We all have problems
I tweeted this morning about my weekend in Doha:
Hard to imagine a more telling indictment of US energy policy the past 40 years!
Why did I say that? Because it’s true: the extraordinary construction, wealth and obesity that characterize the tiny emirate of Qatar are the result of the almost 40 years since Richard Nixon’s declaration of intent to make the United States energy independent. Qatar is per capita the highest GDP country in the world today. It has a tiny population of citizens (I’m told the official number is secret, but fewer than 250,000 citizens seems to be the consensus) out of a total population of 1.9 million. The country’s wealth is due almost entirely to its exports of oil and natural gas.
A weekend there is a strange experience, especially if you are attending a conference on US/Islamic World relations. Very few Qataris were present, not least because the Emir is once again suggesting that he will retire soon, making the big thobes jockey for advantage and worried about musical chairs. So I spent three days couped up (not exactly imprisoned) in a very fine hotel kept at frigid temperatures and learned a lot of interesting things, few of them about Qatar. But even a short drive through town is enough to understand that there is an enormous amount of money, and sometimes even good taste, behind the extensive building projects. I’m also told there is a fine Islamic art museum. Maybe I’ll get there next time.
As for American energy policy, it has managed to fail on all fronts until recently, when oil and gas production has started to increase (fracking, horizontal drilling and all that) and technology available for most of the past 40 years has been taking a bite out of demand. It’s not that we’ve done nothing. The amounts of energy needed to produce a dollar of GDP have declined pretty steadily over those 40 years, but economic growth has ensured that our oil imports have mostly increased. With Chinese demand also increasing sharply, oil prices have risen from their slump in the 1980s to reach and even exceed the peaks (in real terms) of the 1970s. As a result, we’ve pumped large quantities of money into the coffers not only of the Qataris but also the Russians, the Iranians, the Venezuelans and other antagonists, especially in the last decade.
We have a wonderful opportunity now to end this self-defeating practice. If we continue to increase energy efficiency and diversify energy sources while increasing the domestic supply of oil and gas, someone else (mainly China) will be financing the frigid luxury hotels of Qatar in the future. I spent some time on Al Hurra TV this morning discussing Chinese inroads into Iraqi oil production. It seems to me entirely understandable that a country with the voracious demand of China would invest in Iraq’s readily produced and exported resources, especially as the Chinese don’t need production sharing agreements but are prepared to work on service contracts (Western companies don’t like that because they can’t “book” their share of the resource). I’d much rather see us focusing on Western Hemisphere resources.
Let me underline: I don’t begrudge the Qataris or the Iraqis the benefit of exploiting their energy resources. I looked around more than once in Doha and thought they’ve been a whole lot smarter than us. I definitely plan to see the Islamic art museum next time. If the Iraqis would stop killing each other, they might be able to build a few nice things too. But then I noticed the sea water level in Doha and realized we all have our problems. Our burning of their resource has not been all to their benefit, or ours.
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Dan, insightful reportage from Doha. I’d add the corollary observation that as the US (hopefully) draws down its need for oil/gas imports from the ME and elsewhere and China fills that space in our stead, they are going to find it increasingly difficult to stay aloof from the political maelstroms that invariably afflict oil-producing states. Witness the struggles of Chinese oil companies caught between the two Sudans, for example. The Chinese model has been to studiously keep things on a business footing and stay out of the politics. But that’s going to be very hard to do in places like Iraq – especially with a diminished US lighting rod to rely on.
Rusty