Energy & Power:
Whither China?

John H. Black
Magnolia, Texas
presented to
The Raleigh Tavern Philosophical Society
April 24, 1997
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Power is defined in engineering as the rate of doing work; work requires the consumption of energy. The development of the control and use of energy is a subject of monumental significance to the US and virtually all other nations since the industrial revolution, and has resulted in the source of economic power.

This paper briefly describes the growing use of various forms of energy, and discusses the relationship between those countries that had and used energy sources, and their position of power in the world. The paper then goes on to speculate about the prospective shift in power from the West, or more specifically the US, to the Far East, or more particularly - China in light of assertions that the supply of oil has passed its peak.

1. Early Political Power

Ancient civilizations' energy consumption was largely limited to the use of muscle-power: man, oxen, water-buffalo, etc. Early ships were initially powered by oars in the eastern Mediterranean, although the ancient Chinese had sails much earlier. The Vikings made more extensive use of wind power to supplement the oars in their expansionary ventures around northern Europe. With wind as the primary means of propulsion, they were able to make long deep water voyages out of sight of land, including trans-Atlantic voyages to the maritime provinces of Canada, and the northern New England states.

As the European countries increased trade with the Orientals, the overland routes used by traders such as Marco Polo gradually gave way to wind-driven ships. These countries were thus able to transport more goods much faster than theretofore accomplished. Those countries with access to substantial forests could build more ships than those without such access. Power shifted from the relatively tree-deficient eastern Mediterranean region to countries further west and north, such as Spain, Portugal, France, Holland and Great Britain.

2. Early Energy Consumers

With the development of the steam engine in Europe in the late 18th century, came the ability to do and make things at rates previously not contemplated. Industries sprouted up in those regions close to abundant and readily accessible sources of energy- coal - that was used to fire the steam engines. Initially, this occurred in parts of England, Scotland and Germany, but the vast reserves of coal in the western Appalachian region of the US soon propelled the US to the forefront of industrial development. A steam engine was mounted on a wheeled platform by Stevenson in England; his "Rocket" as it was called, was then set on a pair of rails connecting the northern English coal towns of Darlington and Durham, becoming the fore-runner of all railroads, and motorized land transportation.

Steam engines were used to drive forges and presses in the manufacture of steel. The proximity of coal and steel-making in places like the north of England, south Wales, the central valley of Scotland, the Ruhr valley in Germany, and the Pennsylvania-West Virginia Appalachian region of the US was not coincidental. Iron ores are often found in sedimentary rocks of generally similar age as those in which coal is found. The production of steel spawned a whole new economic reality. The already waning influence of the Mediterranean countries, Spain in particular, was quickly overtaken by the Anglo-Saxon-based societies who controlled the most abundant sources of coal, and who could therefore capitalize to the greatest extent on the industrial revolution.

A viscous liquid - crude oil - was discovered hundreds of years ago at the ground surface in seeps and tar pits in places such as Pitch Lake, Trinidad, and in the western Caspian, around Baku, in what is now Azerbaijan, and near to Lake Maracaibo in Venezuela, where the indigenous tribal people referred to the black substance as "mene". Crude oil was used for centuries in its raw state as a heating fuel. Later, crude oil was refined using rather primitive techniques to produce kerosene, that was used both as a fuel for heating buildings and in steam boilers, particularly for use in ships. A rather thick, slippery residue (lubricating oil and grease) from the refining process was not recognized for its unique lubricating properties for some years. Another residue of no known economic significance at the time, was also produced in the search for kerosene oil. This became known as gasoline in the US, and petrol, or words like it, in many other countries.

The discovery, in the mid-to-late 1800's that oil could be refined into a fuel of much higher calorific content than coal, sparked the next major development, the internal combustion engine. Perhaps of German origin, this engine found application in all manner of machinery. It allowed the range and breadth of mobility to be dramatically expanded.

Much of the twentieth century has been focused on the development and control of the sources of oil around the world. While coal remained the fuel of choice for large stationary consumers, like electric power plants around the world, oil proved to be the only truly viable fuel for a growing population of mobile consumers.

The most prolific new source of oil in the US was discovered near Beaumont in east Texas in 1911, at a well known as Spindletop. The early parts of World War 1, fought substantially in Europe between 1914 and 1918 used a combination of units driven by horses, coal fired steam ships, and a range of new-fangled horse-less machines such as trucks, primitive tanks and self propelled guns.

