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Welcome to Daringopinion.com
The Website of Elie Elhadj
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Saudi
Arabia’s Oil Weapon, But for How Long?
Resistance by bankers, investors, and politicians to writing-off an estimated $20
trillion in fossil fuel assets will cause
the greening of the environment to evolve in two stages. The first stage is being driven
by a rapidly growing consumer preference for the electric vehicle. By 2030/2040, as Asia, Europe, and other parts of the world abandon the
sale of petrol cars, most global demand for oil will disppear. When that happens, Saudi cash will dwindle, US protection of Riyadh will disappear, Wahhabi terror will diminish, and democracy could have
a chance to grow in Arab lands. When that happens, renewable energy will have contributed to fighting terror more than armies and air forces. The second stage, a
century later, will abandon coal and natural gas and with it environmental degradation.
This article is sourced mainly from Chapter Five of my book, "Oil and God. Sustainable Energy Will Defeat Wahhabi Terror"
Governments,
investors, lenders, and workers in oil, gas, coal, car, and fossil fuel using
power plants stand in the way of sustainable energy. They have been leading a
fierce and effective crusade to discredit climate science and the scientists
who attribute global warming to human expansion of the
greenhouse effect. They have been lobbying politicians, especially in the US, to delay and
water down, even repeal environmental protection laws, while propagating an
image of themselves as being green and committed to renewable energy.
ExxonMobil, the
world’s biggest oil company, knew as early as 1981 of climate change – seven
years before it became a public issue. However, the firm spent millions over
the next 27 years to promote climate denial.[1] In
Europe, topping the list of firms obstructing climate
action is British Petroleum,[2]
notwithstanding the very green logo, which it designed in 2000 to propagate a
positive environmental image.[3] BP, Shell, ExxonMobil, Chevron, and Total
“spend nearly $200 million a year lobbying to delay, control or block policies
to tackle climate change.”[4]
Despite
environmentalists’ campaigns against the use of fossil fuel and the successes
in developing sustainable electricity generation from solar and wind
technologies, global demand for oil between 1973 and 2017 increased by 75
percent, from 56 million barrels per day to 98 million barrels per day.[5] Between 1973 and 2012, the transport sector’s consumption of oil
increased by 42 percent, from 45 percent to 64 percent.[6] In
2016, the transport sector consumed 64 percent of the global demand for oil. Other oil uses were in petrochemicals (15%), residential, commercial, and
agriculture (10%), various (11%).”[7]
Washington’s Politics of Oil
In a world addicted to crude oil, energy hegemony means
world hegemony. As long as global demand for oil by America’s rivals
(China, continental Europe, India, and Japan) is strong, the US will protect
the al-Saud regime despite its corrupt non-representative dictatorship, dark
record of human rights abuses, radicalizing Islam, polarizing Muslims, and proselytizing hate-of-the-other
culture. As long as global demand for oil by America's rivals is strong, Washington will protect the al-Saud regime
despite its dictatorial rule, human rights abuses, and gender inequality--controlling
one absolute king who owes his throne and life to US protection is far simpler
and more effective than managing scores of parliamentarians and political
leaders in a democratic setting.
In return for US protection, the six Saudi kings and
their father, King Abdulaziz, maintained an obsequious relationship with the
thirteen US presidents since Franklin D. Roosevelt. The kings followed
Washington’s advice/instructions on oil export volumes and pricing politics.
Influence/control
over Saudi oil is important, not because the United States needs to import
Saudi oil,[8]
but because Saudi Arabia, as the world’s biggest oil exporter and swing
producer, is capable of decreasing or increasing the volume of its oil exports
at anytime in order to drive oil prices up or down.[9] President Trump told reporters in the Rose Garden on January 4, 2019,
“four months ago, oil hit $83 a barrel ... after I made some phone calls to
OPEC and the OPEC nations.... all of a sudden, it started coming down.”[10]
Saudi Arabia is OPEC’s de-facto decider.[11]
He repeated the same line on April 26, 2019, tweeting: “Spoke to Saudi Arabia
and others about increasing oil
flow.”[12]
Oil prices tumbled on April 26, 2019, by as much as 4%.[13]
Additionally,
in case of a confrontation with America’s oil importing rivals, particularly China, US control over Saudi/GCC oil becomes a non-lethal weapon of mass
destruction. It determines the volume and direction of global oil exports. Mr. Trump stressed during a visit to NATO on July 11, 2018, that a gas pipeline
from Russia to Germany has made Germany “totally controlled” by and “captive to
Russia.”[14] Putting his words into practice on April 22, 2019, President Trump
threatened China, and seven other countries,[15]
with sanctions if they do not cease oil imports from Iran.[16] A
Chinese foreign ministry spokesperson responded: "China opposes the ...
so-called 'long-arm jurisdictions' imposed by the US.”[17]
Washington has protected the al-Saud regime faithfully for the past seventy years. As global demand for oil increased from 10 million bbl./day in 1950 to 75 million bbl./day in 2000, US protection of Saudi Arabia intensified as well. Not
even when 15 of the 19 Wahhabi terrorists who flew passenger planes on 9/11
into buildings in New York City and Washington D.C. turned out to be Saudi
nationals, killing over 3,000 people, would the Bush administration
retaliate against Riyadh.[18] Instead, Iraq was sacrificed on
the altar of Saudi oil. It was invaded in March 2003, occupied, and much of it
demolished, only for Tehran to dominate Iraq’s Shi’ite South and the Baghdad
government. The G.W. Bush
project in Iraq gave birth of the Shi’ite Crescent
President Obama empowered Iran further. On December 18, 2011, he
withdrew US forces from Iraq prematurely.[19]
So, Tehran filled the gap left by US troops. He midwifed the delivery of the
nuclear agreement, Joint Comprehensive Plan of Action (JCPOA), which allowed Iran to export of oil and access to $100 billion in frozen assets in return for a delay of 15 years in Iran’s nuclear program.[20]
Above all, Obama handed Syria to Iran.
