The Politics of Energy

As the world feeds its increasingly voracious appetite for energy from rapidly diminishing, non-renewable resources, a powerful new strategic weapon is being deployed to squeeze the giant U.S. economy.
From the July 2001 Trumpet Print Edition

Cheap oil and gas provided much of the energy that drove the prosperity of the 20th century. We enter the 21st century facing the prospect of known deposits of these resources drying up by this century’s end.

Natural, renewable sources of energy have long been exploited by man. Wind, water, the sun, wood and peat fire, flammable vegetable oil—all are energy resources that man added to animal power and his own muscle to energize his society for millennia. Not until the 17th century did man have knowledge of the properties of steam as an agent of energy. By the 19th century, steam came into its own as an energy resource, powering the Industrial Revolution that changed society in Britain and the world forever.

As Churchill once mused, “He must indeed have a blind soul who cannot see that some great purpose and design is being worked out here below.” It is no coincidence that at the time when Britain and America suddenly burst upon the international scene as great powers around 1800-1803, the means to energize their expansion, economically, industrially and commercially, was just as suddenly at their disposal.

“The most amazing fact of all history is this sudden skyrocketing from virtual obscurity of two nations to the most fabulous wealth and economic power ever possessed by any people. Britain became Great Britain—a gigantic, stupendously wealthy commonwealth of nations—the United States, the greatest nation of history” (Herbert W. Armstrong, The United States and Britain in Prophecy, p. 129).

The proof that these great national blessings were deliberately bestowed by God, in a timely manner, on those two nations is available without cost to you in our booklet The United States and Britain in Prophecy.

Very simply, during the 19th century, steam power energized the most rapid expansion of industry, trade and transport ever in mankind’s history. The growth of factories in the towns and cities, the development of vast rail networks, the leap from sail to steam-powered shipping, this all contributed to the British Empire and the United States leading the world in the creation and movement of goods more rapidly and freely than ever before. It sped up and freed up the movement of people such that international travel was no longer restricted to the hardy adventurer relying on four-footed beasts or the migrant prepared to brave the hardships of months at sea in pursuit of a better life in the new world. Steam power shrunk the world in time and distance and spawned a whole new industry—tourism. Britain’s mighty steam-powered Navy secured the principle sea gates of the world, thus allowing free and secure access to its people and goods throughout the 19th century.

One hundred years on from that time, in 1898, the first oil well, at Titusville, Pennsylvania, was drilled. Just three years earlier, in 1895, a Parisian of Bavarian parentage, Rudolph Diesel, perfected his four-stroke cycle, oil-fueled internal combustion engine.

Both of those seminal events led to the explosion of exploration, extraction and processing of liquid fossil fuel throughout the 20th century as it became the prime energy source driving the unfettered expansion of the world economy. Through boom and bust, cycle after cycle, oil has filled the energy thirst of burgeoning national economies to the point that, at the dawn of a new century, the prospect of exhaustion of the world’s supply of this energy source is now seen as a foreseeable reality.

“Coal was king in 1800; coal was still king in 1900; coal is a dethroned monarch in 2000. Oil is king in 2000; oil will have abdicated before 2100” (The Times, London, Aug. 30, 1999).

Oil’s Troubled Waters

The International Energy Agency (iea) publicized their findings, in November 1998, that growth in oil output could not be expected to continue beyond about 2001. Although it has been recognized for at least 25 years that known resources of oil, as a finite, limited source of energy, would run out in the present century, little or nothing has yet been done to deal with this prospect. Policy analyst David Fleming states, “The essential problem has been known for a long time. It is a fact, written up exhaustively in the literature, that the period around the turn of the millennium marks the end of growth in the world production of oil, and the start of its long decline toward depletion. In 1956, the geologist King Hubbert accurately forecast that the U.S.’s oil production would peak in 1970. In 1970, Esso forecast that global production would peak in about 2000” (Prospect, Nov. 2000).

