This weekend, our so-called leaders finally began using words like “crisis” to describe the oil-powered shotgun we Americans have stuck in our mouths. Many indications are that we’ve crossed the point of “peak oil” worldwide, and production is now diminishing by a couple percent per year. (According to the IEA, oil production is now in decline in 33 of the 48 largest oil-producing countries.) Couple this with skyrocketing global demand, and whether you think we have ten years or one hundred years of supply remaining, it means one thing for prices: an upward trendline until it is gone.
And we Americans, while good at many things, are not so good at planning ahead. So, we are likely to keep doing what we’ve been doing: driving our SUVs, full of cases of cheap Chinese goods, along our sprawly commuter routes from our well-lit downtown workplaces to our ARM-financed suburban homes until the music stops. I am not an economist, so I don’t know quite when the model “breaks” – but my hunch is that it’s closer to $100 a barrel than $200, and no matter where the breaking point is, we stand closer to it than we ever have.
I’d like to propose an idea that doesn’t seem to be in very broad circulation at the moment: the massively empowering effect of the imminent acceleration of wealth transfer from western societies to smaller Islamic nations such as Saudi Arabia, Iran, Iraq, UAE and Kuwait. Depending on the depth of supply, their relatively small populations will benefit much more than they have in decades past. This new wealth is capable of fueling unparalleled economic and technological growth and spawning major new social, economic and military powers on a scale never before found in that part of the world. We are now seeing new military glimmers of this in Iran, and it is not stoppable.
There’s been a great deal of chatter about China as the world’s “next superpower”, and it certainly has the population and potential to support it. But for this particular transfer of wealth, China is serving more as a moneychanger. Their own ballooning energy needs are forcing them to send their money (and ours) in the same direction – to the Middle East.
Well before the unstoppable price of oil wreaks havoc on the indolent American way of life, we will – like the addicts we are – continue to pay the going price for it until we drive off the economic cliff that supports our ability to do so. We have no other choice. Therefore, the incredible amounts of wealth that will find their way from Western economies into the coffers of sheikdoms and Islamic theocracies will make recently-bemoaned US oil company profits look like small change.
This could force the United States into an unenviable socioeconomic and military position. Having exported most of our wealth, and ultimately seeing the dollar’s back broken by the inevitable Euro-based oil trading we’re dying to prevent, we might no longer have the resources to outgun, outsmart, or outthink the rest of the world. Our ego will have some adjusting to do.
As a result of all this, more than one of these Islamic nations could ultimately emerge as nuclear and economic superpowers; several will become new centers of gravity for culture, the arts and technology; and their governments (elected or endowed) will wield more global power than they ever have before.
And how ironic would it be if this transfer of wealth enabled these nations and their young startup companies to engineer viable, sustainable ways out of the fossil fuel mess before the lights really do go out?