oil reserves coming out of several countries are actually way overstated. (Simmons, 2005; Tverberg, 2008). The graph (Aleklett, 2005) below shows that at the very time when present and future demand continues to escalate, the dwindling known reserves increasingly threaten short supply, and this is borne out by decreasing supply of oil since 2006 (Bowman).

graph: Comparison between Reserves and Demand

Even the remaining best endowed oil countries have reserves that will soon begin to decline. Oil is largely now around the Persian Gulf. It seems the only major oil producers with significant readily extractable reserves of oil left, that will not on average decline in production levels for around another 15 years, are:

The future overall shortfall for world oil supply is rather daunting. From around 2006 we can see that the dwindling supply of oil will increasingly fail to meet the demand (USEIA, 2005 and 2006). And the graph below shows increasingly massive oil shortfalls in the next few years.

graph: Increasing world oil shortfall

Actually the facts for oil are:

The undersupply of extractable oil may cause a rapid threatening economical decline in the next two or three years, and extractable oil may be largely exhausted within the next twenty years.

As we have already seen, at the present time extraction facilities for producing crude are working at about full capacity, and there is no room for any significant increase in the output levels of refineries either. And even if there was the extra refining capacity, there are not the transport facilities around the world to carry any significant increase in the oil and petrochemical payload.

This all means that the world is facing crunch point – and very soon. The much yearned for economic development of the less developed countries will be stymied by lack of adequate cheap oil supplies, and the more developed countries will be hindered in any future economic development by dwindling and increasingly expensive oil. This could mean there will be no winners in the world for economic development as the West declines and the poorer countries falter and remain less developed.

Duncan (2000; 2006) invoking The Olduvai Theory showed that the world energy production per capita reached a plateau way back in 1979 and fluctuated from that for some years [and has since fallen off that plateau in decline], and he further argued that by 2012 (or even before) a catastrophic energy per capita drop off will set in. He forecasts the dramatic and extremely debilitating effects this will have as countries fail to produce electricity and their civilizations’ economic development is crippled and literally collapses back into the dark ages.

Some who are critical against The Olduvai Theory fail to see the absolute vitality of oil as a direct energy source, and also as a totally required support energy source for many other energy supplies. For example, without oil we cannot work the heavy machinery or ships, to extract or transport coal, gas, and uranium ore, and they are the direct energy source for 75% of the world’s electricity. So without oil, we are without coal, gas and uranium, and so without electricity! (for a fuller coverage of this topic see Leigh, 2008b).

Just imagine the catastrophic consequences of no electricity: no phones or computers, no industry which is electricity based, no dairy products or processed foods, no refrigeration, no water as the water pumps won’t work, no cars or transport because the petrol pumps won’t work, no schools or universities, no banks which can’t electronically process transactions, no employment, no income – dwindling stocks of everything as society collapses to unprecedented levels of chaos and deprivation (Leigh, 2008a).

Nature of the oil shortfall problem

The exact nature of the problem is that we will stop extracting oil from the ground when the net energy return is not worth it. For example, when the oil is so deep or difficult to extract that it takes one barrel of oil to extract say one or two barrels (or even worse) it is obvious that there is no net gain worth the effort. Actually oil becomes unavailable and “exhausted” before there is no oil left – the “exhaustion” point is when it is no longer worth it to spend the energy to get so little back.

However, the following quote highlights that there are no easy oil substitutes:

Alternative energy sources have their problematic issues. Nuclear fission supporters have never found a noncontroversial solution for disposing of long-lived radioactive wastes, and concerns over liability and capital costs are scaring utility companies off. Renewable energy sources are diffuse, making it difficult and expensive to corral enough power from them at cheap prices (Kerr and Service, 2005, p. 101).

In reality, no other energy source can be comprehensively substituted for cheap readily available oil. Any use of alternative energy fuels can only partly and minimally make up for the looming oil supply shortfall. No other transportable and versatile energy resource is as energy dense as oil per unit volume.

Coal is the most popular energy source for the production of electricity, but it is a very dirty and destructive pollutant. Nuclear energy, not only is dangerous because of the possibility of industrial accident or terrorism, but it can only minimally fill the gap for a few short decades, before it is spent, and the unwieldy hazardous waste problem will be left with us for thousands of years. Other alternative fuel technologies have serious shortcomings with one or a combination of the following factors:

To bring many of the above points together, in the table below, the various characteristic advantages and disadvantages of energy resources are listed:

table: characteristics of energy resources

The world does not have the oil resources to support free growing economic development as humans have grown accustomed to or expect with anticipation in the future. And even if the world had the oil resources, the escalating waste and pollution are huge problems, which would make the planet dangerous for life, and eventually virtually uninhabitable.

