By Peter Forman
Published: August 29, 2008
New York—Is it just a coincidence that the overwhelming majority of the world's oil reserves are below repressive, regressive regimes? We think not. Here's why:
First a fact: The top ten countries, by oil reserves, are:
Country Crude Oil (billion bbls)
Saudi Arabia 262
Canada 179
Iran 136
Iraq 115
Kuwait 102
United Arab Emirates 98
Venezuela 80
Russia 60
Libya 41
Nigeria 36
Is it just a coincidence that nine out of ten are repressive, regressive regimes — what we might call "not free?"
Actually, oil (as any high-value commodity might) creates both the opportunity and incentive for these types of regimes to flourish.
Countries like the United States that have extremely diverse economies depend on a progressive, forever self-reinventing society to remain competitive.
But when you can stick a straw in the ground and suck out oil for just a few dollars a barrel (and sell it for over a hundred dollars a barrel), you don't just negate the need for a progressive economy and society, you also have the wealth to buy off your opponents.
With the dramatic rise in oil prices over the past ten years, the energy-consuming nations have increased the flow of wealth to the energy-exporting nations from about $250 billion a year to $2.5 trillion a year.
Look at just two examples of the corrupting effects of this wealth transfer:
Ten years ago, Russia was bankrupt and on the path to democracy and capitalism.
Now it is an energy-exporting titan with mock elections, destroyed freedom of the press, and an increasingly nationalized oil and gas sector.
Ten years ago, Venezuela was a capitalist democracy.
Today under Hugo Chavez, it is exporting socialism throughout America's backyard (the Caribbean and South and Central America -- see prior News Analysis on the "Cold War" in the Caribbean for more). It is nationalizing its banking, manufacturing, and energy industries, shutting down press freedoms, spreading hostility against America, and damaging its own formerly democratic character.
And, of course, the OPEC world has always been associated with xenophobic regimes that show little to no tolerance for foreigners, democracy, women, other religions, or most any other progressive societal values. Saudi Arabia, as a prime example, continues to buy "short-term" breathing space by supporting and protecting the radical and virulent anti-West Wahhabists.
The countries with the largest energy reserves and production have increasingly tilted away from American and Western interests as the price of oil has risen.
American petrodollars unintentionally prop up these repressive, regressive regimes.
Not until we bring down the price of oil, which can only be achieved by demand destruction, will the Axis of Energy be weakened.
Not until we diversify our energy sector, through flex fuels, electric, and other technologies, can we even begin to move beyond oil.
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