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1. Follow the External (Balance of Payments) Breakevens of the Oil Exporters

Author:
Brad W. Setser
Publication Date:
07-2017
Content Type:
Commentary and Analysis
Institution:
Council on Foreign Relations
Abstract:
The global impact of oil’s fall from $100 plus to under $50 a barrel has not gotten as much attention as I think it deserves. For most oil exporters, it has been a profound shock—one that forced such a massive contraction in imports that it pulled down global trade (far more than the trade remedies that tend to dominate the ‘trade” news). A few countries adjusted quickly and relatively efficiently (Russia), though not painlessly. A few have struggled to adapt—notably, because of its large external debt, poor policies, and growing political crisis, Venezuela.
Topic:
Oil and Global Political Economy
Political Geography:
Global Focus

2. Interactive: Oil Exporters' External Breakeven Prices

Author:
Brad Sester and Cole Frank
Publication Date:
07-2017
Content Type:
Special Report
Institution:
Council on Foreign Relations
Abstract:
The 2014 fall in global oil prices, from over $100 a barrel to around $50 a barrel, reduced the export proceeds of the world’s main oil- and gas-exporting economies by about $1 trillion. After a decade of largely uninterrupted high oil prices, this dramatic swing has tested the economic resiliency and political adaptability of oil-exporting countries. One of the best single measures of the resilience of an oil- or gas-exporting economy is the oil price that covers its import bill—the external breakeven price.
Topic:
Oil and Global Political Economy
Political Geography:
America

3. Arctic Bungle

Author:
Mike Wenstrup
Publication Date:
12-2013
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Scott Borgerson (“The Coming Arctic Boom,” July/August 2013) is right to argue that “Alaska should invest its considerable wealth in its underdeveloped university system, finance ambitious infrastructure projects, and create policies that attract talented immigrants and encourage them to start new businesses, such as renewable energy ventures.” Unfortunately, the recently passed Alaskan Senate Bill 21 reduces the income Alaskans receive from oil produced on public lands. Alaska has already begun to run deficits, is unable to finance university investments, and, for the fourth straight year, has frozen funding for basic classroom instruction. Oil companies have high profit margins yet pay less for extracting oil in Alaska than in Norway or countless other countries. Alaskan Governor Sean Parnell is squandering an opportunity to convert oil wealth into human and physical capital. Alaska's oil resources are finite, and the state should invest the profits now in capital development and economic diversification.
Topic:
Development, Economics, and Oil
Political Geography:
Norway and Alaska

4. Lessons Learned From the 2011 Strategic Petroleum Reserve Release

Author:
Blake Clayton
Publication Date:
09-2012
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
On June 23, 2011, the International Energy Agency (IEA) announced plans to coordinate the release of emergency oil stockpiles in an attempt to offset an ongoing loss of crude oil production in Libya. In the six months prior, oil prices had jumped more than 20 percent, as political upheaval in Libya had prevented an estimated 132 million barrels of oil from reaching the market. IEA member country policymakers feared that high oil prices risked undermining a nascent global economic recovery. To combat that threat, twelve IEA member countries made roughly sixty million barrels of crude oil and refined oil products, such as diesel and gasoline, available to the market. The release, which the IEA referred to as the “Libya collective action,” lasted from July 23, 2011, until September 15, 2011. It was only the third time in its nearly thirty-year history that the IEA, which was founded after the 1973 oil crisis, has undertaken a coordinated release, though the United States has unilaterally released strategic stocks on several occasions for reasons that include raising revenue and countering rising heating oil prices.
Topic:
Climate Change, Energy Policy, International Cooperation, International Organization, Oil, and Natural Resources
Political Geography:
Libya

