Energy Geopolitics – An Overview

Global oil prices have fallen sharply over the past seven months, leading to significant revenue shortfalls in many energy exporting nations however it has been seen as an opportunity for energy importing countries. From 2010 until mid-2014, world oil prices had been fairly stable, at around $110 a barrel. But since June prices have more than halved and has now dipped below $50 a barrel. This should translate into a strong rupee. However the rupee keeps on falling despite global decline in oil prices. What is the root cause of this problem? Who fixes the prices? If we cannot stop depreciating rupee what alternate avenues exist for us? India produces more than 10 lakh engineers in the world in various disciplines; cannot we do something?

Previously for thousands of years all energy needs were met only by coal, wood, dried cow dung etc and other natural process. Night lamps used castor oil. The entire economies of at least India and Oriental countries were dependent on agricultural products. Farming was done by bullocks. Transportation of goods was done in canals or horse drawn carts. The average speed of such transportation was around 25-35 kilometers, even thousands of miles sea travel was done by using coal or oil created by compressing coal. Economies were coal based economies. India was net exporter and energy sufficient.

With the discovery of oil which was controlled by British and US petroleum companies the third world was forced to shift to oil based economies from coal based economies. This was the only way that the amount spent on energy-transport, lighting, industry could be shifted to west from all other countries. For this first it was stated that coal and wood burning was polluting atmosphere. What was not told was that coal burning was there for thousands of year with no documented health effects. Oil was sold as pure clean energy. Once countries started using oil the pollution went through roof and many lung and heart diseases started emerging. This helped medical companies in selling more medicines. Agricultural energy was replaced with hydro electrical energy.

The basic question that we should ask first is how the price of oil is supposed to be fixed? Except the bore well cost oil costs nothing. It is a free national resource. It is extracted and distributed. Until 1973 the cost of oil was $13-$20 dollars a barrel. In those days oil extraction, distribution and wholesale was all done by single companies. But there was a catch. Any payment for oil had to be done in US dollars only. This way every country that wanted oil wanted dollars. US is the only country that produces dollars. More the dollars in demand better it is for American economy.

From 1971 multinational oil companies divided the oil business into extraction, transportation and distribution. Each separate entity added their own profit. This made oil prices jacked up by a factor of 3. 300% rise in oil prices, 300% rise in the dollar demand. This extra profit is not part of oil cost. But it is to make more money for the same companies by dividing their operations. Then entered speculation in oil trade. From the time the oil tanker leaves Middle East ports till it reaches New York or Houston in USA traders will take options on the tankers. This is like cricket betting or political betting. This jacks up oil prices by another $20 to $30 per barrel. At these prices the oil is offered to all third world countries. This speculation is the cause of rise of oil prices internationally. Whoever opposed this was treated as terrorist nations and world plunged into endless wars. Iraq demanded money for oil in Euros it was attacked. Iran created barter or gold based oil bourse it was about to be attacked. Similar was the fate of Libya.

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Indian Scenario

During 1971 war there was only private oil business in India. During the war the private oil companies refused to supply oil to Indian Army stating that there should be no war as war was bad to business. During that time oil companies were nationalized in India by Indira Gandhi. India made great leaps in developing oil refineries for Indian purposes. Indians specialize in oil refining suitable for Iranian crude oil. If pressure is kept on India for importing Saudi oil then we have to invest billions of dollars in modifying refineries which takes the petrol prices close to Rs 150 per liter.

Since 2000 India started privatizing oil industry. Although on surface it appeared local Indian private businessmen were setting up business now it is clear that foreign MNCs paid Indian companies to corner the oil blocks for exploitation so that they can make more money by selling Indian oil to Indians at international speculative prices.

Mangala Oil field in Rajasthan has more oil than Saudi Oil fields. But it was taken over by British Petroleum using Vedanta as a front company. All KG Basin gas production is taken over by the same British Petroleum using Reliance as front company. Though the transport costs within India are very less these companies refuse to sell at reduced cost to Indians insisting Indians have to pay at international prices as fixed in New York or London. Though it costs only $1.35 per BTU to supply natural gas from KG basin Reliance insists at paying $4.13 per BTU citing international pricing. The same process is used for oil shipped from Rajasthan to Indians. This is nothing but international robbery. To raise the prices Reliance reduced gas output from KG basin. During the 1971 war it was BP that refused to supply oil to Indian Army and that is why we nationalized the oil industry in India. But after 30 years BP was able to get hold of Indian natural resource both gas and oil and wanted to sell at excess costs so that they can make good of lost profits of past 30 years.

With so much dependence on oil still the average speeds we achieve in transportation sector is only 35-45 kilometers per hour. Not a significant improvement. But the huge raise in oil costs increased food prices, equipment prices, subsidies for domestic oil industry and agricultural input costs has made the life of the common man miserable by taking everything they earned and putting it into the pockets of oil companies.

It is the greed of these international private companies that is the root cause of rise in oil and natural gas prices. It is the same companies that killed every alternate energy production like solar, Energy from municipal waste, agricultural waste etc. India produces close to 1000000 engineers of various fields and capable to produce enough alternate energy sources that cost less than petrol or diesel, but still environmentally and ecologically friendly. We are the first country to create unlimited energy extraction from thorium, a safe cheap free energy source from sands of Indian coastal areas, and a good substitute for nuclear energy. But that research is being killed for expensive and dangerous nuclear energy as all the technology was to be imported by the west.

Young Indian engineers pioneered the techniques to create Organic Manure, Bio Fertilizer, Electricity and Compressed Methane to run cars instead of CNG using municipal waste, cattle and poultry waste and created employment in local communities for qualified engineers and other graduates. Why no one encourages this system?

We can set up two energy producing multi utility plants per month with that money and in one year 24 such multi utility units can be set up helping many farmers providing employment and creating own energy supply sources.

As members of GPSSI we request you to help us in helping our communities to create new clean energy, fertilizer, and compressed bio gas at every mandal level so that a change for better tomorrow can be created. With thousands of engineering college students working on alternate cheap energy sources it is time to look at our energy policy and as youth to take responsibility in creating new energy management systems rather than going in to much debt just for oil speculation or losing our hard earned money for enriching oil companies. So please join us in creating new clean green cheap energy sources and their application for us and our societies.

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