The new liquid fuel also facilitated the development of the airplane, a machine that specifically required the high calorific properties and low weight of gasoline as a fuel. From the Wright brothers early experiments in flight in the early years following the turn of the century, airplanes were quickly noted to have military applications, and as World War 1 progressed, so did the development of planes from their initial application as aerial spotting stations to fighters and bombers.

During World War 1, great efforts were made to increase the availability of this new high calorific fuel, that facilitated both the development of larger and heavier equipment, and a dramatic increase in range of mobile military forces. Massive exploratory campaigns took place. Following the development of east Texas fields, centered on Beaumont and western Louisiana, west Texas took over as the leading source area of crude oil in the US, a position held until the 1970's.

As had been the relationship between coal and steel, so began the relationship between oil and chemicals, at least in the West. Alongside the refineries grew a wide range of plants, using either refined oil as a fuel or else using waste heat to drive chemical processes. These plants have since come to produce vast quantities of both finished products and the building blocks for synthetic fibers, plastics, etc.

Elsewhere, the search for sources of this magic fuel ignited. With no apparently similar on-land sources such as east Texas, the British quickly expanded their search area to include all of the Empire, notably Australia, Canada, southern and eastern Africa, and the Indian sub-continent. Oddly, given the vastness of these lands, little was discovered during the war years, or since, except for the heavy tar sands around Lake Athabasca in Canada. The Germans found oil in their Ruhr valley, and further afield in Romania. The Russians discovered huge quantities of oil, initially in the western Caspian Sea area, around Azerbaijan. However, much materiel was still moved during World War 1 by horse.

Until the advent of the internal combustion engine, the horse was the almost universal means of choice of long range mobility. It is no accident that the unit of measure of power generation should have been defined in terms of an equivalent number of horses. Horses, however, consume prodigious quantities of grass, and their utility thus favored those places where grass was abundant. Ironically, one of the least hospitable climatic zones of the world for horses, the desert, eventually proved to contain the most abundant sources of oil.

In the years following World War 1, British influence in the Middle East was strong. Britain had, over the years, developed alliances with various potentates in the region to protect the shipping lanes that had allowed the growth and control of the Empire. Britain was instrumental in the partitioning of the Middle East lands following the demise of the Ottoman Empire in 1918. Straight lines were drawn on maps to indicate boundaries of newly formed countries, such as Iraq, Jordan and Syria. British interest in the Persian Gulf region included the provision of a protective blanket over the various emirates and princedoms along the western shore of the Gulf, and around the southern edge of the Arabian peninsula, including the then most important port of Aden at the junction of the Indian Ocean and the Red Sea.

Geologists from Britain made major discoveries of oil in the Middle East, particularly in what is now known as Iran, Saudi Arabia, Kuwait and the United Arab Emirates. During the period between the first and second world wars, this became the principal source of oil for the British and western Europe.

British influence, however, was on the wane. Over the long haul, the ability of one small country to maintain hegemony over large tracts of the world was proving to be unsustainable. Bonds developed during the ages by virtue of the population by people of British origin, of various parts of the Empire, in particular Australia, New Zealand, Canada, and South Africa were to be stretched to the utmost during World War 2, that began for European countries in September 1939, with the Nazi invasion of Czechoslovakia.

The US was in no hurry to become embroiled in yet another European conflagration, and with heavy lobbying in Washington on the part of the Nazi

regime, was staying on the sidelines. It could not, however, ignore the assault on its sovereignty by the Japanese at Pearl Harbor. Japan had taken over the Anglo-Dutch oilfields of Indonesia to fuel its efforts. In December 1941, the US joined, then soon after, led the Allied forces against Nazi Germany in Europe, as well as against the Japanese in the Pacific. Vast quantities of materiel, including Bunker C for ships, Diesel for trucks and tanks, and gasoline for planes, trucks and automobiles, were produced in the US and shipped initially to the UK for use in the European theater. Much was provided under the lend-lease program. By the end of the war, the British had incurred a monumental financial debt to the US, and its Empire was nearing exhaustion with its efforts to support the motherland.

During the Second World War, the Axis countries relied heavily on coal from the Ruhr, Czechoslovakia and Poland, the oil supplied by Romania, supplemented by both natural gas and gas developed by the Germans from the liquefaction of coal. The Allies relied on coal from Britain, France (sometimes), Canada and the US, and on oil principally from the US and the USSR. The ability to wage war was, and is, constrained by the consumption of fuel. On the eastern front, the Germans committed their second strategic blunder of the war by focusing on the fall of Leningrad and attempting to capture Moscow, and not on first denying to the Russians the supply of oil from the Caspian region of the USSR.[The first strategic blunder being that they failed to complete their invasion of Britain before opening the eastern front in Russia].