5. Renewed Violence in Iraq

Author:
Douglas A. Ollivant
Publication Date:
08-2012
Content Type:
Policy Brief
Institution:
Council on Foreign Relations
Abstract:
Iraq remains a fragile state deeply traumatized and riven by thirty years of war, sanctions, occupation, and civil strife. Although there are numerous positive signs of progress in Iraq—violence has fallen to its lowest level since 2003, its economy is growing modestly, oil production recently surpassed that of Iran, and foreign investment is beginning to restore infrastructure decayed by years of war and sanctions—the risk of acute instability and renewed conflict remains. Already, in the wake of the U.S. military withdrawal in December 2011, Iraq has seen a fierce political struggle between Prime Minister Nouri al-Maliki and many of his rivals in the Sunni-dominated Iraqiya parliamentary coalition, plus increasing tension with at least some segments of the Kurdish minority. For the positive trends to continue, Iraq will need to contain various threats to internal stability and weather regional turmoil that could worsen significantly in the coming months. The United States has a significant stake in helping Iraq overcome these challenges; Iraq is a critical state within a critical region.
Topic:
Conflict Resolution, Development, Oil, Fragile/Failed State, and Sectarian violence
Political Geography:
United States, Iraq, Middle East, and Arabia

6. The Arab Spring at One

Author:
Fouad Ajami
Publication Date:
03-2012
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Throughout 2011, a rhythmic chant echoed across the Arab lands: "The people want to topple the regime." It skipped borders with ease, carried in newspapers and magazines, on Twitter and Facebook, on the airwaves of al Jazeera and al Arabiya. Arab nationalism had been written off, but here, in full bloom, was what certainly looked like a pan-Arab awakening. Young people in search of political freedom and economic opportunity, weary of waking up to the same tedium day after day, rose up against their sclerotic masters.
Topic:
Economics and Oil
Political Geography:
America, Europe, and Arabia

7. A Farewell to Fossil Fuels

Author:
Amory Lovins
Publication Date:
03-2012
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Nearly 90 percent of the world's economy is fueled every year by digging up and burning about four cubic miles of the rotted remains of primeval swamp goo. With extraordinary skill, the world's most powerful industries have turned that oil, gas, and coal into affordable and convenient fuels and electricity that have created wealth, helped build modern civilization, and enriched the lives of billions. Yet today, the rising costs and risks of these fossil fuels are undercutting the security and prosperity they have enabled. Each day, the United States spends about $2 billion buying oil and loses another $4 billion indirectly to the macroeconomic costs of oil dependence, the microeconomic costs of oil price volatility, and the cost of keeping military forces ready for intervention in the Persian Gulf. In all, the United States spends one-sixth of its GDP on oil, not counting any damage to foreign policy, global stability, public health, and the environment. The hidden costs are also massive for coal and are significant for natural gas, too. Even if oil and coal prices were not high, volatile, and rising, risks such as fuel insecurity and dependence, pollution-caused illnesses, energy-driven conflicts over water and food, climate change, and geopolitical tensions would make oil and coal unattractive. Weaning the United States from those fossil fuels would require two big shifts: in oil and electricity. These are distinct -- nearly half of electricity is made from coal, and almost none is made from oil -- but power plants and oil burning each account for over two-fifths of the carbon that is emitted by fossil-fuel use. In the United States, three-fourths of electricity powers buildings, three-fourths of oil fuels transportation, and the remaining oil and electricity run factories. So saving oil and electricity is chiefly about making buildings, vehicles, and factories far more efficient -- no small task.
Topic:
Environment and Oil
Political Geography:
United States

8. Armed Clash in the South China Sea

Author:
Bonnie S. Glaser
Publication Date:
04-2012
Content Type:
Policy Brief
Institution:
Council on Foreign Relations
Abstract:
The risk of conflict in the South China Sea is significant. China, Taiwan, Vietnam, Malaysia, Brunei, and the Philippines have competing territorial and jurisdictional claims, particularly over rights to exploit the region's possibly extensive reserves of oil and gas. Freedom of navigation in the region is also a contentious issue, especially between the United States and China over the right of U.S. military vessels to operate in China's two-hundred-mile exclusive economic zone (EEZ). These tensions are shaping—and being shaped by—rising apprehensions about the growth of China's military power and its regional intentions. China has embarked on a substantial modernization of its maritime paramilitary forces as well as naval capabilities to enforce its sovereignty and jurisdiction claims by force if necessary. At the same time, it is developing capabilities that would put U.S. forces in the region at risk in a conflict, thus potentially denying access to the U.S. Navy in the western Pacific.
Topic:
Conflict Prevention, Security, Arms Control and Proliferation, Oil, Natural Resources, and Territorial Disputes
Political Geography:
United States, China, Malaysia, Israel, Taiwan, Vietnam, Southeast Asia, and Brunei