Geopolitical implications and civilization clash

Thwarted economic development due to escalating demand and the concomitant rising oil prices will have great geopolitical influences on the emerging world order. There does not appear to be any prompt remedy or ability to alleviate or stave off the imminent shortfall of oil and the dramatic economic and civilizational effects of this scarcity.

Newly emerging forces of the world geopolitical scene may be about to play out in a world of civilization clash. Samuel Huntington (1993; 1996) supports the idea of an emerging fragmented world, and argues that there is a great likelihood for intercultural and inter-religious conflict between future world powers, each united from within through culture and religion, in a multi-polar world. He rejects the idea that the world will easily succumb to Western globalizing forces which have been mounted to displace the interests of both Eastern and Islamic peoples. However, these non-Western peoples may aggressively pursue their interests through their newly emerging international power blocs.

Swartz (2001) comments in relation to Huntington’s book on civilization clash:

The great divisions among humankind and the dominating source of conflict will be cultural. … [T]he principal conflicts of global politics will occur between nations and groups of different civilizations. The clash of civilizations will be the battle lines of the future.

For Huntington civilization can be defined as the broadest level of cultural identity of an individual, ethnic group or nation, or even a group of nations. He highlights three major civilizations of influence:

Based on the concept of civilization clash, the author’s previous papers and forthcoming book (Leigh, 2005; 2006; 2007; 2008c) foresee a looming new post-AngloSaxon and post-globalization world which fragments along civilization fault lines. This new international status quo will likely be made up of a tripartite mix of continent-wide civilization superpowers. A prelude to this newly forming world can be seen now with the Western AngloSaxon nations declining as rampant attempts for globalization have failed them. This Western AngloSaxon decline will make way for the anticipated newly formed continent-wide civilization superpowers which appear to be:

In addition to the cohering phenomena of, for example, religion, ethnicity, historical legacy, and customs, Bosworth (2004) comments that generally the different writing systems, as expressions of civilization, tend to compellingly support this ‘tripartite’ mix of regional globalization into civilization superpowers.

These superpowers will be unified in diversity; each will be welded together by overarching common faith systems and ethnicity, building on each member nation’s inherent complementary strengths and weaknesses, for internal synergies, towards the economic and political vitality of the total superpower viability. Of course each superpower will have particular advantages and disadvantages in the new world order. However, each superpower will share common factors – they will have large to huge populations, supported by impressive economies, with significantly powerful militaries, including mass-destruction weapons with biochemical and nuclear capability. Each superpower will be a Titan!

For example, Christian Europe although short on natural resources and relying heavily on imports, has a history of technological development and efficient organization and administration, along with a highly educated population in democratic and relatively free capitalistic society. Europe can supply for export best quality machinery and products, and hi-tech products. But Europe is critically deficient in oil and relies heavily on imports to maintain and increase its development.

Much of the world’s remaining oil is held in the Islamic Arab nations and Iran. And within those nations, the Persian Gulf states are most important. It is noteworthy that a hefty 40% of the world’s oil supplies are shipped out of the southern end of Gulf through the Strait of Hormuz. Iran, by far the most influential regional power in the Gulf, in support of Islamist movements and trends, already has significant influence in Iraq, Syria, Lebanon, Palestine and Egypt. And many other Islamic Arab nations fear the potential for Iran-backed political change or dissidence from their populations against the establishment. Several Islamic Arab nations (potentially to be Iran-backed Islamist) have large earnings from exporting their oil. However, these countries generally have physical and social infrastructures that do not put them in the more-developed-country category.

It is predicted, that within the next couple of decades, the economic development in several of these oil exporting countries will increasingly take much of their oil off the world export market. Much more oil and its products will be needed for their own growing national consumption. Some of these countries are even expected to eventually stop all oil exports. Of course this is another factor that will also greatly exacerbate the increasing world oil shortfall.

The national constituents of the Asian superpowers, except for Russia, are nations which have what may be called mystical eastern religions, in which the meditation process for enlightenment is common across the main Confucian and Indic religions. The four main Asian countries are Russia, China, Japan and India, and except for Russia, they are not generally well endowed with natural resources. Combined they have a huge total population, and the two most populous countries – China and India – have cheap labour and significant pools of educated professionals. Several Asian countries, with increasing adoption of technology in their industries, and cheap labour, can compete on a world market with high value and low cost exports. Except for Russia, these Asian countries have a great need for massive oil imports to support and expand their development.

