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Energy authoritarians

24 December 2012 By Una Galani, Christopher Swann

Autocrats and strongmen have long held the whip hand in global energy. Now democracies are starting to outclass countries like Iran, Venezuela and Russia in oil and gas production. That should reduce the economic and political influence of authoritarian states. And the West’s booming output ought to steady fuel prices, a rare boon for the global economy.

Until recently rich nations looked likely to become more reliant on repressive regimes for their energy needs. The democratically deficient Organization of the Petroleum Exporting Countries – whose members include Saudi Arabia and Kuwait – controls about 80 percent of the world’s crude reserves. Add in Russia, which has been veering back toward one-party rule under President Vladimir Putin, and this share rises to 85 percent. With demand for hydrocarbons surging in China, this seemed like a recipe for higher prices and even greater clout for oil potentates.

But the balance of power is shifting in the direction of mature democracies. They are likely to enjoy the biggest increases in oil and gas output in 2013. Revolutionary drilling techniques have enabled the United States to boost oil output by a third since 2008. It is now on track to surpass both Saudi Arabia and Russia and become the world’s top producer by 2017, according to the International Energy Agency. Canada is not far behind. Meanwhile Australia looks set to overtake Qatar as the leading global provider of liquefied natural gas by 2020. And within the Middle East the best hope for rising output is Iraq – though its status as a representative democracy is far from secure.

This trend should curtail the ability of energy bullies to throw their weight around. Russia, for example, which has often used its vast reserves to influence neighbors, was recently forced to cut prices for gas sold to Poland. Authoritarian regimes like Iran will also have less potential to cause disruptive spasms in oil trading.

Objectionable governments will continue to loom large in energy markets. And even if the United States becomes self-sufficient, China won’t. Still, climbing hydrocarbon output around the globe is at least providing a welcome check on the power of energy strongmen.


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