3. Post War Energy Consumers

In the post-war years, and long envious of the global influence of the British, the US promoted the independence of the colonies (deja vu all over again as Yogi Berra might have said), the end result being in Australia, Canada, India (including the newly formed Pakistan) and South Africa all gaining independence within 8 years of the end of the war. Saddled with crushing loans to re-pay, and an economy and infrastructure severely damaged by Nazi bombing during Operation Overlord, the demise of global British influence was hastened. By the early 1960's all that was left of the Empire, by then called the Commonwealth, was a number of small tracts such as Hong Kong and Gibraltar, together with numerous small islands.

One area of former British influence that was highly prized by the US was the Persian Gulf area. The Anglo-Arabian Oil Co., that had begun exploration of the Emirates and Saudi Arabia in the 1950's, was supplanted by the Arab American Oil Co. - ARAMCO, later becoming Saudi Aramco as Saudi influence gradually assumed greater significance. It became clear during the 1950's and 60's that the reserves of oil in greater Saudi Arabia, including Kuwait, and Iran and Iraq were substantially greater than even the fabulously productive areas of the US - notably west Texas, Louisiana, Oklahoma, Kansas, Colorado and California.

Control over Middle East oil gave the US a further leg-up in the control of the development of the economy of the world in the post-war years. At the same time, the US was able to prevent these huge deposits of oil from falling under the control of the Soviets. By this time, however, the USSR was aware of the presence of similarly huge volumes of oil in the remote areas of Siberia under its control, and could concentrate on its development independently of the non-Communist world.

However, the Soviet system appears to not have been an environment particularly conducive to the development of industrial technology, and the exploitation of the Siberian deposits has proceeded at a much slower rate than might be imagined, and most recently with much technological help from the West.

Another revolutionary energy source was discovered during World War 2. Seemingly esoteric experiments in high energy physics laboratories attempted to split the atom. The theorists indicated that were it possible to remove a neutron from the nucleus of an atom then very large amounts of energy would be released. Enormous efforts were made at the Rutherford laboratories in England and at Sandia National Laboratories in New Mexico to test the hypothesis, and if confirmed, to develop a bomb that could be used to shorten the duration of the war. Eventually, Sandia produced the Fat Man and Little Boy atomic bombs that were dropped on Hiroshima and Nagasaki in 1945, bringing the war in the Pacific to an abrupt conclusion.

From the 1930's onwards, the Soviets invested heavily in espionage. Communist sympathizers in the US and Britain were activated to gain access to the prolific technological advances being made in the West, but not in the USSR. Wartime secrets of nuclear fission had been shared by Roosevelt and Churchill with Stalin and the Soviet Union thus became a nuclear super power, even though the rest of that country was failing to keep pace with social and economic developments in the West.

In the immediate post-war years, the primary application for this new energy source was to develop the nuclear arsenals of both East and West. In time, however, civilian uses were promoted. At one time the provision of electric power generated by nuclear-powered reactors was going to be both abundant and very cheap, compared with the cost of electricity generated by conventional hydro- or thermal power-plants. Massive programs were commenced in many western European countries, North America and the Soviet Union to construct nuclear power plants. However, with all the concerns for safety surrounding the siting, construction and operation of these plants in the West, the cost and time required to build and operate them climbed steeply during the 1960's and 1970's.

The "nuclear bubble" effectively burst in the US in 1979, following a major release of radioactive material from a commercial nuclear power plant known as Three Mile Island. Since then, no new plants have been commissioned in the US; a number of plants then under construction, such as Susitna and WNP 1/4 in the Hanford, Washington area were canceled, at enormous cost to the utility constructing them - the Washington Public Power Supply- WPPS, unfortunately pronounced "woops". As licenses at other, already operating plants, such as Pacific Gas & Electric's Humboldt Bay plant in northern California came up for renewal or refueling, the licenses were either revoked or made much more restrictive. To date, in the US, the problem of disposal of spent fuel rods has not been solved; currently the spent rods are "temporarily" stored in water-filled ponds until a long-term disposal facility can be constructed and put into operation.

