Oil raised a critical issue: the availability in peace and, above all, in war conditions.
The First World War highlighted this issue in a clear way: at this time the Middle East becomes important, strategic. The Sykes-Picot (1916) and Red Line (1928) agreements are also black gold children.
The famous Ford Model T was the first massed produced car, produced until 1927 and fueled with ethanol: Prohibition also played its part in spreading oil.
In 2015, the US Energy Agency said that about 100 million barrels a day produced, 60% was moving by sea and that the Straits of Hormuz was ranked first with 30% of all the oil that moves by sea. The Strait of Malacca ranks second but is going to become of growing interest in view of the LNG’s market soaring.
Once again, the wave of change is coming from the US and once again it is the automotive industry that triggers it: we are talking about electric cars. To date we have about 2 million of about 1.3 billion globally. Less than 1% and the world is divided between those who see the transition more or less quickly. The most of Europe (and maybe also China) have already announced the deadline beyond which diesel and gasoline engines will no longer be sold: first (2025) and later, 2040
Exxon, Shell, and BP with their market value above $ 600 billion, in their forecasts, include the peak demand, who by 2030, who by 2040. One thing is certain: that the peak will be.
Meanwhile, some thinks that Model S (Tesla’s “economical” version) is the Ford Model T forefather and will have the same role of change. Ironically, last April, Tesla (for a while) exceeded Ford’s market value; though for a little while ($ 2 billion on about 60 total).
The Return of the Tribes?
If in Europe the states tend to the superstate, on the other side (through the Mediterranean) there are tribes. We could say (paraphrasing Nietzche) that state is a rope between tribe and superstate. In his latest book Maurizio Molinari, director of Italian journal La Stampa, deals with the theme of new tribes in the ME / NA as well as in the West. However, it should be noted that if the tribe can be politically understood in the West, in the ME and NA it assumes stronger, deeper and divisive meanings. The disintegration of states of despotic regimes and almost always without a popular legitimacy has pushed the re-aggregation – as Molinari says – around pre-static identities (see Libya, Iraq, Yemen, Syria) and hence strengthening tribal clans.
Without simplifying too much, and focusing on Molinari’s words “without popular legitimacy”, in these collapsed states, the individual / clan begins to do justice himself. Result? Chaos and return to the state of nature or “all against all” by Hobbes and Locke. If, in the sixteenth century after the Thirty Years’ War, the citizens, exhausted by continuous conflicts, felt the need to limit some of their rights and powers to transfer them to the sovereign state, here practically we move in the opposite direction.
We ran the risk of adding at the four ex-states mentioned above, at least another pair following the Arab Spring. And we cannot exclude that “external” aggregative forces have helped for their strategic energy importance.
Nickel, copper, lithium and cobalt are not in the ME and NA.
In 2016, for the first time, electricity investments surpassed with 718 billion dollars, the 649 billion of the oil & gas segment. The signal is there but with the low oil price, investments are lower.
The Financial Times, on the possible Saudi Aramco’s IPO, said that this could be deeply affected by new environmental policies. From the estimated $ 2 trillion initially, the market value of the Arab oil giant could fall to just over trillion.
While the energy sector is in distress, the one related to minerals linked to the e-car (and battery) market, i.e. cobalt, nickel, lithium and copper, lives a favorable time. Glencore’s CEO (mining giant and commodity trader) expects that by 2030 30% of the cars could be electric.
Investec Asset Management focusing on emerging markets, introduces the 2×2 matrix in figure: it considers only the 23 countries included in the MSCI Emerging Market Index, but the conclusions are expandable. The index measures the stock market performance for emerging markets. The analysis considers the liquidity of the dollar and commodities’ demand driven by China. Some of the countries present in the North East quadrant of the matrix in the picture, i.e. exporters and active current accounts, no longer sleep on seven pillows as before.
And if Algeria, Iraq, Saudi Arabia, Angola, Venezuela, and Kazakhstan were to be considered: you would find them now in the North West quadrant (so deficit).
How will evolve geopolitics in the Renewable Age?