Far from seeking to reduce our global dependence on oil as our prime energy source, during the past ten years the world went on an oil binge that increased consumption by 9 million barrels a day. Christopher Flavin, acting president of Worldwatch Institute, declared last year, “Unless we use the current crisis as an opportunity to improve fuel economy and diversify energy supplies, we will put the health of both the world economy and the global environment at risk” (International Herald Tribune, Sept. 26, 2000). Flavin went on to point out that the United States, which possesses only 4 percent of the world’s population, is consuming nearly 25 percent of the world’s oil, and it imports more than half its supply. This dependence on foreign sources poses an extreme strategic risk to the U.S. economy.

Added to this, Flavin points to the debilitating effect on planet Earth that the consumption of oil is having: “Burning vast quantities of oil contributes to the inexorable buildup of carbon dioxide in the atmosphere, a trajectory that must end soon if we are not to disrupt virtually every ecosystem and economy on the planet” (ibid.). Hence the U.S. being viewed as a pariah for not supporting the Kyoto Protocol on Climate Change (see p. 21).

Although the search for oil continues, industry experts admit that they do not realistically expect to find another Saudi Arabia or Alaska. Extensive exploration indicates that the largest reserves of accessible oil have been found already. Those which yet remain to be developed are largely sited in territory that is located within countries that have tenuous or hostile relationships with the world’s major oil consumer nation—the United States.

Shaky Ground

Of the world’s total proved reserves of oil, over 75 percent lie underground or offshore of territory controlled by a cartel of 11 nations which comprise the Organization of the Petroleum Exporting Countries (opec, see p. 4). These countries are all developing nations having heavy dependency on oil export revenues to sustain their economies. Collectively they produce about 40 percent of the world’s oil.

Other than opec’s reserves, much has been made of the prospect of developing flows of the black gold from the emerging oil region of central Asia and the Caucasus. These prospects must be seen in the harsh light of reality. It is estimated that, given reasonable political stability (which is hardly the case in this ex-Soviet region), the landlocked Caspian will supply only 3 to 4 percent of the world’s oil supply by 2010-15. Distances from their main markets might yet stymie even this prospect.

A reasonable view of the future of central Asia and the Caucasus was taken by Amy Myers Jaffe and Robert A. Manning in Foreign Affairs journal. They claim that this region is simply not about to spew forth an oil and gas bonanza. “The complex problems of the Caspian region—evidenced by the turmoil in Chechnya, Dagestan and Kyrgyzstan—could, if left to fester without the salve of promised oil wealth, make the Balkans look like a pregame warm-up” (Jan./Feb. 2000). Even if the region does stabilize, which is highly unlikely, these analysts claim that Caspian oil will not feed the gluttonous U.S. markets; rather, it will flow to Europe and possibly Asia.

Russia is touted as another alternative source of supply to opec. Forecasts indicate that oil production in Russia may increase to between 410 and 450 million tons per year by 2005. Once again, any increase is likely to be denied to the U.S. markets, as the EU has ensured prime call on Russia as a principal supplier to its burgeoning energy needs.

“Exports of Russian oil to Europe may amount to 210 million to 250 million [metric tons] per annum by 2005, which accounts for 30 percent of European consumption, Yukos ceo Mikhail Khodorkovsky said in Moscow” (Interfax News, April 3).

In May, Interfax reported that Gazprom, the monolithic Russian corporation which yields 98 percent of that country’s gas production, was gearing up to meet Europe’s growing demand for natural gas. Germany was by far the largest buyer of Russian gas last year. With the EU and Russia forging an increasing alliance against the U.S., the American oil importers and processors can hardly look to their old cold-war enemy to ease their energy shortages.

North African oil is also coming into the picture, with southwestern Chad oil fields being developed by consortia led by Exxon Mobil. Slated to begin operation in 2004, oil from the southwestern Chad basin will be piped 663 miles to offshore loading facilities on the Cameroon coast of West Africa. This places the point of dispatch for export midway between Spain and Southern Africa. With the EU and South Africa probably becoming the principal importers, the U.S. loses out again.