Another, far more serious release occurred from a nuclear-powered electric generating plant at Chernobyl in the Ukraine in 1986. The cloud of radioactive particles released at Chernobyl quickly spread northwestward across Scandinavia, and subsequently around the globe. The minute amounts of cesium deposited on the soil from the fallput have become a year-specific time-marker used to help quantify things like soil sedimentation and erosion rates.

These two incidents have effectively ended the proliferation of commercial nuclear power generation, although a substantial number of such plants remain in service around the world. This is most notable in France, where approximately 40 percent of the installed electricity generating capacity is nuclear powered. Adverse world-wide reaction to the possession of enormous arsenals of nuclear weapons particularly by the US and the former USSR continued to grow, but now at an increasing pace.

The nuclear reaction is the preferred means of steam generation for the propulsion of capital ships in various navies, particularly in aircraft carriers and submarines. With this fuel, these ships can stay at sea indefinitely. In practice, their ability to do so is constrained by the need to service equipment and the crews. There appears to be little public demand to put these ship-borne reactors out of service, although some countries, such as New Zealand and Australia have refused entry into their ports by such nuclear powered ships of the US Navy.

If the foray into commercial nuclear power-generation is considered, for now, to be an aberration in the overall expansion of energy consumption, then control and use of oil, increasingly the fuel of choice during the 20th century, appears to remain the key to economic power in the world.

4. Power in the 21st Century: The Chinese are coming, the Chinese are coming!!

In 1992, the top 20 oilfields in the world were estimated to contain 869.5 billion barrels of proven reserves. Production from these top 20 fields was 12.8 billion barrels, accounting for 87.7 percent of the world's production. Rather less than half of these resources are controlled by the West, through the activities of the "Seven Sisters", as the major oil companies are known.

By 1996, daily consumption of oil worldwide was 68 million barrels per day, (24.8 billion barrels per year). The daily consumption rate is expected to rise by 19.1 per cent to 81 Mbbl/day (or 29.5 Bn bbl/yr.) by the year 2005.

At the 1992 rate of consumption, there were estimated to be reserves enough for a mere 67 years. By around the year 2060, the 67 years of consumption of oil at the 1992 rate will be up, and the world will be substantially out of oil. At the projected 2005 rate of consumption, the 1992 reserves will be consumed in just 30 years! This cry has been heard before - after OPEC flexed its muscles in the early 1970's; undoubtedly more reserves will have been found before then, but we will have inched closer to the day when the world really does run out of oil, since we are consuming oil at a prodigious rate, compared with what is thought to be the rate of oil formation.

Since President Nixon prised open the door for trade with China, that country has made a significant impact on the world. The US now imports significant quantities of manufactured goods from China; trade with its neighbor countries has grown dramatically over the last 10 years. Initially their products were of quality similar to those produced by Japan in the 1950's and 60's, but they are improving almost daily. It does not take that much of a difference in the rate of growth of a country of 1.5 billion people for their economy to overhaul that of a country of 270 million, even if the 270 million country has a very large lead at the start!! GNP in China already exceeds that of several G7 countries, ostensibly leaders of the world's economy. Will the US be able to maintain control, or are we simply looking for a repeat of the fate of the British and their empire? Thus far the Chinese have not become great consumers of oil, although substantial efforts are being made to find oil in China.

Currently, there are four major consumer groups for oil: the US, western Europe, Japan and the Former Soviet Union. There have been no significant finds of oil in the US since the North Slope of Alaska finds of the 1970's. Most, if not all, of the major US oil companies either have sold or are in the process of selling out of their on-land domestic fields. However, Shell recently announced the discovery of Mars, a supergiant field several hundred miles off the coast of Louisiana, in approximately 8,000 feet of water. Others may follow, but major technological advances are needed to routinely extract oil from locations in that kind of water depth.

In Europe, the main continuing area of successful exploitation of oil and gas is the North Sea. From the first discoveries of commercial quantities of gas at Groningen in the Netherlands in 1965, exploration and exploitation have expanded northwards into the Sea itself. Today, exploration is going on around the north coast of Scotland into the North Atlantic between Scotland and Iceland, as well as northwards in the vicinity of the Faeroes. The environment in both locations is truly hostile, with icing and huge seas to contend with for much of the year.

Japan has no oil reserves of any significance, and is therefore most susceptible to having its supplies cut off. As a result of the treaty ending World War 2, Japan does not have military forces capable of independently defending its oil supplies, that come predominantly from the Middle East, and to a lesser extent from South American countries such as Peru, Ecuador and Venezuela.