The empowerment of Iran led to brutal proxy
sectarian wars between Wahhabi Saudi Arabia and Shi’ite Iran in Iraq, Syria,
and Yemen. In addition to keeping Muslims busy killing each other in the Middle
East, these wars have forced Saudi and other Arab Sunni states to buy American
arms by the ton and seek alliance with Israel. With such gains,
President Trump has no incentive to change the playbook he inherited from the
Bush and Obama administrations.
Manifesting US
Protection of Saudi Arabia
The US has
been protecting the al-Saud kings since oil was discovered in big quantities. US protection is manifested in four ways:
1. American technicians, engineers, and spare parts sent to
keep operational the hundreds of billions of dollars in sophisticated US
weapons sold to the Saudi Ministry of Defense and Aviation and the National
Guard over the past forty years. Weapon purchases are a form of protection
money Saudi Kings pay. On a campaign
rally in Wisconsin on April 2, 2016, Candidate Trump said, “We take care of
Saudi Arabia. Now nobody’s going to mess with Saudi Arabia because we’re
watching them.”[21] On April 27, 2017, in an
interview with Reuters, President Trump said, “we are losing a tremendous amount
of money in defending Saudi Arabia.”[22] On April 24,
2018, Mr. Trump, addressing Saudi Arabia and the rest of GCC member states
during a White House press conference with French President Emmanuel Macron,
said: “Countries that are in the area ... would not be there except for the United States ... They wouldn't last a
week. We are protecting them.”[23] To loud
cheers at a rally in Southaven, Mississippi, on October 2, 2018, Mr. Trump disclosed
that he warned King Salman: “You might not be there for two weeks without
us."[24] South
Carolina Republican Senator Lindsey Graham, a Trump supporter, said on December
9, 2018 that, “if it weren’t for
the United States they’d be speaking Farsi in about a week in Saudi Arabia.”[25]
2. Until 2003, the US maintained a large air force
presence at the Prince Sultan air base outside Riyadh. In a cosmetic move, it
relocated to the nearby al-Udeid Air Base in Qatar. The move was intended to
“purify” the land of the two holy mosques from the military presence of
“infidels” to calm bin Laden’s followers. Al-Udeid is a few minutes flying time
away from Saudi Arabia’s Eastern Province where the world’s richest oil fields
are located. With
around 10,000 US troops, al-Udeid Air Base is the largest US base in the Middle
East.[26]
Additionally, Bahrain is home to the US Fifth Fleet, hosting approximately 7,000 Navy personnel.[27] Its Khalifa bin Salman deep-water port can accommodate
aircraft carriers.[28]
Out of Sheikh Isa Air Base, the US Air Force operates F-16s, F-18s, and P-3
surveillance aircraft.[29] In Kuwait, the US has 15,000 troops in two air force
bases[30]
and seven camps scattered in this small country. [31 In the UAE, there are about 3,500 US military personnel stationed at Dhafra, and it
is the only overseas base with F-22s.[32]
3. While all other countries maintain a single diplomatic
presence in Riyadh, the US has always maintained large diplomatic presence in
Riyadh, Jeddah, and Dhahran. With eyes and ears to the ground, American diplomats must have heard for years, anti-democracy preaching,
hate-the-other teaching, and jihad glorification from
blaring mosque loudspeakers and from radio and television.
4. US protection of the al-Sauds is also aided by various
former senior Washington administration officials, captains of industry, media
moguls, and professional lobbyists who act for the Saudi government, ruling
family members, and private sector in return for hefty fees as lawyers,
advisors, consultants, investment managers, business partners, etc. Politico
reported that the Center for International
Policy “found that registered foreign agents working on behalf of Saudi
interests contacted Congress, the White House, the press and think tank analysts
more than 2,500 times in 2017.”[33] The London Independent
newspaper on March 12, 2016 stated that, “Arab oil states spread their power by
many means in addition to religious proselytism, including the simple purchase
of people and institutions which they see as influential. Academic institutions
of previously high repute in Washington have shown themselves to be as
shamelessly greedy for subsidies from the Gulf and elsewhere as predatory
warlords and corrupt leaders in Iraq, Syria, Lebanon and beyond.”[34] In the interview
Mr. Obama gave for the April 2016 issue of the Atlantic magazine, Jeffrey Goldberg wrote how an administration
official describes Arab lobbying activities in Washington D.C. and how the
media spreads views from “experts” on the pay of lobbyists: “One
administration official refers to Massachusetts Avenue, the home of many think
tanks, as ‘Arab-occupied territory.’ Television and newspapers happily quote
supposed experts from such think tanks as if they were non-partisan academics
of unblemished objectivity.”[35]
Notwithstanding that Saudi
Arabia was designated by the US State Department since 2004 as a Country of
Particular Concern for its severe violations of religious freedoms, the US
Secretary of State has waived the sanction that comes with such designation due
to the important national interest of the US:
Since
2004, Saudi Arabia has been designated as a “Country of Particular Concern”
(CPC) under the International Religious Freedom Act of 1998 for having engaged
in or tolerated particularly severe violations of religious freedom. Most
recently, on February 29, 2016, the Secretary of State re-designated Saudi
Arabia as a CPC, and announced a waiver of the sanction that accompany
designation as required in the important national interest of the United States pursuant to section 407 of the Act.[36]
The Transition from Fossil Fuel
to Green Energy
British
Petroleum estimated in 2014 that “the
earth has enough oil left for about 53 more years at current production
levels,” but “significantly more than 53 years of oil remaining if drilling
technologies can improve to the point that recovering the more difficult to
reach oil becomes economically feasible.”[37]
However,
future demand for oil is not only a function of its physical availability, it
is also a function of the speed by which the combustion engine is driven out of
use. The green energy revolution will evolve in two stages.
