Friday, November 18, 2005

The Quiet Anti-Oil Revolution - Part 2

In my previous post, I tried to establish the motive and the means for how the world breaks it's oil-addiction. If in fact, breaking that oil addiction is only a matter of time (10-20 years?), a number of interesting political outcomes present themselves. (I will not detail the resultant apocalypse-preventing environmental effects)

India will take a much harder line towards militancy, if it is energy-secure through means not critically dependent on the Middle-East or Iran (think civilian nuclear or clean coal power, hybrid or ethanol or CNG transportation). Even the pacifists and left-wingers should see no rational explanation for the continued appeasement of Middle-East royals sitting on their sea of oil. India will find common cause with Israel on several scores: strong democratic traditions, burgeoning military and civilian trade, and the threat of the Pak/Iran bombs. In a world without massive Saudi subsidies, Pakistan becomes much more dependent on India, and hence much more pliable.

The US will be much better off except for one giant problem. The Saudis hold US Treasury Bills and Bonds of close to a trillion dollars. The US will need a strategy for handling this elephant in the room. But, there should be no need for future middle-east military quagmires because oil will be plentiful, cheap, and available elsewhere.

As for the Middle-East - without a dire need for their oil, who cares! The world will have to deal with this fountain-head of disaffected folks for some time to come. Hopefully, with the oil-money spiggot turned off, they should not be nearly as menacing as they are today.


Anonymous said...

Hey go slow on the anti-arabic rants, they are hurtin ur credibility.

libertarian said...

Good point anonymous. The story is about oil, not about Arab rulers.

The Greatest Hokie Ever !! said...

[Libertarian] I fully agree, the story is about OIL.

Should be interesting to see if someone has an idea about the short and long term benefits on a society which is extremely dependent on a monopoly for survival. If we think in terms of the steel towns of the eastern US, the situation now is not so good, this should even be a bigger shock because the entire Arab economy is so highly reliant on oil. Interesting times !!

libertarian said...

greatest hokie, great point on monopoly-dependent societies. The degree of dependence on oil varies dramatically: Saudi, Kuwait, and Iraq are in big trouble should oil become less relevant; so are Nigeria and Venezuela; Qatar, Oman (with their natural gas) and Russia will much less affected; Dubai (and the UAE in general) and Canada will get away almost unscathed.


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