By Afeef Nessouli, Special to CNN
Editor’s note: Afeef Nessouli is an intern with Fareed Zakaria GPS. The views expressed are his own.
The debate over whether the Iraq War was really all about oil may never be fully resolved in some minds, but one thing is clear – either way, Iraq has yet to really cash in. The country’s GDP may have risen several fold in the decade since the war began, yet its income per capita lags not only oil rich neighbors such as Kuwait and Saudi Arabia, but also relative economic minnows including Botswana, Turkmenistan and Albania. This is despite the fact that it sits upon the world’s fourth largest oil reserves and could double its production in the next few years.
The question, then, is will Iraq be able to meet its oil potential?
By Ravi Agrawal, CNN
The Arab Spring was a series of seismic, historic events. But 2012 shows the term itself is no longer a useful description. Spring implies a summer and a winter to follow – neither season is an apt adjective. And can we really club the Arab world together under one banner? Each country has undergone its own revolution and is moving on its own divergent trajectory. That trend will accelerate in 2013.
Economists point to one factor that influences countries in the Middle East and North Africa above all others: oil. Consider that of all the regimes to fall during the Arab revolutions of the last two years, not a single one was an oil exporter. Petro-states have the funds to keep their people satisfied. So I was surprised when I looked at the International Monetary Fund’s latest growth outlook. It projects that the region’s oil exporters (Iran, Saudi Arabia, Algeria, United Arab Emirates, Qatar, Kuwait, Iraq) will have grown by 5.3 percent in 2012. Oil importers (Egypt, Morocco, Tunisia, Sudan, Lebanon, Jordan) will have grown only 1.2 percent. But come 2013, that disparity will shift. The IMF projects that oil exporters will slow to 3.8 percent growth while oil importers will speed up to 3.3 percent growth.
This is the fifth in a series of entries looking at what we can expect in 2013. Each weekday, a guest analyst will look at the key challenges facing a selected country – and what next year might hold in store.
By Jonathan Kay, Special to CNN
Editor’s note: Jonathan Kay is the Managing Editor for Comment at Canada’s National Post newspaper and a fellow at the Washington, D.C.-based Foundation for Defense of Democracies. Follow him @jonkay. The views expressed are his own.
Canada is in a fortunate position relative to other developed Western nations. Our government is stable. Our budget deficit is small. Our real estate market is healthy (if somewhat overheated). And unemployment is relatively low. Only the occasional flourish of Quebec separatism keeps things lively in the Great White North. The biggest challenge my country will face in 2013 – and for many years after that – will be the problem of plenty. Specifically, how will Canada manage its large and growing oil wealth?
Canada currently produces just over 3 million barrels of oil per day (b/d), making us the world’s 7th largest producer, and the single largest supplier of oil imports to the U.S. market. Thanks to the ongoing expansion of Alberta's oil sands, production is expected to more than double by 2030, to 6.2-million b/d, transforming Canadian into an energy superpower.
By Blake Clayton, Special to CNN
Editor’s note: Blake Clayton is a fellow for energy and national security at the Council on Foreign Relations. He recently wrote a major new study on the U.S. Strategic Petroleum Reserve published by the Council, available here.
The chaos in Libya, Egypt and elsewhere has the oil market on edge, and with good reason. But there is another scare among oil traders, much closer to home, one that could be catastrophic for gasoline prices if oil imports are disrupted this fall.
Speculation among experts is rife that the U.S. Strategic Petroleum Reserve (SPR) is no longer able to release oil to the market as quickly as the Department of Energy claims it can. If true – and there is good reason to believe it is – it could destroy the White House’s ability to prevent oil prices from skyrocketing if the commotion in the Middle East worsens. This needs to be fixed – and fast.
By Kevin Massy and Govinda Avasarala, Special to CNN
Editor’s note: Kevin Massy is associate director of the Energy Security Initiative at the Brookings Institution in Washington, D.C. Govinda Avasarala is senior research assistant with the Energy Security Initiative. The views expressed are their own.
“Energy Independence” has been the rallying cry of politicians since the administration of Richard Nixon and an object of ridicule among cynical energy wonks for about as long. The truth is that the United States can rid itself of that pesky dependency on unreliable international markets. But maybe it isn’t such a good idea.
First, let’s establish what we’re talking about. When politicians rhapsodize about “energy independence” they are nearly always referring to oil. “Energy independence” suggests a scenario in which the United States supplies its own needs, islanded from international oil markets and unaffected by international disruptions to oil supply; a scenario in which unrest in Dhahran will not affect John Doe in Des Moines. To achieve this, the U.S. simply has to make sure that oil consumption always meets domestic oil production, and that all exports and imports are prohibited. But this is not as straightforward as it sounds.
By Rob Sobhani, Special to CNN
Rob Sobhani is president of Caspian Group Holdings, which has interests in green energy and infrastructure projects, and author of ‘King Abdullah of Saudi Arabia: A Leader of Consequence’. The views expressed are his own.
King Hamad bin Isa al-Khalifa of Bahrain is one of America’s key allies in the Persian Gulf. He’s also among a growing number of political leaders in the Middle East who see more than oil in the region’s future. After all, the Middle East is blessed with an abundance of another natural resource: sunshine.
Bahrain wants to take full advantage of this reality, and harnessing solar energy has become a top priority in the country. But the government has also taken the surprising step of seeking long-term partnerships with leading American solar energy companies.
By Michael Levi, CFR
Michael Levi is director of the Program on Energy Security and Climate Change at the Council on Foreign Relations. This entry originally appeared here. The views expressed are his own.