The First Stage
Here,
most of oil imports by major US rivals would end. Independence from
US-controlled oil must rank high on the national security priorities of big
oil-importing rivals of the US. When Saudi oil exports collapse, the al-Sauds’ oil revenues
will dwindle, Washington’s
protection will disappear, Wahhabi indoctrination and proselytization will falter, and terror will be dealt a severe blow. It is only then that the war
against Wahhabi terror will be won. The countries leading the renewable energy
revolution will add a greater contribution to world peace than all the raids on
terrorists’ hideouts by the world’s armies and air forces.
Which Country Will Lead the Drive Towards Electric Cars?
China
will lead the world in the drive towards electric cars. Beijing is Washington’s
main geo-political rival. The two are locked in heated competition for global
control over the import and exports of raw material and finished products.
China’s
entire oil imports are burned in the
transport sector. Eliminating the internal
combustion engine would free China from US-controlled oil imports.[38]
It will enhance China’s economic and military security. In 2007, according to International Energy
Agency statistics (IEA), out of a total oil demand of 7.609 million bbl./day,
China imported 3.873 million bbl./day (the rest was produced domestically).
Significantly, the volume of oil imports that year was almost identical to the 3.844 million bbl./day, which
China used to fuel its transportation fleet,[39]
around 59 million vehicles.[40]
In 2009,
according to IEA, out of a total oil demand of 8.046 million bbl./day, China
imported 4.246 million bbl./day (the rest was produced domestically). The
volume of the imported oil that year was, again, almost identical to the 4.254
million bbl./day, which was used to fuel China’s
transportation vehicles[41] of around 76 million vehicles in 2009.[42]
In 2017,
according to US Energy Information Administration (EIA), out of a total demand
of 13.2 million bbl./day, China imported 8.4 million bbl./day;[43]
around double the 2009 level (the rest was produced domestically). The number
of vehicles in China in 2017 was 217 million, or 285 percent the 2009 level.[44]
In the absence of sectorial oil consumption data for 2017, it is reasonable to
assume that the degree of correlation in 2007 and 2009 between Chinese oil
imports and vehicle consumption of oil had also prevailed in 2017. The
disproportionate increase between 2009 and 2017 in oil imports (200 percent)
and the number of vehicles (285 percent) may be attributed to the fact that
post-2009, the internal combustion engine became more fuel efficient than
earlier models.[45]
To stimulate
demand for the electric vehicle, the Chinese
government began a subsidies program in 2010, with
government entities required to buy only electric.[46] From a modest beginning in 2014, China
accounted in 2016, for more than 40 percent of the 753,000 electric vehicles
sold worldwide.[47]
In 2017, China sold 777,000 electric vehicles.[48]
In 2018 the number jumped to 1.3
million,[49]
representing 62 percent of the 2.1 million in global electric car sales in that
year.[50]
In 2018, China sold 23.71 million passenger cars and 4.37 million commercial
vehicles.[51]
Morgan
Stanley Research forecasts that China will increase the sale of
electric vehicles from 1.7 million units in 2020 to 4.3 million units in 2025,
to 9.4 million units in 2030, to 17.3 million units in 2035, to 25.1 million
units in 2040, and to 31.4 million units in 2045.[52]
China plans to build 800,000 charging points, including
100,000 in 2017.[53] It will
build by 2020 a nationwide charging-station network to power 5 million electric
vehicles along 14,000 kilometers of highways with an average spacing of 48.6
kilometers.[54] In Beijing and Shanghai,
a charging facility can already be found within a radius of less than 5
kilometers.[55]
China’s
Deputy Industry Minister stated in September 2017, that the ministry has begun
"research on formulating a timetable to stop production and sales of
traditional energy vehicles."[56]
China
“already produces nearly two-thirds of the world’s lithium-ion batteries ...
and controls most of the world’s lithium processing facilities.”[57] Bain Consulting has “predicted that penetration of battery-powered vehicles will reach 18 percent
in 2025, and likely top 70 percent by 2040.”[58]
As the transformation evolves, China’s oil imports will
progressively decline until they disappear. This assumes that China’s domestic
oil production would be sufficient to meetthe country’s non-transportation
demand. China was a net exporter of oil in 1990 (452,400 bbl./day) and that in
1995, it became a net importer (280,600 bbl./day).[59]
China
generates all of its electricity needs from non-oil sources (coal, nuclear, hydro, wind, solar). China has the world’s most
hydropower capacity.[60]
It is the world’s leader in wind[61]
and solar[62]
energy generation. Coal, with 72% (in 2015), however, remains China’s largest
source of electricity generation.[63] The New York Times reported in 2017 that
Chinese corporations are building or planning to build more than 700 of the
1,600 new coal plants at home and around the world.[64]
When Are America’s Oil Importing Competitors Likely to Electrify their
Transportation Fleets?
America’s
oil importing competitors are likely to electrify their transportation fleets
between 2030 and 2040. In Norway all new
passenger cars and vans sold after 2025 should be zero-emission vehicles.[65] India plans by 2030 to sell only electric cars.[66] Similarly, by 2030, Germany,[67]
Denmark,[68]
and Holland[69]
will sell only non-petrol motor-vehicles. France will follow suit by 2040.[70]
The UK will end combustion engine sales by 2040.[71]
Japan had in 2016 more electric car charge points than petrol stations.[72]
A
Bank of America study in October 2017, expected electric vehicles to “reach a
global share of 34 per cent in 2030 and 90 per cent in 2050.”[73] An International Monetary Fund working paper dated
May 22, 2017, suggests that "oil as the main fuel for
transportation could have a much shorter life span left than commonly assumed.
In the fast adoption scenario, oil prices could converge to the level of coal
prices, about $15 per barrel in 2015 prices by the early 2040s."
