Trend Alert: The Cold War on Peak Oil?

David Taylor, Strategic Futures Analyst, Collaborative Connections

Russia's invasion of Georgia and its subsequent recognition of South Ossetia and Abkhazia, has led to accusations that it is resurrecting the spirit of the Cold War. But in a region where international relations are as flammable as the oil and gas that it produces, what would a Cold War mean for ‘Peak Oil’?

What is changing?

Russia has been, and remains, the economic and military powerhouse of the Caucasus region. Through its action in Georgia though, it has emphatically reduced the West's influence in the former Soviet region, created another crack in the theory of a largely unipolar world and possibly created a new political driver for technological change.

Stephen Aguilar-Milan, Director of Research at the European Futures Observatory, identified the Caspian Basin as one of the world's 'Geopolitical Hotspots', pointing out that, according to one model, "A resurgent Russia – financed by rising oil and gas revenues – tended to be the more dominant power in the region." But as one report notes, "This [invasion of Georgia] was no sudden response to provocation, but a long-planned move."

Certainly, one vital impact of this long-planned move is that Russia has eliminated the competition, making itself the gateway to the region’s energy supplies with de facto control over the pipelines snaking across its territory and that of its neighbours. Inasmuch as the 1,000-mile-long Baku-Ceyhan pipeline, which runs through Georgia, had been seen as the forerunner to a network of planned pipelines that would offer an alternate supply to Western Europe - according to one analyst, the risk of building a pipeline through countries vulnerable to the wrath of Russia is now just too high.

Why is this Important?

According to Stephen Aguilar-Milan, the continued resurgence of Russia in many respects depends upon how tight the energy markets remain. Indeed, Russian foreign policy has been more board-room than gun-barrel. Gazprom, Russia's energy giant, already has long-term supply contracts with most European countries, including France, Germany, Italy and Austria and Gazprom has already announced intentions to supply 20% of the UK's gas by 2015. By ‘discouraging’ the competition, Russia has secured its economic - and simultaneously - its political influence at a global level. But the question as to whether softening energy markets would lead to a weaker Russia is a pertinent one.

History is full of examples where politico-military necessity has been the mother of technological invention. Beet sugar, the jet engine, radar, computers, Global Positioning Systems (GPS) and even the Internet were all born out of military demand. While for the most part, the response of the United States and the EU has been uncertain - and Russia too has been careful not to provoke a direct confrontation over existing pipelines - the dependence of Western Europe on Eurasian oil and gas is seen by some as worrying. In this regard, the desire for energy security, as much as for political leverage, may be a great incentive for the development of new, more efficient and hopefully cleaner technology or may equally accelerate the race for oil in unexplored, untapped regions. Either way, this could have a profound impact on 'peak oil' as well as the environment.

Many thanks to Stephen Aguilar-Milan for his article, "St George, the Bear, and the Eagle" . You can visit Stephen at the European Futures Observatory.

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