Historically, the availability, access and control of oil, as a vital economic resource has shaped global power relations. It has led to the creation of many powerful countries and has been the source of multiple wars and conflicts in the last few decades. For instance, Saudi Arabia was one of the poorest countries in the world during the 1930s, but with the discovery of oil, its fortunes transformed massively. Saudi Arabia amassed $515.6 billion in sovereign wealth funds and became the lynchpin of a mighty oil cartel, exerting pressure on the world economy by rationing the oil supply and regulating prices.
However, today, the Unites States has emerged as a formidable player, by reducing its dependence on Iraq, Venezuela, Saudi Arabia and other OPEC (Organisation of the Petroleum Exporting Countries) countries. The US underwent the Shale Revolution in 2016, by adopting multi-pad wells, fracking and deep drilling, alongside crunching vast amounts of data to refine their techniques and making IT investments. By innovating and cutting down costs, the US became incredibly efficient, leading to massive government deficits and slumps in the oil revenues of the OPEC countries. Their move to drive oil prices perilously low failed as American free-market capitalism won over 40% of the global oil output. Their subsequent strategy to increase oil prices and impose production limits failed too, as American output increased. The US is now likely to become the world’s largest oil producer by the end of 2019.
The increase in the supply of oil and gas in the world markets has benefitted consumers due to a fall in prices. Oil is meets one-third of the world’s energy and hence, is the primary fuel. By 2040, the world’s energy use is poised to rise by 30%. However, the consumption of oil as fuel is a major contributor to global warming and the processes of extraction are not environment-friendly at all, due to their heavy dependence on resources like water. The rising energy demand must be met by cleaner sources, in order to prevent the devastating impacts of global warming.
Technologies for renewable sources of energy are no longer as expensive as they used to be. In fact, many countries are now racing towards creating and developing new and more efficient technologies to be able to harness their potential and reduce pollution. Securing energy independence and self-sufficiency is a key motivation for these countries and the one leading from the front is China. China is the largest consumer of coal and the second largest of oil. But, it is also leading the world towards clean energy. Today, 33% of the world’s solar and wind panels are installed in China. Moreover, China is responsible for selling more electric cars than any other country in the world.
The long-term transition to clean renewable energy can yield multiple new global challenges. These include the creation of tensions in unstable parts of the Middle-East with heavy reliance on the oil economy as they focus their efforts on preventing the revenue from drying up. Secondly, wind and sunlight are intermittent natural resources and therefore, harnessing them efficiently will mean the establishment of vast shared energy grids that span geo-political borders to ensure efficient and constant supply. Thus, in order for the world to have a shared energy future, a great collaboration needs to be fostered across the major economic powers as well as other countries of the world. Otherwise, any wars that might be fought over scarce resources could possibly be much worse in the 21st century, as compared to the 20th century.
India Outbound
November 16,2018
source https://indiaoutbound.org/beholding-the-worlds-energy-future/
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