In terms of proven reserves, the Former Soviet Union is in the best shape of the four consumer groups, except that the FSU does not act as a monolithic block any longer. FSU countries around the Caspian Sea have large reserves, but getting the oil out to market is difficult. For example, from Azerbaijan, pipelines are needed through Russia, Armenia or Georgia; Azerbaijan has problems with all three. On the eastern side of the Caspian, Turkmenistan is proving to have significant reserves, as does Kazhakstan. Again, access to external markets is difficult. Mother Russia has the second largest known reserves (after Saudi Arabia) in the world, but the bulk are in the hostile environment of Siberia, where extraction is very difficult.

Let us look now at two different geopolitical scenarios. In one, the rate of finding significant reserves of oil drops to a level in which it begins to look as though the world is going to run out in 30 to 70 years, as forecast above; in the other, the rate of discovery of new reserves outpaces current consumption levels, to the extent that concern about running out of oil recede into the background.

Scenario One

Since World War 2, the human population of the world has more than doubled, and the consumption of energy from non-renewable sources in general and oil in particular has increased even more. Most of that consumption has come about by the four aforementioned groups, that together comprise less than 25 percent of the world's population. With the departure of the British from the Middle East, and the growth of OPEC, the political influence of the major oil producing states of Saudi Arabia, Kuwait, Libya, Iran and Iraq has continued to grow. Relationships between the west and the last three countries have soured as a result of those countries sponsoring international terrorism. Fact remains, however, that they possess substantial reserves of oil, and have relatively small populations.

Historically, China has been and substantially continues to be an agrarian society, but one with increasing ambitions on the global scene. China's thermal energy supply comes principally from coal, of which it has abundant reserves. With a rapidly growing economy and the spread of its influence in the Pacific region, it is likely that China will increasingly compete with Japan for supplies of oil from the Middle East. It may be that China will supplant the West in terms of influence over countries that support international terrorism, and thus get access to their large reserves of oil. That oil will facilitate further industrial growth, as it did for the West, that may have to be defended militarily, just as the west defended "its" Middle East oil. Just ask Saddam Hussain!!

China already has the largest military force in the world numerically, if not in fire power, but that could change quickly if countries that are capable of building advanced technology arms decide to sell to China. Similarities between Western equipment and Russian counterparts are not co-incidental. They are the result of systematic copying of Western products. The Chinese, historically have been a more inventive race than the Russians; with examples to copy from, the Chinese could make much more rapid advances that could turn out to be more sinister for the Western way of life..

The other area of potential conflict is in the far east of Russia, where the Chinese are much closer to the Russians' oil than is Moscow. Russia, although economically crippled as a result of the Cold War, remains a very potent military power. If its territory is assaulted, it might be given enough reason to set aside the internal strife and face a common enemy, as it did against Hitler. Within the past few days, however, the Russians have announced their intention to sell high-tech military aircraft to China. Perhaps they are implementing their strategy to head off the conflict through appeasement.

What could the West do if China acquired a significant hold over resources that historically the West has controlled, or which represent a new source of power, as in Siberian oil? What would the West do to contain the "jack" that it has encouraged to get out of the "box"? Control over the exploitation of a finite supply of oil will put increasing strain on a political grouping that for much of the past century has become accustomed to a seemingly infinite resource. For over forty years, between the end of World War 2 and 1989, the year of the demise of the USSR, political affiliations have remained relatively constant. With the prospect of a reducing supply of oil and economies ever dependent on oil, old affiliations may come apart (as in the USSR) and new ones will take their place. These affiliations are likely to be as much based in the pragmatism of the new reality as past affiliations were based on the old reality. If survival of our system is at stake, old friends may well get traded in for new ones!

To what extent is the West prepared to vitalize the Russian economy such that Russia can defend its oil reserves? If the West were to make such an undertaking with its former deadly foe, what, if any safeguards can be installed to preserve the West's interests? Western investment in Russia boomed from 1990 until about 1992, but has since slowed to a trickle, while organized crime seems to be settling over the country.

Seventy years is not long, and that is the upper end of the estimated period of abundant oil! Ten percent of that time has already elapsed since the USSR collapsed. A concerted effort and vast capital inputs will be needed to bring the Russian economy into line with the West, or at least to convince the Russians that we, and not the Chinese, are the good guys. In the meantime, the Russians are now selling advanced arms to the Chinese! For years the West was happy to provoke the dissension between the two major Communist blocks. It would be ironic if that rapprochement were to occur now that Russia is no longer a Communist state.

