Now that the phenomenon of peak oil has been universally explained and understood in leading media in Canada like The Globe and Mail and National Post, and its arrival has been widely acknowledged (even by the US President), it is now time to consider the unfolding consequences of this new global reality. What the cresting of the peak of global oil production signals is the start of the long-anticipated and worldwide War of Resources. We have just entered a whole new era in world history and all political and economic reporting must be adjusted accordingly.
The War of Resources may remain a “cold” war for some time (if not forever) in terms of military confrontations between the major combatants. But it will certainly be a “hot” war in terms of real bombs and bullets flying around where minor players become entangled in the global positioning by two or more of the major world forces.
Hot or cold on any scale, the War of Resources is now the overriding economic, military, and political priority in the capitals of all countries involved, major and minor. It is from now on safe to assume that major combatants have switched over their economies, foreign policies, and militaries to a total war footing as all-encompassing as major combatants did during World War II. It is equally safe to assume all minor players are busily maneuvering and negotiating their positions in between the major combatants, looking for their safest harbours in the coming storms. All political and economic news coming from all players big and small from now on must be interpreted through the lens of the War of Resources. It is “game on” as of this moment.
There are six powerful nations that, with the passing of peak oil and the dawning of the War of Resources, now comprise the six major powers in that war: they are the United States, the European Union, Russia, China, Japan, and India. These six may from time to time form temporary alliances among each other in all possible configurations, as their own calculations dictate. But they are each in the game for themselves, and hostilities in any configuration are also possible—a point that cannot be emphasized enough.
There are many minor players in this war also whose national economies produce significant amounts of oil, but there are six among them whose control is both crucial to the major powers, and whose allegiances may also be in play: they are Saudi Arabia, Iran, Mexico, Venezuela, Nigeria, and Iraq. These nations comprise the six major battlefields in the War of Resources (located on three different continents), but of course there are dozens of minor battlefields besides those located throughout all seven continents.
There are as well six major private oil companies powerful enough to be considered instrumental in the political, economic, and military decisions made in any and all of these capitals as the War of Resources unfolds. These companies are BP-Amoco, RoyalDutch/Shell, ExxonMobil, ChevronTexaco, TotalFinaElf and ConocoPhillips. These companies will play the role of regulating the relative heat of this war in each of its big and small battlefields with an eye toward maximizing their profits.
The main set-up on the game board of the War of Resources at its start is this: the six major economic powers will be vying to take and maintain control of any or all of the six major battlefields through economic warfare (combined, the six powers’ 2004 GNPs were about $50 trillion, or nearly 75% of the world total) and by military deployments (the six major powers’ military spending combined is presently about $1 trillion, representing about 92% of total world military spending).
The War of Resources will proceed against the backdrop of an ever-widening gap between global demand for oil and global supply. Oil is not only critical to industrial energy and transportation, but is also integral to food supply, all chemical industries, and most manufacturing. To the advanced technological civilizations of today, oil supply is a matter of national life and death, literally. For all of the major powers, a serious cut of oil supplies will mean collapse of their economies, widespread starvation, and massive social upheaval in all cases leading to overthrow of current leaderships. Eventually, all measures, including total war between the major powers, will become possible, and with time, increasingly likely.
Therefore, from now on, all six major economic powers will be under severe pressure to maximize the flow of oil from the oil producing countries into their own economies, and to cut the flow of oil into each other’s economies. As pressure builds, they will each become more encouraged to open up war on the minor players to force their allegiances, and increasingly on each other to remove competition from the field.
The six large oil companies, meanwhile, will attempt to manage the global conflict so as to maximize their profits. A massive world war directly between any or all of the six major players would mark a failure by the oil companies who, in such a scenario, would see oil demand (and prices) collapse in widespread industrial destruction following the likely brief (nuclear) war. Their job is to maximize the competition for oil to the point of war in the oil-producing battlefields, but to keep the War of Resources from boiling over into an all-out and total military conflict between the major powers.
This is the point we are at now: The major combatants are deploying economic and military forces to positions in and around all the oil producers, those producers—the minor powers—are playing their cards as best they can to generate their own best outcome, and the oil companies have deployed executives to all capitals major and minor to offer information, advice, and encouragements, as well as to make strategic investments or disinvestments, in order to regulate the rising heat of the war and to try keeping it from boiling over.
In future issues of The Republic, we will run a series of articles chronicling the political and economic maneuvering among the major powers, the oil producing countries, and the major companies whenever those events can be understood through the lens of the War of Resources. We will be keeping a close eye out for, and reporting on, evidence of major economic and military power deployments, minor power maneuverings among those deployments, and oil company interventions to regulate both.
Our aim is to provide the best explanatory framework inside which future events in the War of Resources and their causes can best be understood. Only when we know what is happening and why will we be able to dream up and implement the best policies for Canada to minimize the panic, chaos, death and destruction that are sure to be features of this war around the world.
The key issue now for all the people of the world no less than for Canadians is to see the major powers make the transition from an oil-based global economy to whatever kind of economy that replaces it in the future without recourse to their stockpiles of nuclear weapons—by no means a sure thing, as such a transition entails massive shifts in balances of relative power. All but Japan are nuclear powers; between the remaining five, there are over 33,000 operational and deployed warheads the firing of any one of which could well trigger a sufficient number of retaliatory firings of warheads so as to jeopardize the survivability of the human race.
Secondarily, we need to anticipate the foundations of a new, post-oil global economy, and begin construction of it now, so that there is a future to which the world might make such a transition, should it survive the War of Resources.
