Crude Oil as a Strategic Power Factor in International Relations

table of contents

Preface

Introduction

Production and Uses of Crude Oil

Crude oil in international relations
What is a strategic tool?
Examples of strategic tools
Oil as a strategic tool
Key locations

The OPEC
The OPEC and oil in international relations

The example Norway
Rationale for country selection
National oil industry overview
Influence on foreign policy
Conflicting interests in the arctic
Location
Conflict & Parties involved
Norwegian position
Key reasons for exploiting High North petroleum reserves
Possible scenarios
Optimistic scenario (1)
Pessimistic Scenario (2)
Turning point

Conclusion

Preface

I have now pondered writing a research paper about oil for a long time. Influenced by my father, who is Norwegian, my frequent visits to the country and a wish to study International Relations (IR) after graduation, this opportunity fits me surprisingly well.

That said, the main aim of this paper is to examine the role of oil in international politics, both by discussing past events related to it and by attempting to estimate its future role. The focus is not on exploring oil from a natural science point of view, but on examining which geopolitical roles oil plays when it comes to issues such as national security and the international balance of power.

Introduction

This academic research paper sets out to examine the role of oil in international politics. It will first be studied which importance oil carries as a commodity and power factor. Examples for the use of oil in international relations are given to illustrate the more theoretical backgrounds.

This paper employs two main examples: Norway, as an example of an oil-rich country and net exporter, and the Arctic region as an area of possible future conflict over oil. Using these examples, the different national interests will be shown to demonstrate what is at stake for the national states as well as for the international community.

It should be known to the reader that this paper, due to its limited extent, can only give a first impression of the topic. It is, nevertheless, a subject of universal relevance and, hopefully, interest.

Production and Uses of Crude Oil

Before examining why crude oil is so sought after this section will briefly display how crude oil is formed and processed. The many uses of crude oil in today’s society will also be shown.

Crude oil was formed many million years ago from tiny plants and plankton below the surface of the sea. When plankton die, they descend to the bottom of the sea, adding to the layer of dead animals and plants one by one. The plankton is trapped under multiple layers of mud, sand and other sediments. As millions of years pass, these are buried deeper and deeper. Through the enormous heat and pressure exerted, they gradually turn the mud into rocks and the dead animals and plants into oil and gas.^[1]

The ambition of this section is to show in how many varieties oil is used nowadays, often unnoticed.

- Fuels

Petrol is a mixture of more than a hundred different hydrocarbons produced mainly through crude oil refining. Plane kerosene and diesel fall into the fuel category as well.

- Asphalt

Used in road production, asphalt is based on crude oil. While, during the current economic decline, less asphalt is used for infrastructure projects, the consumption is expected to rise in the next years.^[2]

- Heating

Heating with gas is still common, despite the availability of more environmentally friendly solutions.

- Plastics

Made up of polymers, plastics play an enormous role in our daily lives. This includes simple items such as plastic bags and boxes as well as consumer electric goods such as telephones, televisions and computers.

- Fertilizers

- Personal hygiene

Perfume, soap, lip stick and hair spray are all made out of oil.

- Home interior

Carpets, wallpapers, curtains and many other common objects are produced from crude oil.

The above list does not assert a claim to thoroughness, but is illustrates how dependent all of us have become on crude oil products.

Crude oil in international relations

This section shall establish the role of oil in international relations; that is to say in international politics between states. It is first examined whether oil can be considered a strategic tool.

What is a strategic tool?

For the discussion in this research paper, a strategic tool shall be defined as every specific action taken by a legitimate government of a country with the intent to improve the position of the country relative to another country or countries. This can be action of economic, political, cultural, technological or societal nature. A strategic tool can, however, also come in the form of a resource, as described in the following.

Examples of strategic tools

Pertaining to oil, several strategic tools can be identified. What these tools have in common, is that they all fulfill the preconditions stated in the above paragraph.

Strategic oil stocks act as a palpable example. These are reserves of crude oil (and gas) hoarded by a country within its own borders. These reserves aim to guarantee the provision of fuel even if imports are halted. Such halts in import may be the result of transport failure or accident, but also of intentional non-delivery by petroleum-exporters.

Strategic oil stocks thus reduce the dependence on foreign suppliers, enabling the hoarding country to operate key government infrastructure in cases of emergency. The hoarding of strategic reserves can bring about very tangible benefits, as being able to endure oil export bans issued by other countries. As far as it is known, most governments retain a certain level of these reserves. According to the U.S. Department of Energy, the U.S. Strategic Petroleum Reserves stand at 727 million barrels, stored in underground salt domes in Texas and Louisiana. The reserves will be used in case of “severe energy supply interruption” and decided upon by the President.^[3]

Other examples of strategic tools include weapons; especially weapons known to cause great suffering such as WMDs. Weapons of mass destruction comprise nuclear, biological and chemical weapons. Although international treaties for non-proliferation of these weapons are in place and every effort is made to have more countries sign and comply with these treaties, deterrence is still what has kept countries from using WMDs in the last decades. In other words, knowing that other countries dispose of these weapons has largely prevented their deployment. Although there have been exceptions, such as in Syria’s civil war, when the Assad regime has allegedly used chemical weapons.^[4] The odds are that in the future more countries will run WMD programs, according to Hans Blix.^[5]

Oil as a strategic tool

Because of countries’ dependence on oil and the inability to “produce” oil (some countries will never be able to extract their own oil as it simply is not available in all areas) oil is, among others such as gas, but also wheat/grain and - to a certain extent - gold, a strategic commodity.

It might well be, that in the future, other commodities become of strategic importance. Examples include platinum, as it is used for the production of microchips which are used in almost all consumer technical goods.

Being a strategic commodity, oil might just be as important from a political view than from a production point of view. In some cases, merely knowing that “others” can dispose of it, can lead to conflicting desires and political insecurity.

[...]

^[1] Der große Brockhaus in einem Band, “Erdöl”, 2. Edition, Leipzig, 2005.

^[2] Roadsbridges, “Asphalt consumption reboud“, http://www.roadsbridges.com/north-america-leading-way-asphalt-consumption-rebound, (25.03.2013)

^[3] U.S. Department of Energy, “Strategic Reserves Programme”, http://www.fossil.energy.gov/programs/reserves/spr/spr-facts.html, (25.03.2013)

^[4] BusinessWeek, “Chemical weapons employed in Syria?”, http://www.businessweek.com/news/2013-03-24/rogers-says-mounting-evidence-of-probable-chemical-weapon-use, (25.03.2013)

^[5] Hans Blix, Chairman of the Commission on Weapons of Mass Destruction in a speech held on July 14, 2010 at the U.S. State Department in Washington D.C.