The economic slump experienced throughout much of Europe during the first half of the 1990's has been attributed to the siphoning off of a huge amount of investment capital by the Germans in the process of re-uniting East and West Germany. If the result of that drain on global investment capital is felt as far and as wide as it has been during German re-unification, then re-building the Russian economy will require orders of magnitude greater effort. The global economy cannot do for Russia what West Germany did for East Germany - there simply isn't enough money. The Russians will have to be taught how to put their own house in order, if they'll allow it, and if they want it.

One person in five in the world today is Chinese. By the middle of the next century, that could rise to one in four. European and US birth rates have slowed significantly over the last thirty years. Populations of Third World countries are growing rapidly, but thus far they have little political or economic leverage.

China has already begun to exert its influence over countries such as Iran and Iraq in particular, by providing arms and by circumventing Western trade embargoes. As time progresses, the West may have to come to terms with the international terror sponsor countries, or else lose them permanently to the enlarging sphere of influence of the Chinese. We may not be able to prevent that from happening in any case, so the hand-wringing over how we can come to terms with people like Saddam Hussain, and still be able to sleep at night, might not be necessary.

Paradoxically, at a time of rapidly increasing trade with the US, China is increasing its independence from the US as the world's market-place grows. Trade between China and its neighbors is growing much more rapidly than just about any other trade grouping in the world. Many of those countries, including China, have no love for the Japanese. Japan's position as an off-shore island may increasingly come to look more like that of Taiwan, and less like that of a major independent nation if China's control over countries like Iran and Iraq increases and their oil is diverted away from Japan. Conceivably Japan could be brought down! Would the US intervene to "defend" Japan? If the oil were to run out by year 2060 in any case, could the US afford to?

Countries around China, like Korea, Taiwan, Vietnam, Indonesia, Singapore and Malaysia are steadily developing China's radius of influence, and Europeans have steadily decreasing influence there. The US may be next. As the cohesion of the Asian block grows, with China and not Japan at its core, the US will have progressively less ability to influence the outcome in its favor. The block is already too strong to take on militarily; the US lacked the political will to defeat one of those countries. It could not take on them all.

For the Chinese, arguably the best outcome is for a long overdue alliance with Russia. However, relations between the two countries have been difficult for many years. The Soviets maintained a very sizable military force along the border between the two, to prevent hordes of Chinese flooding into the vast unpopulated areas of Siberia. What could the Chinese trade to the Russians in exchange for some of that real estate today? Would they have to trade anything? For how long could the Russians keep the Chinese out, if they seriously attempted to move into Siberia? Would such a move trigger the nuclear Armageddon that the US and the USSR strived so long to avoid?

Accommodations will have to be made as time progresses to accord to China a role on the world stage befitting the largest country the world has ever seen. The time for plots to the contrary has already passed.

Scenario Two

Many of the historically known reserves of oil reside in the Middle East, the North Sea, and Russia. The supply lines between the currently friendly Middle East countries of Saudi Arabia and Kuwait, in particular are very long. They are likely to come under increasing strain as the cultural differences many Arab nations have with the West may be replaced by countries with lesser differences to the east.

For the last 25 years Europe has come to rely increasingly on North Sea oil. The area has proven to be a major oil province that with increased technology could continue to provide oil for many years to come, perhaps until well after the 70 years are up.

Domestic oil production in the US has been decaying for the same 25 years, notwithstanding Alaska and deep water Gulf of Mexico finds. Exploration around Japan continues to come up dry.

There have, however, been several significant developments affecting the oil industry over the past few years. Some are technological, others are political. Three dimensional (3-D) seismic exploration techniques routinely used today allow for much better definition of potential drilling targets than before. Tomography techniques are now available to allow exploration in locations where traditional 2-D and 3-D arrays did not produce any data. For example, beneath layers of salt, as occur beneath the Gulf of Mexico, as well as along the US Gulf Coast states. High speed digital processing allows much better and faster definition of target areas. Horizontal drilling techniques allow multiple holes to be drilled from a single location, and for production to be enhanced where oil is encountered. Technology now exists to drill successfully in great depths of water, as demonstrated in the Gulf of Mexico. The development of surfactants and cryogenics allow a higher proportion of the oil in the ground to be extracted.