Even though Russia on religious grounds may not seem to fit there, we must remember that Russia, as a huge Eurasian nation, has been rejected as an equal partner by the West, and as it does not fit with the Islamic states, it may have no choice but to reestablish friendly ties and deep cooperation, in economic, political and military matters with its Asian brothers (Arbatova, 2000).

The positioning of the three looming superpowers is interesting as they form a cluster around the Mediterranean and in Asia. This cluster configuration means that they either border each other or are in relatively close proximity.

map: prospective civilization superpowers

As we have seen the most abundant region for holding the remaining oil in the world is the Persian Gulf. These Persian Gulf countries are best positioned to be able to produce significant amounts of oil (before dwindling supplies set in) for on average the next 15 years. Influence and good relations with this region for the other superpowers is vital for their continued supplies of oil.

Europe is largely resource deficient, and the whole Former Soviet Union region, having reached peak oil production more than thirty years ago, is declining in production. The economies of three of the four major Asian nations – China, Japan and India (excluding Russia) – do not have across-the-board abundance of raw materials and this includes great oil deficiency.

Eventually as the nonOPEC countries founder in oil production, OPEC will produce just about all the world’s oil. This will give OPEC, a largely Islamic nations’ cartel, great civilizational power to wield its oil weapon for its own political agenda.

It is important to note another point here, there is not enough oil left in the world to fuel universal economic development – maintaining the present economic development of the more developed Western nations, and at the same time promoting the economic development of the less developed countries is just not possible – oil is dwindling. One side of the economic divide will have to give way – that is for the West to suffer economic (and therefore civilizational) decline, or on the other side, the less developed countries will have to give up their push to economic development and the prospect of civilization greatness in newly formed civilization superpowers. And this will be a bitter pill that no civilization will succumb to swallow easily.

It does appear that the increasingly Islamist PanArab States, several of them making up most of OPEC, are much more embittered against the Christian West than against any other peoples. History would suggest that there could be a looming civilization clash between European Christendom and the Islamic world which would put the Asian superpower in an advantageous position for trade with the OPEC countries, even with preferential treatment including the discounting of oil supplies.

This has huge implications for access to reliable oil supplies at “favoured” prices. It may even be that eventually those states without good relations with the OPEC cartel will not readily find reliable supplies of oil at any price as OPEC uses oil as a devastating economic weapon. And as nonOPEC nations have rapidly falling oil supplies to export, OPEC is heading to be the world’s primary supplier – that is of much more than half the worlds dwindling oil in the imminent few years ahead.

The trends in the dominance of OPEC are shown in the graph (Duncan, 2000) below. Specifically it was correctly predicted that the world oil production peak was reached in 2006. He also predicted that in 2008 OPEC would begin to produce more oil than the rest of the world combined. Whenever this actually does happen, and it is probably imminent, it will give these OPEC nations incredible “petropower”. Also it is interesting to note that both sources of oil, OPEC and non-OPEC, will have falling production, although OPEC is a little better off in this trend.

graph: world, opec, and non-opec oil production

Future scenarios and conclusion

The USA, in economic decline, is about to plunge from its position as the world’s massive consumer that has helped keep the world afloat economically. That rapid descent of the USA will not only have dramatic repercussions economically, by producing international financial uncertainty and chaos, as the worlds biggest consumer disappears, but a rocky transition period will also leave the world without a great politically and militarily preeminent superpower. Just as nature hates a vacuum so does the political realm, and so newly forming superpowers will vie for advantage and even supremacy in the newly forming world order.

Out of this universal mayhem, with severe decline of some nations and the collapse of the international financial system, a newly world-dominant economic and political superpower may arise with its currency as the international convertible currency of choice.

Any remaining viable superpowers or civilizations will need the reliable supply of oil, at the cheapest rate possible, and it appears OPEC will be the most likely supplier of significant quantities. It remains to be seen whether the two oil-hungry but oil-deficient civilization superpowers – Europe and the Asian conglomerate – can secure their supply of oil by the soft power of diplomacy or whether the hard power of military force will be required – as oil is increasingly scarce against escalating demand.

For sure, these oil-hungry superpowers will go to great lengths to maintain oil supplies and so sustain economic development and the viability of their civilizations.

This imminent state of affairs may prove to be a testing ground for how the superpowers will compete for advantage, and how vociferous they can be for each to maintain, and even improve, its level of economic development, civilization greatness and world influence.


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