Oil

Introduction

The use of oil in our daily lives has grown ever since, and at this point in time the world as a whole uses a stunning 1000 barrels of oil per second, which equates to 42,000 gallons a second.  (Source:Gibson Consulting Online. 2009.

Oil is the most valuable commodity in the lives of modern man today, and is used in more items than anybody would realise, from plasters to curtains, oil plays its part in their manufacture, and when dealing with an item that is so valuable and sought after, then conflict is, many would say an expected side effect.

In the 1970’s America was the world leader in oil production, producing approximately 9.6 million barrels per day, which at the time equated to 43% of the worlds oil, however due to natural greed and thirst for appliances that remove as much stress and hassle from daily life as is possible, the large reserves of US oil were consumed, and as of 2004 the production of oil had dropped to 5.4 million barrels a day which only accounted for a meagre 13% of the total world production. Yet despite this lack of reserves, America still uses a quarter of the daily produced oil, for their 5% of the total global population.

With the need for oil rising with each passing day, and with America’s industrial arms stretching across the globe in order to quench their requirements, it is no surprise that a deep well of varying conflicts that will continue to rage for as long as there is a demand for the product that is being contested over.

Conflict Across the World.

According to an article written by Michael Ross the associate professor of Political Science at the University of California, the world is a more civil place than it was, with there being 15 major civil war disputes globally in the early 1990’s compared to but 5 in 2006. The article also goes to state the despite this decrease and the lessening of minor conflicts from 33 to 27, there has been no such reduction in countries that produce oil.

A look at any of the major oil producing countries around the world will reveal a major source of conflict with the black gold as the root cause from South America across Asia and the Middle East or into Africa.

Conflicts that arise as a result of the oil industry can range from being the driving force behind political regimes or a cause of civil war between locals in countries such as Nigeria.

Colombia

Colombia is a country shrouded with political instability and filled with militant groups and corrupt officials looking for ways to secure power. The best way to do this is through the control of the economy, and within the country one of the largest sources of income is oil. It is not uncommon for the two main militant groups within the country to launch attacks on various pipelines to disrupt the flow of oil as they attempt to reduce the governments oil based income.  “Over the years, the attacks caused 2.6 million barrels of oil to spill into lakes, rivers, and the soil.” “During 2001, attacks put the pipeline out of operation for a record 266 days, costing close to $600 million in foregone revenue.”

The United States are being drawn into the battle within Colombia and possibly risk further angering the militants who view even their own government involvement as a reason for war.

Nigeria Delta

If looking for further proof of the conflicts caused as a direct result of the need for oil, then look at the Nigeria Delta.

“It accounts for about 40% of the Gross Domestic Product and 70% of government revenues. In 2003, Oil and gas accounted for 80.6% of total federal government receipts” (Source: Augustine Ikelegbe; University of Benin. 2005.

It must be considered, that Nigeria is the seventh largest oil-producing nation in the world, and it is accountable for over one fifth of the oil consumed by the United States. In a country that is as politically unstable and economically challenged, the power presented by controlling the oil is for many simply too tempting. The Niger Delta area is rife with violent rebellions against the government controlled oil lines, and according to Mr Ikelegbe’s article “The Nigerian Economic Summit Group (NESG) estimates a daily theft of about 100,000 barrels of oil valued at about USD 2.8 million (Subair & Adesanmi 2003).”This clearly shows the very minimum amount of loss suffered not only by the Nigerian government every day, but also could give an indication of the compounded loss that is filtered through to the Nigerian people.  

The market to lose around 15% of Nigerian oil exports

The conflict in Nigeria surround the oil industry is not just about stealing oil or interrupting the flow by attacking the pipelines but there have even been cases of kidnappings and hostage situations. Such as what happened in 2006 with nine Shell employees stationed at the Forcados export terminal. This incident alone resulted in “the loading of oil to be suspended and the market to lose around 15% of Nigerian oil exports.”

Whenever a commodity suffers a loss, the remaining supply becomes more expensive. Within area where the conflict for oil is high, disrupting the flow of oil serves only to make the unstable environment even more hostile. It is a simple fact of life that if something is expensive it is views as being more important and ownership or control thereof symbolizes a certain level of power based on the items net worth. The incident mentioned above resulted in a $1 dollar increase in the value of the oil. In the eyes of the rebels and other groups, this is a significant level of extra power that is attainable, and so it would see a further rise in the level of violence.

The main background cause for the oil conflicts in the underdeveloped countries is a combination of their importance to the worlds successful operation compared to their position in terms of global economy and net wealth, and also how the vast sums of money that exchanges hands is eventually filtered down to the people.  “Petroleum-producing countries are plagued by corrupt and authoritarian governments, lopsided and unsustainable economic development and violent conflict. Foreign powers and their huge multinational oil companies often maneuver for control of the oil fields through clandestine operations or outright military intervention”

Corrupt officials squirrel away the funds and invest in further clandestine endeavours

It is in due response to the above mention clandestine approach to dealing with oil that drives the locals to form militant groups of their own, whose sole intention is not to stop the delivery of oil to the richer countries necessarily, but to simple see themselves receive a cut of money that the locals work hard to produce. Corrupt officials squirrel away the funds and invest in further clandestine endeavours or to develop a way to fight off any opponents who may rise and threaten their regime. In a country where oil is the main or one of the major commodities, it is often the case that the political structure is unstable; it is not a result of the oil industry, but more of an unlucky coincidence that is not made any better by the presence of drilling fields and pipelines.