While the above are major advances, the biggest advances have come on the political front. The Seven Sisters have moved to South America. Long the US' "back yard", political stability and democracy has opened up Latin America to exploration. The results so far have been dramatic. BP's supergiant Cusiana field in Colombia has recently been joined by another. In Venezuela vast reserves of heavy and extra heavy oil have been quantified in the Orinoco Tar Belt, where some 270 billion barrels of recoverable oil are now known to exist. This in addition to some 65 billion barrels of light and medium crudes. Nearby, off the coast of Trinidad, Amoco and Exxon have made significant finds.

Ecuador continues to be a place of good fortune, but the gem of all is only just emerging from a veil of obscurity: Brazil. There are many geologic similarities between the Amazon basin of Brazil and the interior of Venezuela; but Brazil is vastly larger than Venezuela. Brazil could well turn into the largest producer of oil anywhere.

The precise process of the formation of oil is either not particularly well understood, or a closely guarded secret of those who know. It involves the conversion under certain conditions of temperature, pressure and redox of organic detritus into oil. Oil is found in storage structures (traps) that have arrested the migration of oil from its areas of formation to places where it accumulates. All commercially viable reserves of oil occur relatively close to places where, in the past there was a large supply of organic matter: trees, grass or seaweed. The Amazon River produces about half of the freshwater in the world, and carries organic debris out into the Atlantic, where it is currently being deposited. Where was it being deposited 10 to 50 million years ago - time long enough for oil to have been created? Where has it been trapped in volumes large enough to be of commercial value? With the door to Brazil about to be opened, these questions will undoubtedly be answered in sufficient detail for very large discoveries to be made.

Notwithstanding other factors, the US has exerted and, if sufficiently dexterous, can continue to exert, considerable influence in "its" back yard. Probably much more easily than either in the Middle East, or in Siberia. In time, the US might finally be weaned off Middle East oil as South American oil takes over. We might, eventually have to give up the English language in order to get oil; or we might have to create a new hemispheric country of "Americas" to be able to guarantee control, but that would be a country in which the current power brokers would be in a minority. Or we fall back on the old stand-by and build a better gun boat!

5. Paradigm Shift

Since John D. Rockefeller created Standard Oil in the early 1870's, oil has become the principal source of energy for mobile applications. Coal remains the overwhelming fuel of choice around the world for stationary applications, such as for steam generation and electric power generation. Our dependence on oil, increasingly foreign oil, can be stopped, or at least slowed, if we reduce the number of mobile energy consumers, reduce the total energy consumption of those mobile sources, or if we significantly increase the efficiency of the ones we have. In the 1920's and 30's General Motors systematically purchased effectively all companies that ran tram cars in the US. Somehow San Francisco got away! Having purchased them, GM then retired the tram cars and replaced them with buses. GM builds buses, oil companies fuel them. If you can't win, change the rules!!

With the rapid penetration of computers into the work place and the home, with the development of high-speed modems and the Internet, commuting could be slashed in the US if more people worked from their houses, or from "officetels" nearer to their homes than their present places of employment.

6. Summary

The potential conflict with China has been cast principally in the light of oil consumption. As stated above, however, most oil used by Western economies is in mobile applications - automobiles and trucks in particular. Additionally, the military forces use substantial quantities of oil-derived products. If the Chinese do not allow the unlimited spread of the private automobile as we have done, they will need a great deal less oil. The world's running out of oil could eventually come to mean less to China than to the West!

Oil has unique properties needed to create a wide variety of chemicals, plastics, and pharmaceuticals. The volume of oil is finite. It is probably too valuable to burn in automobile engines just so we can exercise our freedom of mobility. Ultimately, there will be conflict between the 10 percent of the world's population who today have or control that mobility - Western countries through their oil companies, and the rest who look on while that small group consumes 80 percent of the world's non-renewable resources. We can either plan for the conflict, do nothing and let our kids (or their kids) deal with it, or start planning for a somewhat different distribution of wealth. In order to deal with the issue, however, we have to come up with a strategy to rein in the power of the oil companies. For over 100 years they have been our surrogate enforcers of Western foreign policy.

The 20 percent of the world's population who are Chinese won't forever put up with what we allow them to have. If we do it right, maybe they won't be too hard on us when the tables are turned. If De Klerk can do it in South Africa, maybe we can too. Energy & Power John H. Black April 24,1997 15 1