Wednesday, August 25, 2004

How World War III Will Start...and Where.

Mr. Esmay  calls our attention to the fact that oil prices are high, and that there are some indications that the great oil field in Saudi Arabia, the Ghawar -- may be drying up.  He expresses doubt that there will be a catastrophic impact on the American economy from high oil prices.  That is debatable, although I would rather not get into that debate right now. 

Mr. Esmay opines, though, that high oil prices could result in considerable turmoil in the Middle East, if a higher degree of political stability is not attained.  No debate there.  However, there has been turmoil in that regoin for a long time.  The people there are used to it.  Therefore, I am not too worried about it.  That is not where the next World War will start.

The next World War will start in the Caspian region:


The Caspian region has 17 to 33 billion barrels of oil in proven reserves.  There are credible estimates that the total reserves are likely to be in the 171 to 191 billion range.  In addition, there is considerable natural gas.  Proven natural gas reserves are around 232 trillion cubic feet.  (1  2)

A quick look at the map will show what the problem is.  Russia holds only a small minority of the hydrocarbon resources in the area.  Russia, Ukraine, and Turkey are stable countries; Georgia is fairly stable; the rest are not.  The problem is not getting the hydocarbons out of the ground.  The problem is transporting it safely.  The majority of the energy reserves would have to go through at least some highly unstable territory, in order to get to world markets. 

BBL= billion barrels; * Ttl Reserves = Proven + Possible Res.; ** Only from Caspian sea region
  Caspian Sea Region Oil Reserves, Production, & Exports (1996) (Production & Export @ thousands barrels/day)
Ttl Reserves* Production Exports Major Exporting Cities
Azerbaijan 31-38 BBL 198.7 42.6 Baku
Iran** 12 BBL 0.0 0.0 Neka / Kharg Island
Kazakstan 95-101 BBL 532.1 254.5 Tengiz / Aktyubinsk / Atrau
Russia** 5 BBL 52.0 0.0 Novorossisk / Terskoye
Turkmenistan 34 BBL 103.9 26.4 Turkmenbashi / Charjou
Uzbekistan 1 BBL 182.6 3.8 .
Total 178-191 BBL 1069.3 327.3 .

There are two safety concerns: the vulnerability of the pipelines and shipping routes, and the vulnerability of the environment.  The pipelines would be very difficult to defend.  If the hydrocarbon makes it through the pipeline, it then will have to be loaded on a tanker.  Anything going through Turkey would have to be transported by ship on the Black Sea and/or the Mediterranian, then the Straits of Gibraltar.  If it goes through the Black Sea, it would also have to go through the Bosporus Straits.  Any spill east of Gibraltar would be an environmental catastophe.  Ships are especially vulnerable in either Straits. 

Note that the geography is such that no one nation can be completely independent in the production, transportation, and marketing of their hydrocarbon energy resources.  With the exception of Russia's relatively small slice of the pie, all the other reserves would involve at least three countries: the producer, the country with the transportation route, and the customer.  How many terrorist acts would it take to start a war in the region?

So far, we have spent a lot of money on the Iraq War:

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If we had spent that money on development of fuel cells, biodiesel, solar, and wind power, would the next war even be necessary?

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