To compound the problem of supply, China and India ended decades of energy self-sufficiency when they became net importers of oil in the mid-1990s. Jaffe and Manning report that “China’s rising hunger for oil imports means that it will depend more on the same energy resources and sea transportation lanes shared by the United States, Japan and other industrialized countries” (Foreign Affairs, op. cit.).

Which brings us to the question of future power plays, by not only the U.S. but all other major oil-consuming nations, looming large on the horizon—and opec holding the whip hand.

Politics and Oil Security

Did not the U.S. win the war for the security of Kuwait in Operation Desert Storm? Well—no! Saddam is still on his throne, his defense infrastructure is rebuilt and, aided and abetted by China (in a total violation of UN sanctions), “Iraq has upgraded its air defense network with fiber optic communications that connect surface-to-air missile batteries and radar sites into a more effective defense umbrella” (www.stratfor.com, June 4).

With the U.S. scared to death of losing a warrior in battle, the administration is heeding the fears of its senior military officers as they point out the heightened risk this poses to U.S. and British pilots. As a result, allied air patrols will be scaled back significantly, if not totally cut.

But all this really involves the politics of oil. The Bush administration is capitulating on the U.S.-led UN sanctions to ease Iraq back into play in the global arena. The sanctions have been an unqualified failure from the beginning. The only people hurt in the process were the common folk of Iraq, the civilian foreign-policy fodder. But it’s all about oil. The energy crunch has pushed the U.S. to dovetail its policy toward Iraq with Washington’s new energy policy, which simply requires greater access to the region’s oil reserves. As Stratfor pointed out, Iraq and neighboring Iran together hold about 20 percent of Middle East oil reserves and 18 percent of its gas reserves. The lifting of sanctions simply paves the way for U.S. corporations to profit from the exploitation of these resources.

Nevertheless, the changing policy toward Iraq got off to a bad start.

Playing hard to get, in June Saddam Hussein pulled Iraqi oil off the market, ostensibly because the UN extended the oil-for-food program for only one month instead of renewing it for six months as had been their habit. The UN’s stated reason for this decision was that it needed to review U.S. and British proposals for an overhaul of the entire sanctions regime in line with Washington’s new energy policy. Hussein’s move will further crimp oil supply for as long as Iraq wants, in a market already bearing the brunt of the opec cartel’s denial of any production increase at their recent meeting in Vienna.

“That group is a political animal, whether or not it wants to acknowledge it.” Thus opined Jareer Elass, ceo of the Washington-based consulting firm Oil Navigator, as quoted by Associated Press following opec’s first summit in 25 years held in Caracas, Venezuela, in September last year. Subsequent meetings of opec, held in its Vienna headquarters, have done nothing to ease the high prices of oil which escalated during last winter and continue to hold up, rising to a four-month high near $30 a barrel following opec’s June 5 meeting. Simply put, the opec cartel has the global energy market at its feet. It’s just pure and simple market economics—supply and demand. World oil inventories are low, scarcity raises demand, heightened demand raises price.

So it was that greed governed opec’s decision to refrain from increasing oil output when they last met, thus sustaining the present excessively high cost for crude oil.

Feet of Clay

Like another political and economic cartel, the EU, opec has feet of clay. Its inherent weakness has been an inability to unify and agree on a common direction. This has worked to oil consumers’ advantage in the past. But opec partners play for high stakes, and recently they have enjoyed a period of reasonable unity. Herein lies the danger.

“These nations, when they act together, can importantly affect the economic well-being of every society that relies on oil to power its factories, run its cars and trucks, and heat its homes” (Commentary, March 2001).

That’s the opinion of Irwin M. Stelzer, director of regulatory studies at the Hudson Institute. In a cutting analysis, Stelzer continued, “Since the end of the Arab oil boycott of the mid-1970s and until recently, the consuming nations have benefited from the inability of the often quarrelsome producing nations to cooperate in a price-fixing conspiracy. But then the price of oil fell to $10 per barrel—a figure that, although still higher than what would prevail in a freely competitive market, was evidently too low to permit the producing nations to fund their arms purchases, their subsidization of anti-Israel terrorists and other groups, the massive subsidies doled out to their disenfranchised middle classes to prevent discontent from boiling over into outright revolution, and payments to princes and other potentates whose taste for the good life exceeds what their talents would command in a global workplace.”