The Transformation of Energy Geopolitics from
Oil to Lithium
The US
Geographical Survey (USGS) stated in its Mineral Commodity Summaries of 2018 that:
“Lithium supply security has become a top
priority for technology companies in the United States and Asia ... to ensure a
reliable, diversified supply of lithium for battery suppliers and vehicle
manufacturers.”[74]
Most lithium reserves are in Chile (7.5 million
tons), China (3.2 million tons), Australia (2,700 million tons), and Argentina
(2 million tons), with a very modest reserves in the US of 35,000 tons.[75]
In 2017, the world’s top lithium producers
were: Australia (18,700 tons), Chile (14,100 tons), China (3,000 tons),
Argentina (5,500 tons).[76]
What Saudi Arabia is for oil, Chile is for lithium. It may be predicted
that Chile will take the place of Saudi Arabia as Washington’s centre piece in
energy geopolitical strategy.
The Second Stage
Greening the environment requires abandoning not only oil (3 percent of global electricity generation in 2015);[77] but, also, coal (39 percent of
global electricity generation in 2015),[78]
and natural gas (24 percent of global electricity generation in 2014).[79]
Multiple decades will elapse before renewable energy is allowed to
replace coal and natural gas. Saudi
Arabia's Minister of Energy, said on October 24, 2017, “Energy demand is
expected to rise by about 45 percent by the year 2050... [renewables] will only
account for about 10 percent of the primary energy demand, and this is despite
a very rapid growth rate ... Petroleum, natural gas, and coal will continue to
account for about 75 percent of the supply of energy by 2050.[80}
President Trump’s Assault on Environmental
Regulations
President
Trump rolled back 23 environmental rules in his first 100 days in office.[81]
While relieving companies from environmental protection regulations increases
corporate profits and stock values, it ignores accounting for the cost of
preserving America’s environmental capital. For example, revoking the rule that
prevents coal mining companies from dumping debris into
local streams (February 16, 2017), or ending
the ban on a potentially harmful insecticide (March
29, 2017) will burden future generations with
cleaning the polluted river or reclaiming the contaminated soil left.[82]
The Trump administration issued its
notification that the US intends to withdraw from the 2015 Paris Climate
Agreement on August 4, 2017.[83]America is the only country in the world
outside the Paris landmark agreement, while 197 countries are in support of the
Agreement.[84] Measures adopted
on December 15, 2018, by the UN Climate Change Conference in Katowice, Poland,
attended by 196 countries to make the Paris climate pact operational in 2020,
were objected to by Kuwait, Russia, Saudi Arabia, and the United States.[85]
In the middle of 2017, the US Interior Secretary directed the Bureau of
Land Management to ramp up sales of oil and gas leases on federal land in order
to increase oil production on federal lands.[86]
In a sign of what’s to come, “Trump Digs Coal” placards are a common sight in
Trump’s rallies in America’s coal states. On a visit to West Virginia on August 21, 2018, Mr. Trump
declared: "We love clean beautiful, West Virginia coal ... That's
indestructible stuff ... In times of war, in times of conflict, you can blow up
those windmills, ... You can blow up those
pipelines ... You can do a lot of things to those solar panels ... But you know
what you can't hurt? Coal."[87] Speaking at a National Republican Congressional Committee dinner on
April 2, 2019, Mr. Trump went as far as declaring that “wind farms cause cancer.”[88] In an interview on October 15,
2018, with CBS's program 60 Minutes, he accused climate change scientists of having a
"political agenda."[89]
He doubted whether humans were responsible for earth’s rising temperatures,
adding that temperatures "could very well go back," and that he does
not want “to give trillions and trillions of dollars” and “lose millions and
millions of jobs.”[90] Mr. Trump is dismissive of climate change science, oblivious to the potential
trillions and trillions in export revenues, and the millions of jobs the new technologies
would provide. To stand in the way of human progress is
futile. Had it not been for the motor car and the light bulb, we would still be
riding horses and using the kerosene lamp.
Resistance to Writing-off
Trillions of Dollars
Standing
in the way of the growth of renewable energy is investors’ opposition to
writing-off trillions of dollars on the balance sheets of the oil, gas, and
coal-burning power plants, and the myriad of supporting industries.
Oil Companies’ Write-offs
Bank
balance sheets provide a good estimate of the magnitude of oil companies’ write-offs. Excluding short-term loans,
investor owned oil industry, according to the Bank for International
Settlements, had bonds outstanding in 2014 in the amount of $1.4 trillion and
$1.6 trillion in syndicated loans, excluding account repayments or loans that
were never drawn.[91] Both numbers are likely
to have increased since 2014, in part due to the boom in shale oil and gas
extraction in the US.[92]
As for equities, the world’s top ten oil and gas companies are estimated
to have had a combined equity of $2 trillion in 2015,[93]
making the aggregate financial exposure by banks and investors to the oil and
gas publically owned companies, $5 trillion.
Additionally,
it is necessary to add the write-offs of the hundreds of medium and small size
investor owned oil and gas companies, and the independent oilfield and drilling
service companies, pipeline companies, crude oil and product tankers and fuel
delivery trucking companies, refining companies, and owners of the estimated 600,000 gasoline stations worldwide.[94]
When these are accounted for, the total would likely more than double.
To put
the figure of $10 trillion in perspective, if the write-off period is 20 years,
the annual write-off amount would be $500 billion. If the period is 100 years,
the annual write-off would still be a massive $100 billion.
Moreover,
abandoning government owned oil and gas operations in, among others, OPEC states
could cost trillions of dollars more. This may explain Kuwait, Saudi
Arabia, and Russia’s rejection of measures adopted on December 15,
2018, by the UN Climate Change Conference in Katowice, Poland.