Last week, the Obama administration tightened its oil-related sanctions against Iran. This was followed by new congressional legislation that promises to extend those sanctions further. Yet less than a year ago, most observers found such stringent sanctions against the Iranian oil sector unthinkable.
What has happened to so fundamentally change the picture? It’s worth looking at three things.
A Change in Politics
There’s no question that the Obama administration was initially less enthusiastic about oil sanctions than Congress was. But political power moved in ways that gave Congress more control. Ultimately, the administration struck a bargain rather than try to defeat sanctions legislation. It got language that allowed it to exercise extensive discretion in applying the sanctions: it could hold off if the economy would be put at substantial risk; it could also exempt other countries that were making solid efforts to wean themselves off Iranian crude. The decision to cooperate with Congress was critical – it opened the door for other factors to push the United States further down the sanctions road.
By Fareed Zakaria
In my column in today's Washington Post, I argue that the rise of shale gas is shaping up to be the biggest shift in energy in generations. And its consequences - economic and political - are profoundly beneficial to the United States. Here's an excerpt:
No one could have predicted that oil prices would rise to today’s levels. Saudi Arabia’s oil minister, Ali al-Naimi, says that they are irrationally high, pointing out that world demand is lower than the available supply and that Saudi oil inventories around the world are largely untapped. The “irrational” cause, of course, is fear of a war with Iran. But it would also have been unpredictable that a 47 percent hike in oil prices since November 2010 would not cause a major slowdown in the U.S. economy. One reason it hasn’t might well be the rise of shale gas.
By now, the basic facts are well known. It was only a few years ago that most experts were warning of an imminent shortage of natural gas in the United States. But thanks to the efforts of a small private company, Mitchell Energy, combined with a horizontal drilling procedure called hydraulic fracking, it has become possible to extract vast quantities of natural gas from shale, which this country has in abundance.
Editor's Note: Michael A. Levi is the Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations where he blogs. This post is part of a CFR Expert Roundup. It is reprinted with permission of the Council on Foreign Relations.
By Michael A. Levi, CFR.org
There is a myth, popular among both politicians and the public, that high oil prices are the greatest economic risk that the United States faces when it comes to energy. They're wrong; wildly changing prices, not high ones per se, are what really do damage. Rapidly rising prices drain consumers' wallets without giving them time to adapt; frequent change also makes long-term investments more difficult. People may applaud when prices crash, but to turn a cliché on its head, what goes down must go up.
Policymakers should focus their responses along two dimensions: steps that blunt intolerable volatility and ones that help consumers cope with the consequences of whatever remains.
Some volatility is natural and quite tolerable. Markets aren't perfect predictors of the future, which means that prices will shift to and fro. Since there's no reason to think that governments would be smarter, they usually shouldn't try to override what the markets do. Moreover, modest volatility can prompt consumers to take steps, like shifting to more fuel-efficient cars that will help them if volatility later explodes. FULL POST
Editor's Note: The following post comes from ThinkProgress, a division of the liberal think tank the Center for American Progress Action Fund, based in Washington, DC. Joe Romm is a Fellow at American Progress and is the editor of Climate Progress. This post is reprinted with permission.
By Joe Romm, ThinkProgress
The public understands Obama isn’t to blame for high gasoline prices, as recent polls make clear. Even the Wall Street Journal and Cato Institute agree: “It’s not Obama’s fault that crude oil prices have increased.”
But as the New York Times pointed out Sunday [jn an op-ed], facts don’t stop the GOP:
The issue of gas prices has not only been misunderstood but thoroughly distorted by relentless ideological spin from industry and its political allies, mainly Republican. Hardly a day goes by that some industry cheerleader somewhere — be it Gov. Bobby Jindal of Louisiana or Senator James Inhofe of Oklahoma — does not flay President Obama for driving up oil prices by denying the industry access to oil and gas deposits and imposing ruinous environmental rules. Senator John Barrasso, a Wyoming Republican, said last week that Mr. Obama should be held “fully responsible for what the American public is paying for gasoline.”
The Times put together some great charts using EIA data. They make clear 1) oil prices are set on a global market and 2) the strategy of “Drill, Baby, Drill” adopted by the GOP and President Obama has succeeded at increasing production and decreasing dependency on foreign oil — but it has unsurprisingly failed at affecting global markets. FULL POST
When gas prices are high especially in an election year, the president is going to be blamed. His opponents promise to lower the price and quickly. On Anderson Cooper the other day, I argued that this is pure political pandering. The president can't do much in the short term to affect the price of oil. I discussed this with Anderson Cooper and Stephen Moore, senior economics writer for the Wall Street Journal. Here's a transcript of our discussion:
Anderson Cooper: President Obama spent today attending fund-raisers for his re-election campaign raising more than $5 million. The men who want the president's job were also on the trail ahead of Tuesday's primary in Illinois. One line of attack picking up considerable steam for the leading Republican candidates is the rising price of gas. They would have you believe that bringing down gas prices is as simple as casting a vote for president. FULL POST
Hundreds of you have submitted very thoughtful questions for me through Facebook, Twitter and my blog. Over the next few days, I am going to post my text and video responses to some of the most common questions and a few others that caught my eye.
The rising price of oil is the single most serious threat to the global economic recovery, the U.S. economy and President Obama's reelection prospects. Right now, we are beginning to move into a pretty broad-based recovery. Manufacturing is rising for the first time in 25 years. Technology firms are doing very well. Retail is picking up. The green shoots of the housing recovery are emerging and that's very important because housing has led almost every recovery since World War II. .
But all the while that you have this economic good news, you are beginning to see oil prices rise quite substantially. They're up about 15 percent over the last few months. And that could put a damper on all this good news. Why is the price of oil rising? FULL POST