Yet, despite the good times rolling within opec, Saddam Hussein is the cloud on the cartel’s horizon. His Mexican standoff against the U.S.-led UN sanctions review has posed a problem to opec unity. His halting of Iraqi oil exports from June 4 has a double-whammy effect.

“Iraq’s export cutoff will have an impact beyond just annoying the West and scaring its neighbors. Although Iraq is one of 11 opec members, while it is bound by UN sanctions, it can produce as much oil as it wants. So from the viewpoint of certain opec members, the cutoff, which will remove 2.2 million barrels per day from global supply, provides a hard-to-resist opportunity to increase oil prices” (www.stratfor.com, June 5).

Though the maverick Hussein is an opec member, his stand has thrown a cat among the rest of opec’s pigeons.

“But the damage to opec solidarity is already done. The Iraqi cutoff has opec members second-guessing each other. All have a bit of excess capacity, and all know they will pump more to take advantage of Iraq’s withdrawal regardless of the official opec stance. This unraveling of confidence will continue as oil prices drop in reaction to the developing global economic slowdown, darkening opec’s collective future. For if opec members cannot cooperate at a time when none are threatened economically, they will find it that much harder to engineer production cuts once prices truly fall” (ibid.).

Target America

In this whole scenario, whether prices are sustained at the excessive June 5 levels or squeezed due to global recession, the U.S. remains the prime target of the opec cartel’s initiatives.

“One way to assess the impact of opec collusion on the American economy is to consider the difference made by a rise in the price of oil from $10 per barrel to what seems to be opec’s new target price of $30. Since we import about 9 million barrels per day, the recent increase is transferring almost $65 billion per year from the pockets of American consumers to the various Arab kingdoms and other producing nations” (Commentary, op. cit.).

A case in point is Kuwait. The U.S. plowed billions of dollars into Desert Storm. Was Kuwait gracious in demonstrating its appreciation? Did the struggle really buy us a tiny oil-rich opec ally at mind-boggling expense? Rather than provide moral support at home, the Kuwaiti royal family fled the scene of battle during operation Desert Storm to play the casinos in London and live the high life in safety, while American servicemen risked their lives to save Kuwait from Saddam Hussein. In oil politics, Kuwait has not favored its U.S. benefactor.

“Kuwait produces only 3 percent of the world’s oil. It is thus one of the opec countries that could turn on the taps immediately and, if it so chose, increase its production capability even further…. Yet, when the price recently fell below $30, it was Kuwait’s oil minister who led the charge for further curtailments of output” (ibid.).

Irwin Stelzer concludes that the U.S. will find little joy in seeking support in any energy crisis from its Arabic “allies.”

“Looking for gratitude in Kuwait is as fruitful as looking for oil under the White House lawn, and asking the Saudi regime to put economic sense above the [Palestinian Liberation Organization] line is as rewarding as asking the more extreme environmentalists to ease our national shortage by withdrawing their opposition to new drilling or new power plants. No, for a way out of our predicament we will have to look not to opec but to ourselves” (ibid.; emphasis mine).

But Mr. Stelzer’s comment has bearing on far more than the current energy crunch for the U.S., Britain and other Western democracies.

Asymmetric Warfare

Even if alternative sources of oil are accessed by the U.S. in the future, the Gulf states will remain its chief source of supply for the next decade and hence a most crucial component in the global foreign-policy scene.

Only the blind could conclude anything but that opec uses their majority control over the world’s major energy source, oil, as a weapon of economic warfare.

One school of thought in foreign-policy circles centers on the growth of “asymmetric warfare.” This theory postulates that an adversary uses whatever situation exists to attack the weakness of its intended victim.