9. Will Oil Drown the Arab Spring?

Author:
Michael L. Ross
Publication Date:
09-2011
Content Type:
Journal Article
Journal:
Foreign Affairs
Institution:
Council on Foreign Relations
Abstract:
Summary: No state with serious oil wealth has ever transformed into a democracy. Oil lets dictators buy off citizens, keep their finances secret, and spend wildly on arms. To prevent the “resource curse” from dashing the hopes of the Arab Spring, Washington should push for more transparent oil markets -- and curb its own oil addiction. MICHAEL L. ROSS is Professor of Political Science at the University of California, Los Angeles, and the author of the forthcoming book The Oil Curse: How Petroleum Wealth Shapes the Development of Nations. Even before this year's Arab uprisings, the Middle East was not an undifferentiated block of authoritarianism. The citizens of countries with little or no oil, such as Egypt, Jordan, Lebanon, Morocco, and Tunisia, generally had more freedom than those of countries with lots of it, such as Bahrain, Iraq, Kuwait, Libya, and Saudi Arabia. And once the tumult started, the oil-rich regimes were more effective at fending off attempts to unseat them. Indeed, the Arab Spring has seriously threatened just one oil-funded ruler -- Libya's Muammar al-Qaddafi -- and only because NATO's intervention prevented the rebels' certain defeat. Worldwide, democracy has made impressive strides over the last three decades: just 30 percent of the world's governments were democratic in 1980; about 60 percent are today. Yet almost all the democratic governments that emerged during that period were in countries with little or no oil; in fact, countries that produced less than $100 per capita of oil per year (about what Ukraine and Vietnam produce) were three times as likely to democratize as countries that produced more than that. No country with more than a fraction of the per capita oil wealth of Bahrain, Iraq, or Libya has ever successfully gone from dictatorship to democracy. Scholars have called this the oil curse, arguing that oil wealth leads to authoritarianism, economic instability, corruption, and violent conflict. Skeptics claim that the correlation between oil and repression is a coincidence. As Dick Cheney, then the CEO of Haliburton, remarked at a 1996 energy conference, "The problem is that the good Lord didn't see fit to put oil and gas reserves where there are democratic governments." But divine intervention did not cause repression in the Middle East: hydrocarbons did. There is no getting around the fact that countries in the region are less free because they produce and sell oil.
Topic:
NATO, Government, and Oil
Political Geography:
Iraq, Ukraine, Middle East, Kuwait, Libya, Vietnam, California, Saudi Arabia, Spain, Lebanon, Egypt, Jordan, Bahrain, and Tunisia

10. Saudi Arabia in the New Middle East

Author:
F. Gregory Gause III
Publication Date:
12-2011
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
There is arguably no more unlikely U.S. ally than Saudi Arabia: monarchical, deeply conservative socially, promoter of an austere and intolerant version of Islam, birthplace of Osama bin Laden and fifteen of the nineteen 9/11 hijackers. Consequently, there is no U.S. ally less well understood. Many U.S. policymakers assume that the Saudi regime is fragile, despite its remarkable record of domestic stability in the turbulent Middle East. “It is an unstable country in an unstable region,” one congressional staffer said in July 2011. Yet it is the Arab country least affected in its domestic politics by the Arab upheavals of 2011. Many who think it is unstable domestically also paradoxically attribute enormous power to it, to the extent that they depict it as leading a “counterrevolution” against those upheavals throughout the region. 2 One wonders just how “counterrevolutionary” the Saudis are when they have supported the NATO campaign against Muammar al-Qaddafi, successfully negotiated the transfer of power from Ali Abdullah Saleh in Yemen, and condemned the crackdown on protestors by Syrian president Bashar al-Assad, and how powerful they are when they could do little to help their ally Hosni Mubarak in Egypt.
Topic:
Security, Foreign Policy, Diplomacy, Economics, International Trade and Finance, Islam, Oil, and Bilateral Relations
Political Geography:
United States, Middle East, Arabia, and Saudi Arabia