« Have a Koch and a Smile | Main | Oil Prices Oil Lies »

April 26, 2006

The future is here?

By: Silvio

One of the strongest pillars of the (current) Western dominance of the globe is its easy and relatively cheap access to resources, primarily to fossil fuels whose energy has been used to boost a technological, military, social and economical growth never seen before in human history.

If you look closely at this "pillar", thou, you'll notice that much of it has been and still is built using barrels of Saudi oil: Riyadh controls 23% of world oil reserves and provides the world with almost 15% of global oil supply - most of which (about 70%), by the way, is the light crude, a kind of oil much easier to transport (and thus more precious) than the heavy one.

Therefore, despite the fact that an increasing number of experts are questioning Arabian reserves and Aramco capacity to offset decline of existing fields, it's quite clear that Saudi Arabia has to be a very close "friend" of every country that needs (a lot of) oil to fuel its economy - and to keep society united around the new religion of infinite growth.

The strongest friend to the House of Saud, the ruling dynasty of this strict and quite despotic monarchy, has always been the United States - and in particular the Bush family (read here, too), a family that, just to cite one minor thing, fought a war mainly to protect Saudi Arabia from Iraq.

But, let's be honest - and a bit cynical: the United States is an oil-dependent nation that has to have a strong relationship with the oil-rich Saudis. Period.

So, it is quite of a surprise to read news like this:

China and Saudi Arabia have signed defense and security agreements that strengthened the strategic relations between the two Asian powers.

The accords were signed during the visit by Chinese President Hu Jintao to Riyad over the weekend, Middle East Newsline reported. Hu, arriving on April 22, has sought to offer Chinese weapons and technology in exchange for greater access to the Saudi crude oil market.


or this:

Saudi Arabia is considering setting up a strategic oil reserve in China which could be used by Beijing in case of emergency.

[...]

The proposal could see a strategic oil reserve set up in China supplied by the Saudis, in addition to the oil Saudi Arabia exports to the country for its daily needs. The reserve would be in a coastal city in south-east China, a Chinese official said. He said Riyadh and Beijing were discussing the plan's feasibility and how to carry it out.


What is going on? China and Saudi Arabia established diplomatic relations in 1990 - just 16 years ago - and now they are signing security and economic cooperation agreements. So?

The truth is that in times of decreasing supplies of oil and decreasing ERoEI worldwide, what once was one of the U.S. backyards (the Arabian peninsula) is now getting quite crowded: and all these news are smaller or bigger signals that the world is going to live a strong (and probably painful) shift in power balance.

The players are placing their pieces: let's wait for the next move, be it on a chess board, or on a Xiangqi one.

Posted by Silvio at April 26, 2006 10:40 AM Category: Peak Oil