MichaelCD - The Blog.

The thoughts of Michael Cadwallader. Coffee loving, history book reading, Cheshire man.

Saturday, September 02, 2006

The Case For Energy Sovereignty.

As energy seems to be in the news at the moment, I thought I would return to the subject. Mostly, the focus from politicians, green campaigners and the BBC has been on climate change. But, the real reason we need to put energy on the top of the agenda is not climate change. No, our medium term security, and long term financial security depend on energy sovereignty. I will examine why, now.

There can be no denying that things have quietened down on the energy front recently. After all, look at the oil prices down at $70 dollars a barrel - a 4-month low. Well yes, that’s true, and I believe that oil prices could probably go down as far as $65. At that point everybody will take their eyes of the larger picture, and alternative energy will look a less attractive investment. But, this is not the time for a short-term outlook.

Whilst it's true that impressive new drilling technology may temporarily raise the production levels of current oil fields, it doesn’t negate the fact that large new fields are not being discovered. In fact, relying on technological improvements in drilling, amounts to little more than moving the deck chairs round on the Titanic. I am absolutely certain that oil will hit the $100 barrel mark within the next ten years, and when it does Britain will be in big, big trouble. W will explain why that is later. So, this is by far the most important reason that Britain must become Energy Sovereign. But there are other reasons for a policy of energy sovereignty, and they are far more pressing than peak oil.

For instance, this week I opened my e-mail up to be confronted by mounds of junk.It was one of those days when the whole world and his wife decides to send me adverts for Tramadol. Sorting through it, I found one proclaiming the coming age of Ethanol and the end of ‘American dependence on Mideast Oil Inc’. Wouldn’t that be nice, I dreamily said to myself. How many of our current problems are tied to oil? There certainly can be no doubt that oil, more specifically oil revenues, has propped up countless dictators and indirectly financed Islamic terrorists. It also allows left-wing ‘populists’, such as Hugo Chavez, to buy votes. Not to mention the danger that western citizens encounter working for oil companies in places such as Saudi Arabia and Nigeria.

A case-in-point is President Idriss Derby, from the large impoverished nation of Chad. Last week he abruptly ordered foreign oil companies to leave, with Petronas and Chevron ordered to get-out immediately. This caught oil executives and western diplomats totally by surprise, but it’s a symptom of the global movement towards defying the west. And, in almost all the cases, they have a new favourite customer - China.

So, there can be no doubt that energy sovereignty is desirable. Oil money goes directly into the hands of hostile regimes and dictators; it also finds its way indirectly into the hands of terrorists. Furthermore, if Iran gained de facto control of the Shiite areas in southern Iraq, it would then become more powerful than the Saudis in terms of reserves. The power they would then yield of the world’s market would be immense. That should worry everybody, unless, like Steve Sailer’s correspondent, you believe in the ‘pipe dream’ that tar sands will save us. It’s plain to see that the goal of extirpating ourselves from the Muslim world is desirable, but it’s achievable only if we actively move towards energy independence.

There is already a large movement of patriotic Americans advocating energy independence. Now is the time for a similar movement to arise in Britain, and time is of the essence. You may ask why do I think the situation is so desperate? Well, it’s very simple: the North Sea Oil peak and decline. I explained a few months ago how important North Sea Oil was to our balance of payments. Just this month its importance to the Chancellor was shown, when, thanks to a tax threshold rising, he received a record budget surplus. And, ironically, the very harbinger of future doom – high oil prices, has led to the profitability of North Sea oil remaining steady, even whilst reserves decline.

Then there is the negative impact on our trade deficit by population growth. In 1988 Britain imported over 30% of its foodstuffs. Since then the population has increased by over 3 million, and with the crazy immigration policies of the government it’s scheduled to hit 70 million by 2040. Added to this, our supermarkets continue to drive British companies out of business and source more and more food from abroad. So, with our exports of oil on the decline, we will rely solely on financial services to keep our trade deficit down. But, as this industry is subject to the whims of the international economy, a global recession or depression would hit that industry very hard. The likely scenario then would be that the Pound will follow the same path that the Dollar is on.

In conclusion, the benefits of energy sovereignty are enormous, but to see the benefits requires a long termist view that is sadly lacking from modern politics. The main question has to be, is energy sovereignty an obtainable goal? I believe it is. And I will examine our future options, at a later date.


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