Motor Vehicle Manufacturing
Companies’ Write-offs
Notwithstanding
opposition to green energy by bankers, investors, and governments, consumers’
preference for the electric car will render the combustion engine obsolete. The
shift is expected between 2030 and 2040.
It may be
guesstimated that the cost of writing-off partially depreciated car factories
could reach a trillion dollars.[95]
The guesstimate may double as the suppliers of engine parts, robotic assembly
lines, and repair garages shift from manufacturing and repairing petrol engines
to making and repairing batteries and electric engines.
In addition to writing-off investments in the oil and auto industries, the cost of building several million electricity charging points to replace petrol stations' pumps should be accounted for.
Fossil Fuel Power Plants, Coal
Mines, and Natural Gas Fields Write-offs
Fossil
fuel power plants generated two-thirds of world’s electricity. De-commissioning
power plants will evolve very slowly over a century, possibly longer, for the following
reasons:
· The size of the write-offs will be enormous, if
the plants are abandoned before the end of their useful life. Coal and gas
power plants are typically depreciated over fifty years or so.
· While wind turbine and solar panel manufacturers
have achieved impressive growth during the past thirty years, huge additional
renewable energy capacity is still needed.[96] In 2017, there were 1,600 coal plants under construction or in the
planning stage.[97]
The new plants could still be operational by around 2069, or longer.
· De-commissioning fossil fuel power plants will result
in the abandonment of investments in coal mines and natural gas fields before
their full depletion. Aditionally, investments in railroad cars, barges, ships, and liquefied
natural gas pipelines and tankers.will be abandoned
The Aggregate Cost
When the
cost of job losses and re-training of millions of workers in the affected
industries are added to the cost of abandoning the undepreciated oil, gas,
coal, and associated industries’ assets, the total could reach $20 trillion, may be
more, much more.
In the UK alone, reducing greenhouse gas emissions
to net zero could cost £1 trillion, according to Chancellor of the Exchequer, Philip Hammond. [98] President Trump claimed in a speech at a rally in El Paso, Texas on February 13, 2019, that the Green New Deal to transition to 100% green energy in the US, propsed by Representative Alexandria Ocasio-Cortez and Senator Edward Markey on Frbruary 7, 2019, could cost $100 trillion.
The Gargantuan Cost of Inaction
Since 1950, global
demand for oil increased from 10 million bbl./day in 1950, to 55 million
bbl./day in 1975, 75 million bbl./day in 2000, and 100 million bbl./day
in 2018. Even if the probability of human responsibility for
global warming is infinitesimally small, the catastrophic cost of inaction must
compel the transition to renewable energy. Global warming causes illnesses from polluted air and oceans, higher death rates
from more frequent harsher weather, damage to
property and infrastructure,
rising sea levels, drowning of coastal cities, loss of agricultural land, mass migration and security threats, lower
productivity and GDP growth. Productivity loss alone is
estimated to be £1.5 trillion per annum.[99]
Had politicians, investors, executives, and lobbyists in the oil, auto, and banking industries in the United States and the rest of the developed world started promoting the electric car fifty years ago, following the oil embargo in 1973, for example, the
size of the
asset write-offs today would be a fraction of the
trillions of dollars that must be written off betwee 2030 and 2040 and beyond. Had the demand for petrol
cars not skyrocketed since
1973, greening the environment could have been achieved. Had oil not been
a factor following the terror attacks of 9/11, the occupation of Iraq by the G.W. Bush
administration and the empowerment of Iran and the
Shi'ite/Sunni wars that killed and injured millions and devastated Iraq and Syria might not have happened.
To put the price of saving the environment in
perspective, however, the cost of saving bankrupt banks
and companies in the US alone, in the aftermath of the 2008 financial meltdown,
exceeded $22 trillion.[100] Indeed, saving the environment must be far more important than saving bankrupt banks.
Preparing for the Looming Write-offs
The Bank of England has taken the
lead in dealing with the financial challenge of the transition to green energy.
It released on October 15, 2018, a policy
proposal document requiring British banks and insurance companies to develop credible plans for an
orderly market transition to a low-carbon world, including possibly holding
more capital.[101]
The Australian Prudential
Regulatory Authority (APRA) said in a statement on March 20, 2019 that, “it
expects lenders and insurers to include climate as one of the material risks
they manage to ensure they meet obligations to depositors and policy holders.
These risks are material, foreseeable and actionable now,” the statement
continued.[102]
The
Government of Norway proposed on March 8, 2019, “to exclude companies
classified as exploration and production companies within the energy sector
from the Government Pension Fund Global.”[103]
Norway’s Minister of Finance said: “The Fund should be able to participate in
the growth renewable energy.”[104]
The Shape of a Post-Oil Middle East - The Economic Effect
Within twenty to thirty years, between 2030/2040, possibly 2050, the sale
of petrol vehicles in most of Asia, Europe and other parts of the world will
have stopped. When this happens, two thirds of the global demand for oil will disappear and GCC oil exports will be reduced to a trickle.
As GCC oil revenues vanish, the transformation from economies dependent mainly
on oil revenues to non-oil based existence will bring catastrophe. Gross domestic product will collapse to a fraction of the golden oil-export days. The great majority of the 15 million expatriate workers, representing half of the aggregate population in GCC cities and towns, would return to their countries of origin. They will leave behind over-built cities during the previous fifty boom years to accommodate as many, if not more, expatriate workers in cities like Riyadh and Dhahran than Saudi nationals and, in the likes of Doha, Qatar, and Abu Dhabi, UAE, 10
times as many foreign workers as Qatari or Emarati nationals. The departing workers will
leave behind ghost towns, complete with over-capacity airports, harbors,
telecommunication systems, road networks, schools, hospitals, and water
and public utility facilities, etc. Suffering from lack of funds and technicians for proper maintenance in the blazing sun of the Arabian desert, the infrastructure would irreprably deteriorate. Millions of empty dwellings mean massive losses in real estate values. Desertification would ultimately restore to the desert its pre-oil millennia-old condition.