Politics is always an area filled with conflict, across the globe is a continual struggle for power. Conflict doesn’t have to gain media coverage for its body count to be a conflict, and as you move from the western world and through into the third world countries, without whom the world would seize up within a matter of day you notice that there is a definite rise in the openness and brutality of the conflict. Everybody is aware of the hidden motives that are continually raised surrounding the US invasion of Iraq and the war that continues to rage to this day. There is no hiding that fact that the majority of the people in power within the US at that time were serving or had previously served on the board(s) of many of the worlds most powerful oil companies, and as a result had a lot of their own or families money tied up in the success of those companies. People choose a side no longer based on what is morally the correct decision to make, but add their weight to the desired conflict with their eyes swelling at the prospect of their ‘black gold’ share of the rewards. “Oil is power and power needs to control oil. Behind the names of presidents and dictators are the names of much more powerful actors: Exxon/Mobil, Chevron/Texaco, Shell, British Petroleum, Elf.” (Source: F. William Engdahl. 2008. Century of War Part I. Online.

When viewing conflict, people tend to look a the larger areas and concentrate on this, civil wars and disputes that claim the lives of thousands per year, but conflict can also be used as a term to describe what happens to the indigenous people of an area that is found to have oil deposits. “From Ecuador to Nigeria and from Indonesia to Chad, "black gold" has been a curse to local peoples and their environments”

The advent of capitalism which stemmed from the discovery of oil reserves in America back in 1859 marked the beginning of the end in the way the world views and chooses its leaders; not just political figure heads, but the leaders of corporations, in short it has always been the powerful people who have made the decisions, and oil simply changed the meaning of what power was and who had it.

JD Rockefeller himself is quoted as saying “God gave me my money. Having been endowed with the gift I possess, I believe it is my duty to make money, and still more money, and to use the money I make for the good of my fellow man, according to the dictates of my conscience.” (Source: The Socialist Worker, 2008. The Oil Industry: Capitalism and Conflict.

While Mr Rockefeller may have been a giving and charitable many whose philanthropic endeavours left behind a legacy that is still going strong today, he also changed the way that power is perceived which ultimately – although certainly not as a direct result of these words – led to a new era of war in the latter half of the twentieth century.

The world evolves, not just in the way mankind improves but also in the way mankind deals with its disputes. War used to be about gaining control of land or of people, in the name of the king or of expanding an empire. Whereas in the modern world it is all about controlling the targeted country’s economic situation, making the largest profit possible. As oil is the primary source of monetary power across the globe, it is only logical that possession of it be highly regarded, and in turn fought over.

Oil may not always be the direct cause of a conflict but more often than not it is the contributing  factor, the ‘straw that breaks the camels back’ as many people say. Underdeveloped nations have struck lucky – or unlucky many people would view it- in so far as they seem to be gifted with large oil supplies that in turn serve as their key to world commerce. Despite these countries being notoriously poorly governed, with greed and political tyranny rife amid the high powered ranks, there is often always smaller localised disputes ongoing over land borders between not only neighbouring countries but also between states. Africa is a good example of this, with not only multiple countries closely bunched together in one landmass, but also many tribal areas turned regions each of which wants to control the most land they can. This is particularly evident when discussing the Bakassi Peninsula in Africa.

Civilians rise up against the government

When you have a government that likes to keep what it earns for its own merit, and civilians who believe that they have a right to a percentage of the profits, then you have a circle that will never end. The more the civilians rise up against the government, the more the money will be spent on military defence, and also the more money will be given to them by the foreign powers that govern what they do with the oil in an attempt to help them keep power.

There can be no doubt about the influence of oil and the industry that surrounds it with regards to the number of conflicts in the world today, especially when it is seen that large oil industry based companies such as Schlumberger Ltd regularly create invoices and supply oil software and the necessary licenses to the Department of War in various countries.

The level of conflict that arises because of oil is directly linked to two main factors, the economic and military power possibilities for the country concerned and its geographical location.

Any country that is almost completely reliant on the economic profitability of oil is a greater target than a more powerful nation that can support itself via a number of means. Poorer nations need to export the oil more than they need it themselves, and because of this the struggle for the power or control of its supply is great, the stability of the infrastructure that governs is weak, which leads inevitably to a form of conflict no matter how escalated it may become.

“Administration of the U.S. Department of Energy (DoE), oil exports account for approximately 90-95 percent of Saudi Arabia’s foreign earnings, 90-95 percent of Nigeria’s, and 80 percent of Iran’s.   Oil experts are also expected to provide a very large share of the funds available to the U.S.-imposed Interim Government in Iraq. It is hardly surprising then, that ruling factions in these countries are likely to resist any change in government that might deny them access to prolific oil revenues.”

Conclusion:

Whether looking at the oil industry as a direct cause for conflict via infighting or rebellious locals looking for their share of what they feel is rightly theirs, through to the more subtle conflicts which see communities crushed and brushed aside with the rest of the rubble, the simple fact is the oil is a major form of conflict across the globe in all levels, from the boardroom to the jungles.

The question posed should rather be is it possible to stop the conflict oil causes, although that in itself is something that could only be done in a theoretical world. “Oil is for the people” and the only way to distribute its wealth would be for a portion to be allocated to each person within the state or country where the oil is produced. Even this would not stop conflict, as it is part of human nature to want more, to have the control and power. Oil is for everybody, and oil is power, but power is only for a set few, and it is because of this that conflict shall always arise.