Tuesday, July 06, 2004
Energy Insecurity, or Ditch Kyoto, Go Nuclear!

The oil price remains high in comparison to price fluctuations since the first Gulf War, even though it is far lower, in real terms, than the oil crises of the 1970s. The market now includes a premium for the political risk that dogs the sources of our primary energy source.

Ed Blanche, a member of the International Institute for Strategic Studies, provides a survey of the unstable regions that now provide most of the world's oil. Most are in areas marked by ideological rivalry and political instability, where anti-Americanism has become a populist tool and oil wealth a source of kleptocratic wars.

The current market is peculialy vulnerable to the actions of a single producer such as Chavez of Venezuela due to the convergence of a number of factors: limitations of supply amongst providers, increasing demand due to new entrants into the oil market, and the instability of the 'swing producer', Saudi Arabia. These factors may lessen or worsen depending upon developments.

Britain has allied itself with the United States in the search for new energy sources, and faces the risk that any producer boycott against the US could include ourselves. However, the Blair government has donned a green tinged hairshirt under the lunatic demands of the Kyoto treaty and is knowingly pursuing green policies even though concerns have been raised about our increasing dependence upon oil from unstable sources. Moreover, the European powers play upon the Kyoto pedestal whilst clandestinely appeasing those who can assure their supply of oil: Russia and the Middle East. There is no indication that soft-pedalling Iran or the Arab states will prove more beneficial in the long run.

To conclude, Britain faces a credibility gap in energy, until new technologies provide real alternatives to fossil fuels at a credible price. The response of the government in rigging the market and directing investment towards renewable energy sources will exacerbate our insecurity. The first step towards redressing this gap would be to ditch the Kyoto Treaty, free up the energy market and assess whether nuclear power stations are a necessary insurance policy to redress any possible price spikes in an increasingly volatile market for fossil fuels.

(23.10, 6th July 2004)


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