The Shape of a Post-Oil Middle East - The Political Effect
The political transformation would be even more serious. Without the oil weapon, Washington would abandon the Arabian Peninsula. Without US protection, the oil royals will be left on their own to face hostile and far more powerful neighbours, especially Iran and Turkey. With their far bigger populations, greater diversified economies, and stronger militaries,
the US and its allies would befriend Iran and Turkey and ignore the Arabian Peninsula.
There
would be four powers vying for influence in a post-oil Middle East: Sunni
Turkey, a block of Sunni Arab states, Jewish Israel, and a block of
Shi’ites in Iran plus certain Arab states and communities. There can be
as many alliance
scenarios as the mind can conjure. With help from its Western protectors, Israel’s security will determine the politics and shape of the post-oil map. Sunnis
and Shi’ites would remain in an almost constant state of war. Arab Sunni states
would support
co-religionist Sunni Turkey against the block of Shi’ite Persians and Arabs. Alliances could also be struck
along ethnic lines. Arabs and
Persians have had a long history of wars before and after Islam. Turks and Persians fought
each other when both were Sunnis as well as after Persia was converted to Shi’ism
by Shah Ismail (1501-1524). These wars would eventually cost GCC states the monetary reserves of the golden years.
The shape of a post-oil Middle East deserves a dedicated book.
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[11] OPEC’s other members are: Algeria, Angola,
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[15] Japan, Greece, India, Italy, South Korea,
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http://www.globalsecurity.org/military/facility/udeid.htm
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[31] Military Bases.com. “Kuwait.”
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9, 2014).
https://www.washingtonpost.com/world/national-security/in-the-uae-the-united-states-has-a-quiet-potent-ally-nicknamed-little-sparta/2014/11/08/3fc6a50c-643a-11e4-836c-83bc4f26eb67_story.html?utm_term=.1e23ef7eb539
[33]
Theodoric
Meyer, Lorraine Woellert, and Marianne Levine, “Diplomatic crisis
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18, 2018).
https://www.politico.eu/article/jamal-khashoggi-diplomatic-crisis-spotlights-saudi-arabias-spending-in-washington/
[34] Patrick
Cockburn, “How Barack Obama turned his back
on Saudi Arabia and its Sunni allies,” The
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2016).
http://www.independent.co.uk/news/world/middle-east/barack-obama-saudi-arabia-us-foreign-policy-syria-jihadism-isis-a6927646.html
[35] Goldberg,
“The Obama Doctrine,” The Atlantic, (April 2016 Issue).
https://www.theatlantic.com/magazine/archive/2016/04/the-obama-doctrine/471525/
[36] US
Department of State, “International Religious Freedom Report for 2015, Saudi Arabia.”
[37] Ryan
McQueeney, “How Much Oil Is Left,” Zacks, (December 27, 2017).
https://www.zacks.com/stock/news/287141/how-much-oil-is-left-in-the-earth
[38] Alanna Petroff, “These countries want to ban gas and diesel cars,” CNN, (September 11, 2017).
https://money.cnn.com/2017/09/11/autos/countries-banning-diesel-gas-cars/index.html
[39] “Oil and Gas Security, Emergency Response of IEA
Countries, People’s Republic of China,” International
Energy Agency (IEA), (2012).
https://www.iea.org/publications/freepublications/publication/China_2012.pdf
[40] Vehicle population in China from 2007 to
2017, Statista.
https://www.statista.com/statistics/285306/number-of-car-owners-in-china/
[41] “Oil and Gas Security, Emergency Response of IEA
Countries, People’s Republic of China,” International Energy
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[42] “China’s Auto Fleet Expands to 154 Million
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https://www.eia.gov/todayinenergy/detail.php?id=34812
[44] Vehicle population in China from 2007 to 2017
(in millions), Statista.
[45] The disproportionate change in the number of vehicles
and oil demand is due primarily to the combustion engine’s
improved efficiency. Global demand for oil between 1973 and 2017 increased by
75% (from 56 million bbl./day to 98 million bbl./day). Between 1976 and 2016, the estimated number
of vehicles in the world almost quadrupled (from around 342 million to around 1.32
billion):
Andrew Chesterton, “How many cars are there in the world?,” CarsGuide, (August 6, 2018).
https://www.carsguide.com.au/car-advice/how-many-cars-are-there-in-the-world-70629
[46] Evelyn
Cheng, “China's multibillion-dollar
electric car companies are heading for a make-or-break moment,” CNBC, (December 17, 2018).
https://www.cnbc.com/2018/12/17/china-electric-car-companies-are-heading-for-a-make-or-break-moment.html
[47] Sherisse Pham, “China wants to ban gas and diesel cars,” CNN, (September 11, 2017).
https://money.cnn.com/2017/09/11/news/china-gas-electric-car-ban/index.html
[48] g, and you have a
lot of money!,".. 2019, prices
down. titution, balance to Fitchburg the
French Mandate.te. lgeria,Mark Kane, “777,000 Plug-In Electric Vehicles Were Sold in China in 2017, Including
600,000 Cars,” INSIDEEVs.com,
(February 13, 2018).
https://insideevs.com/777000-plug-in-vehicles-were-sold-in-china-in-2017-including-600000-cars/
[49] David Reid, “China’s electric vehicle sales will continue boom despite subsidy cuts,
Fitch says,” CNBC, (April 8, 2019).
https://www.cnbc.com/2019/04/08/fitch-says-chinese-electric-vehicle-sales-to-boom-despite-subsidy-cuts.html
[50] Roland Irle, “Global EV Sales for 2018 –
Final Results,” EV-volumes.com.
http://www.ev-volumes.com/country/total-world-plug-in-vehicle-volumes/
[51] “Passenger and
commercial vehicle sales in China from 2009 to February 2019,” Statista.