In the case of certain Gulf states, in particular Iran and Iraq, oil is the weapon, the U.S. and its allies are the adversary, and energy dependence on external supply is the glaring weakness.

As Clark Staten, executive director of the Emergency Response and Research Institute (erri), has stated, the superior military capability of the U.S. and its allies does not prevent such nations “using oil as a lever to create hardships for the poor, motivate protests, cause civil unrest, and escalate political problems for the Western powers.” He added, “For those countries participating in this alleged collusion, it is a ‘win-win’ situation…. They both collect vast amounts of money to further their ambitions, and they destabilize the governments that they politically or ideologically oppose” (EmergencyNet News, Sept. 24, 2000).

Prophetic Significance

There is an intriguing prophecy in the book of Hosea which fits the very times we are passing through in this early 21st century: “Ephraim feedeth on wind, and followeth after the east wind: he daily increaseth lies and desolation; and they do make a covenant with the Assyrians, and oil is carried into Egypt” (Hos. 12:1).

Biblical Ephraim is Britain, under whose benign protection of the high seas in the century and a half preceding World War ii the U.S. was free to build, peacefully, its massive economy. British politics today is about that which lies to their east—all the hot air that emanates from Brussels, the headquarters of the European Union. The EU is progressively destroying British sovereignty.

The Spectator magazine recently ran an article claiming that the British prime minister would do anything to please the EU, at cost to Britain’s sovereignty as a free nation. He may well preside over the government which makes “a covenant with the Assyrians”—meaning Germany.

In terms of our focus on energy politics, it is interesting to note the closing phrase in this scripture, “and oil is carried into Egypt.” That term carried into comes from the Hebrew word yabal, meaning “to bear along.” Oil is born along Egypt. The Suez Canal is crucial to the oil shipments from the Gulf states. Millions of tons of crude oil are shipped from the Gulf, born along the Suez Canal northward to the Mediterranean and South to the Arabian Sea and Indian Ocean. It is a crucially strategic lifeline for the energy supply to the U.S. and its allies.

What an amazing prophecy this is. At the very time we see Britain consorting with German-led Europe to its gross disadvantage, led by a leader who is working behind the backs of British citizenry to conclude a covenant (“foreign alliances”—see the Companion Bible), oil comes into play, in the Middle East, as a powerful political force.

As the Trumpet’s editor in chief has pointed out, this is a prophecy for our time, the very time we are living in right now!

The U.S. and its allies are in a predicament. It centers around energy and the control of external supply. Mr. Stelzer says we will have to look to ourselves for a way out of this predicament. Yet the energy crunch is but one of a number of symptoms of a far deeper crisis in the Anglo-American countries. It’s a crisis of spirit, of character, of morality, a crisis of a great loss of national virtues. It’s a crisis of the great loss of love for truth! It’s a crisis of nations which have forgotten their God!

This magazine is part of the solution which leads many individuals to find the way out of the great national predicaments that the Anglo-American nations will soon confront, of which the energy crunch is but one.

“What is truth?”, asked King Herod, as he washed his hands of dealing with a great moral and spiritual crisis 1,970 years ago. The truth is that, be it the energy crisis or the moral and spiritual crisis that has led to our nations showing no shame for electing pathological adulterers and liars as our leaders, the reason for our present state is simply the curses we have brought upon ourselves in outright rebellion to our God.

“The Lord hath also a controversy with Judah, and will punish Jacob according to his ways; according to his doings will he recompense him” (v. 2). This is a dual prophecy having to do with a controversy which the Eternal God has with Judah (the modern Jewish nation, Israel) and Jacob (the Anglo-American nations) and, at the spiritual level, with God’s own Church.

Hosea’s prophecy contains vital information that you need. Irwin Stelzer says we must look to ourselves to find a way out of our predicament. We really need to look to our God! He alone can lift us out of our personal, our national and our spiritual predicaments. Write now, without delay, for our free booklet Hosea and God’s Adulterous Wife. Read it, study it. It will show you the reality of the times in which we live and the way you can change your life to prepare for events of startling significance in the future.