Government, energy & environment

Resource nationalism

Ten of the largest oil companies in the world are 'nationals' - state-controlled oil companies. Moreover, many of the owners of the world's largest remaining oil fields are moving to the far-left politically and could potentially nationalise all energy and resource production within their borders. Venezuela is frequently quoted as a future trouble spot as it contains some of the world's largest remaining reserves, but Nigeria (which has the eighth largest oil reserves on earth), Libya, Bolivia, Peru, Ecuador, Angola and Sudan could also potentially shut out foreign oil and resource companies from their soil. On the face of it this is not entirely unreasonable. Traditionally oil companies have taken 80 per cent of the revenue from such fields leaving just 20 per cent to the host country. In other areas the 'tax' paid by foreign mining companies is as little as 10 per cent. However, it's not just money that's at stake.We are entering a period where natural resources will be more strategically important. We are already witnessing the rush of countries like China into regions like Africa and many of these buyers are willing to deal with these regimes on a 'no questions asked basis'. So what are some of the potential future scenarios for oil politics? One possibility is that a US attack on Iran will result in an Iranian blockage of oil moving through the strait of Hormuz, but this is unlikely to succeed. A more plausible development would be a radicalised Nigeria. Rebels could halt oil production in the southern delta region and this could lead to a Muslim general seizing power in the north that in turn would result in US military intervention. Or what would happen if it were proven that Venezuela had the largest oil reserves in the world but decided to keep them for itself?
Ref: Various including: The Economist (UK), 8 April 2006, 'Taking on big mining', Atlantic Monthly (US), April 2006, 'Worse than Iraq', J. Tayler and Reuters, 6 September 2006, 'Speeding terminal decline or managing oil's future', B. Lewis and S. Webb.
Search words: oil, nationalism, security, energy

China scenarios

China's GDP has doubled since 2000 but will this growth continue given its level of corruption, environmental destruction and social unrest? One way to answer this question is to construct a set of scenarios. This can be done by creating two key variables, intersecting them, and then treating the resultant quadrants as future worlds. For example, the two variables could be high and low economic influence, and military resolution of conflicts versus diplomatic resolution. This is a set of scenarios created by the Global Business Network recently. The first resultant scenario (called Emperor of Business) is effectively the dream scenario for developed nations - in that China plays by the established rules and moves to enforce intellectual property law. China is open to foreign companies and eventually turns to Africa as a source of cheap labour. The second scenario (called Emperor's New Clothes) is more disappointing - at least for China - as the country turns into the new Brazil. Corruption and unrest mean that China never fully achieves its economic objectives and eventually grinds to a halt. The third scenario (Emperor of Asia) is a regional story. China grows but only as fast as its Asian Neighbours and is forced to compete with them for resources. As a result a series of economic and defence pacts are signed and nationalist sentiments increase resulting in the end of globalisation and more co-operation between North and South America. The fourth and final scenario is called Emperor of the World. In this world, China rapidly acquires economic and political power, eventually displacing the US as the number one superpower. China then stops buying US debt, the US economy falters and the Yuan becomes the favoured global currency.
Ref: Business 2.0 (US), August 2006, 'Four Futures for China Inc'.
Search words: China, scenarios

Be careful what you search for

Earlier this year AOL released the data relating to 23 million searches on the Internet. 650,000 people made the searches over a 12-week period and most of these people would never have imagined that what they typed into Google would one day become public. The data didn't identify any individuals, replacing their names with numbers, but while it proved difficult to identify total strangers it proved relatively easy to identify people that were already known to you. The 'mistake' was soon put right and several people including the CTO of AOL resigned or were fired but by then the database had been copied several times. To put this into perspective, Google conducted 2.7 billion searches in July 2005 while its main rivals Yahoo and MSN are thought to have conducted around 1.8 billion and 800 million searches respectively. Theoretically information about what we search for or what we look at on the Internet is confidential. As a result we reveal details about private lives that many of us would be reluctant to tell even our closest friends. However, this 'database of intensions' is only confidential so long as companies like Google choose to keep it so and there are already concerns about what Google is telling the Chinese authorities in return for operating in that country. The Orwellian spin on this is clearly a future police state snooping on our every thought and action - based on what we search for. For example, should the police be contacted when someone searches for 'how to kill yourself with gas' and where exactly do you draw the line between interest and intention? A more positive future is simply technology that knows what we buy and where we go (thanks to GPS) that is able to make recommendations about what we might like or whom we might want to talk to. Both are science fiction at present but both may come true in the future.
Ref: New York Times (US), 9 August 2006, 'A Face Is Exposed for AOL Searcher No 4417749', M. Barbaro and T. Zeller. The Sydney Morning Herald (Aus), 2-3 September 2006 'There is no place to hide', Andrew Brown.
Search words: data security, risk, privacy, data

Energy futures

There is a lot of discussion about peak oil at present. Most studies predict that we will hit peak oil production within the next ten years and then supply will run out around 2050. As a result of this, nuclear power is firmly back on the agenda in many nations having been cast aside by environmentalists and governments in the 1980s and 1990s. However, one critical bit of information is missing in this nuclear debate and that is that it's not a sustainable technology. You might think that the reason nuclear energy is not suitable is because of the radioactive waste but that is only half the story. Uranium reached peak production in 1981 and there is not enough left to fuel the 28 new nuclear power plants now under construction across the world, let alone the 30 new plants under construction in China. Uranium is, of course, abundant but concentrated uranium suitable for power plants is not. One solution is using plutonium from dismantled weapons but this too is due to run out in 2013. There is also the option of 'fast breeder' reactors using spent uranium but these are very costly and potentially very dangerous. Finally there's the option of thorium-fuelled reactors but to date nobody has ever built one.
Ref: Guardian Weekly (UK), 21-27 July 2006, 'Limited reactions'  M. Meacher.
Search words: oil, nuclear power, sustainability

Cellulosic fuels

Ethanol is a form of high-octane bio-fuel that's mixed with conventional gasoline to power cars and other vehicles. In Brazil 40 per cent of the fuel used to power vehicles is ethanol-based and the US is the world's leading producer, ahead of Brazil and China. Until recently, however, there was a problem because the cost of production did not make commercial sense. Furthermore, even with oil at US$70 a barrel, ethanol is still problematic because it effectively uses food to make fuel. Agricultural land is already limited and an increasing population means that turning food into fuel doesn't make long-term sense. So how about making fuel from agricultural waste instead? This is precisely what cellulosic technology is all about so expect to hear more about this in the future.
Ref: Red Herring (US), 11 September 2006, 'Ethanol evangelists',
Search words: fuels, bio-fuel, cellulosic technology