https://www.statista.com/statistics/233743/vehicle-sales-in-china/
[52] Evelyn Cheng, “China’s auto sales slide may be obscuring a demand shift in the
industry’s largest market,” CNBC, (April 18, 2019).
https://www.cnbc.com/2019/04/18/chinas-auto-sales-slide-may-be-obscuring-a-demand-shift.html
[53] “China to build more charging points for
electric vehicles,” Chinadaily,
(February 10, 2017).
http://www.chinadaily.com.cn/business/motoring/2017-02/10/content_28160372.htm
[56] Bred Jones,
“China is Working on a Timetable
to Ban the Production and Sale of Non-Electric Cars,” Futurism, (September 11, 2017).
https://futurism.com/china-is-working-on-a-timetable-to-ban-the-production-and-sale-of-non-electric-cars/
[57] Ernest
Scheyder, “United States sets sights on
China in new electric vehicle push,” Reuters,
(April 5, 2019).
https://uk.reuters.com/article/us-usa-lithium-exclusive/exclusive-united-states-sets-sights-on-china-in-new-electric-vehicle-push-idUKKCN1RH1TU
[58] Evelyn
Cheng, “China's multibillion-dollar
electric car companies are heading for a make-or-break moment,” CNBC, (December 17, 2018).
[59] “Oil and Gas Security, Emergency Response of IEA
Countries, People’s Republic of China,”
urthermorehe Middle Easti and other Arab
Sunni states buy American arms by the ton. en 2030 and 20140ndonment of natural
gas n International Energy Agency (IEA), (2012).
[60] Hydropower Status Report, Sector Trends and Insight, International Hydropower Association,
(2018).
https://www.hydropower.org/sites/default/files/publications-docs/iha_2018_hydropower_status_report_4.pdf
[61] Alex Pashley, “China overtakes EU to become global wind power leader,” The Guardian, (February 11, 2016).
https://www.theguardian.com/environment/2016/feb/11/china-overtakes-eu-to-become-global-wind-power-leader
[62] Feifei Shen, “China Outstrips Germany in Solar Capacity After Record Additions,” Renewable Energy World, (February 8,
2016).
https://www.renewableenergyworld.com/articles/2016/02/china-outstrips-germany-in-solar-capacity-after-record-additions.html
[63] Chinese
coal-fired electricity generation expected to flatten as mix shifts to
renewables,” US Energy Information
Administration (eia), (September 27, 2017).
https://www.eia.gov/todayinenergy/detail.php?id=33092
[64] Hiroko
Tabuchi, “As Beijing Joins Climate Fight, Chinese Companies Build Coal Plants,” The New York Times, (July 1, 2017).
https://www.nytimes.com/2017/07/01/climate/china-energy-companies-coal-plants-climate-change.html
[65] Alanna Petroff, “These countries want to ditch gas and diesel cars,” CNN, (July 26, 2017).
https://money.cnn.com/2017/07/26/autos/countries-that-are-banning-gas-cars-for-electric/index.html
[66] Jackie Wattles, “India to sell only electric cars by 2030,” CNN, (June 3, 2017).
https://money.cnn.com/2017/06/03/technology/future/india-electric-cars/index.html
[67] Oscar Willims, “German Lawmakers Vote To Ban Petrol And Diesel Cars By 2030,” Huffington Post, (October 13, 2016).
https://www.huffingtonpost.co.uk/entry/german-lawmakers-vote-to-ban-petrol-and-diesel-cars-by-2030_uk_57fcee9ae4b01fa2b9055c11
[68] “Stop selling new petrol and diesel-fuelled
cars by 2030: Danish government,” The
Local DK, (October 4, 2018).
https://www.thelocal.dk/20181004/stop-selling-new-petrol-and-diesel-fuelled-cars-by-2030-danish-government
[69] Fred
Lambert, “The Dutch government confirms plan to ban new petrol and diesel cars
by 2030,”
Electrek, (October 10, 2017).
https://electrek.co/2017/10/10/netherlands-dutch-ban-petrol-diesel-cars-2030-electric-cars/
[70] “France to ban sales of petrol and diesel cars
by 2040,” The Guardian, (July 6,
2017).
https://www.theguardian.com/business/2017/jul/06/france-ban-petrol-diesel-cars-2040-emmanuel-macron-volvo
[71] Anushka Athsana and Matthew Taylor, “Britain to ban sale of all diesel and petrol
cars and vans from 2040,” The Guardian,
(July 25, 2017).
https://www.theguardian.com/politics/2017/jul/25/britain-to-ban-sale-of-all-diesel-and-petrol-cars-and-vans-from-2040
[72] Justin McCurry, “Japan now has more electric car charge points than petrol stations,” The Guardian, (May 10, 2016).
https://www.theguardian.com/world/2016/may/10/japan-electric-car-charge-points-petrol-stations
[73] Josh Ye, “China to account for half of global electric vehicle sales until 2030,” South China Morning Post, (October 17,
2017).
https://www.scmp.com/business/global-economy/article/2115694/china-account-half-global-electric-vehicle-sales-until-2030
[74] “Mineral Commodity Summaries,” U.S. Department of the
Interior, U.S. Geographical Survey, (January 31, 2018), PP. 98-99.
https://minerals.usgs.gov/minerals/pubs/mcs/2018/mcs2018.pdf
[75] Ibid. g, and you have a
lot of money!,".. 2019, prices
down. titution, balance to Fitchburg the
French Mandate.te. lgeria,
[77] “Electricity production from oil sources in
2015 (% of total),” World Bank Group.
https://data.worldbank.org/indicator/EG.ELC.PETR.ZS
[78] “Electricity production from coal sources in
2015 (% of total),” World Bank Group.
https://data.worldbank.org/indicator/EG.ELC.COAL.ZS
[79] “Electricity production from oil, gas, and
coal resources sources in 2014 (% of total),” World Bank Group.
https://data.worldbank.org/indicator/EG.ELC.FOSL.ZS
[80] Anmar
Frangoul, “Saudi
Minister Says Global Energy Demand Expected to Jump 45% by 2050,” CNBC, (October 25, 2017).
https://www.cnbc.com/2017/10/24/saudi-minister-says-global-energy-demand-expected-to-jump-45-percent-by-2050.html
[81] Nadja
Popovich and Tatiana Schlossberg, “23 Environmental Rules Rolled Back in Trump’s
First 100 Days,” The New York Times, (May 2, 2017).
https://www.nytimes.com/interactive/2017/05/02/climate/environmental-rules-reversed-trump-100-days.html
[83] “US Notifies UN of Paris Climate Deal
Pullout,” BBC, (August 5,
2017).
http://www.bbc.co.uk/news/world-us-canada-40829987
[84] Fiona
Harvey, “Syria
Signs Paris Climate Agreement and Leaves US Isolated,” The Guardian, November 7, 2017.
https://www.theguardian.com/environment/2017/nov/07/syria-signs-paris-climate-agreement-and-leaves-us-isolated
[85] Matt McGrath, “Climate change: COP24 deal to bring Paris
pact to life, BBC, (December 15,
2018).
https://www.bbc.co.uk/news/science-environment-46582025
[86] Jim Lyons,
“The
Rush to Develop Oil and Gas We Don’t Need,” The New
York Times, (August 28, 2017).
https://www.nytimes.com/2017/08/28/opinion/trump-oil-public-lands.html?em_pos=small&emc=edit_ty_20170828&nl=opinion-today&nl_art=4&nlid=18135507&ref=headline&te=1
[87] John Siciliano, “Trump uses dramatic vision of exploding windmills to tout coal's
reliability,” Washington Examiner,
(August 22, 2018).
https://www.washingtonexaminer.com/policy/energy/trump-uses-dramatic-vision-of-exploding-wind-mills-to-tout-coals-reliability
[88] Ledyard King, “Do wind farms cause cancer? Some claims Trump made about the industry are
just hot air,” USA Today, (April 3,
2019).
https://eu.usatoday.com/story/news/politics/2019/04/03/cancer-causing-wind-turbines-president-donald-trump-claim-blown-away/3352175002/
[89] “Trump: Climate change scientists have
'political agenda',” BBC, (October 15, 2018).
https://www.bbc.co.uk/news/world-us-canada-45859325
[91] Phillip
Inman and Rob Davies, “The Five Fears
Stalking the Global Banking Industry,” The Guardian, (February 10, 2016).
https://www.theguardian.com/business/2016/feb/10/banking-shares-under-pressure-as-investors-fear-effects-of-global-downturn
[93] Investopedia, “World’s Top 10 Oil Companies,” (January 7, 2015).
http://www.investopedia.com/articles/personal-finance/010715/worlds-top-10-oil-companies.asp
[94] According to the US Census Bureau, there
were 114,533 gas stations in the US at the end of 2012.
Paul Ausick,
“Why Are There 115,000 (or 150,000) Gas Stations in America?,” 247 Wall St. (May 22, 2014).
https://247wallst.com/economy/2014/05/22/why-are-there-115000-or-150000-gas-stations-in-america/
it may be extrapolated that the number of petrol stations
in the world is around 636,294 (114,533/0.18).
[95] Based on the 12/31/2018, balances of fixed assets and
inventories of General Motors ($92 billion) and Ford Motor Company ($77
billion), and on car sales statistics of the two companies [GM (8.8 million
units) and Ford (6 million units)] out of worldwide car sales of 78.7 million],
as posted on Statista.
https://www.statista.com/statistics/200002/international-car-sales-since-1990/
[97] Hiroko
Tabuchi, “As Beijing Joins Climate Fight, Chinese Companies Build Coal Plants,” The New York Times, (July 1, 2017).
https://www.nytimes.com/2017/07/01/climate/china-energy-companies-coal-plants-climate-change.html
[98] Seth Jacobson, “Cutting UK emissions to net zero would cost £1tn, says Hammond,” The
Guardian, (June 6, 2019).
https://www.theguardian.com/environment/2019/jun/06/cutting-uk-emissions-net-zero-cost-1tn-philip-hammond
[99] Ian Johnston, “Global warming set to cost the world economy £1.5 trillion by 2030 as it
becomes too hot to work,” The
Independent, (July 19, 2016).
https://www.independent.co.uk/environment/global-warming-climate-change-economic-effects-jobs-too-hot-to-work-india-china-a7143406.html
[100] The GAO
study states: “cumulative
output losses could exceed $13 trillion” (P. 17). Further, “Households
collectively lost about $9.1 trillion ... in part because of the decline in
home prices” (P. 21).
Financial
Regulatory Reform: Financial Crisis Losses and Potential Impacts of the
Dodd-Frank Act
US Government Accountability Office, (Released: February 14, 2013).
https://www.gao.gov/products/GAO-13-180
[101] Huw Jones,
“Banks, insurers must have
credible plans for climate change: BoE,” Reuters,
(October 15, 2018).
https://uk.reuters.com/article/us-britain-boe-climatechange/banks-insurers-must-have-credible-plans-for-climate-change-boe-idUKKCN1MP0YW
[102] “Australia bank regulator expects climate to
be included in risk management,” Reuters,
(March 20, 2019).
https://www.reuters.com/article/us-australia-banks-climatechange-idUSKCN1R10ZG
[103] Press
release, “Excludes exploration and
production companies from the Government Pension Fund Global,” Ministry of Finance of Norway, (March 8,
2019).
https://www.regjeringen.no/en/aktuelt/excludes-exploration-and-production-companies-from-the-government-pension-fund-global/id2631707/
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