What Happens When Oil Runs Out?


By Julianne Geiger

The world as we know it today depends on a finite resource. Whether that’s a photo finish or a slow transition, whether it’s at the hands of something better or when the last barrel that exists is found, its end will come, with ramifications far beyond concerns for transportation and power generation.

No matter how or when, oil’s end will shift the geopolitical landscape and rebalance the entire world.

It’s Already Begun

One needs only to look at what some of the world’s largest oil producers and oil consumers are doing to see that this shift has already begun. The push for a greener tomorrow is already pushing nations to develop alternative energies such as wind, solar, and hydropower. While these are imperfect substitutes, the fact that the world is eyeing something more carbon neutral means that the day will come when oil is upstaged, forever changing the balance of power throughout the world—and the major players know it.

But not all nations will be able to preserve their clout that for now, is tied to oil.

The Day the Oil Princes Died

Many great nations have clung to power through their vast oil riches, and no one has clung to power more fastidiously through oil riches than Saudi Arabia and the United Arab Emirates.

Princes in both nations have doled out munificent subsidies and handouts thanks to their great oil wealth, solidifying the power of their ruling class in their country.

But it hasn’t always been so.

Prior to discovering oil in the ‘60s, the UAE, now “so blindingly rich it’s almost sickening,” relied on its pearl and fishing industries. Water was hard to come by, and literacy was at 10%. It’s hard to imagine now, but without oil, this extreme wealth that the UAE now enjoys would not have been possible–and it won’t last forever.

For Saudi Arabia, oil wealth came a few decades earlier. Since then, It has used its massive oil reserves and prolific oil production as a weapon. Its budget relies heavily on its oil revenues—70% of its total export revenue is from petroleum products.

“Saudi Aramco is almost like the basis of politics in Saudi Arabia. Everybody in Saudi Arabia is – one way or another – beneficiary of Saudi Aramco,” Jim Krane, an energy researcher at Rice University’s Baker Institute for Public Policy said of Aramco’s importance.

This heavy reliance on oil puts the princes from both nations in precarious positions should the world no longer have need of the resources they possess. And it has inadvertently placed its citizenry squarely in the hands of the oil industry. The strides both Saudi Arabia and the UAE are taking today suggest that both are aware of the danger that lies ahead.

Both nations are now using their great wealth to diversify their economies and to develop other modes of energy. But will it be enough to keep them in power?

The UAE undertook a monumental solar project that is the biggest in all the world. But while this will provide power to its people, it will do little to replace the wealth created through the exporting of crude.

Saudi Arabia’s Crown Prince Mohammed bin Salman, too, is making inroads to prepare for the day without oil. MBS has put forward an ambitious plan to diversify its economy. But instead of hunting for alternative energies, it is simply looking for other ways to sustain its citizens who have become accustomed to living in the lap of luxury. And its Vision 2030 plan to do just that is calling for a monstrosity of a city valued at $500 billion. It’s a fantastic creation of a city that will have fake rain, robot dinosaurs, flying taxis, artificial moons, and more. But is it realistic? If so, will it be enough?

Will their world influence dwindle, no longer be able to meet the world’s needs? Will it also be willing to get into the next wave of energy transformation?

The Search Is On For A New Stick

Saudi Arabia and the UAE won’t be the only nations found at the mercy of a world without oil. Oil has also been used as a stick by world powers seeking to bring about change.

The United States has used oil—other country’s oil—as a tool to strongarm nations–most recently Iran and Venezuela–into change. The United States has taken creative steps in developing its oil industry to insulate it for the day the oil stick isn’t quite as long or hard-hitting.

After being on the receiving end of Saudi Arabia’s strongarm tactics during the days of the oil embargo, America made a push to become more energy independent. But this is a short-term stop-gap measure. While it has successfully lessened its dependence on Middle Eastern crude oil through remarkable shale output growth, it is simultaneously supporting alternative energies through subsidies, and working on creating alternative energies as a nation. Solar subsidies, biofuel subsidies, and electric vehicle subsidies have not pushed the oil industry onto the backburner, but they have shown progress, even if they are not the final oil substitute.

Regardless, these are poor substitutes for the United States’ current stick—choking off the source of income from other oil-producing nations. When Venezuela is no longer sitting on the largest pile of the world’s greatest resource, the stick that is currently being used to oust socialist Maduro from power will be ineffective. Likewise, the stick used to force Iran into renegotiating its nuclear agreement—sanctioning its oil industry—will be useless.

But the United States is also looking to make its way back to the moon, and like other nations, it is on the lookout for valuable minerals that are found mainly out of this world—such as Helium-3 used in nuclear fusion. If it is successful in finding “the next oil” on the moon, it may very well gain another stick to wield.

Iran too has used oil as a stick. It has long used its physical position near the most important oil chokepoint in the world to insulate itself from foreign meddling. It has used threats of closure as a weapon against other nations, which has been fairly successful given that nearly a third of all oil transported throughout the world traverses through this narrow waterway. Recent attacks on oil tankers off the coast of Oman and several oil tanker seizures in the Strait of Hormuz have highlighted just how critical this waterway is. In a post-oil world, the Strait will become far less important, and Iran will have to find a new threat–one that the world may like even less than the current one.

Purchasing Power

Like the great oil producers, great oil purchasers like India and China have acquired economic power through its sheer buying power of the hottest commodity on the planet, and their influence in the world may wane. But the Chinas and Indias of the world may fare slightly better in a post-oil world than their producer counterparts, who not only must seek an alternate means of producing energy, but must also seek an alternate means of revenue generation. China and India, who have been a bit slow to move past coal, are ambitiously looking for that oil exit. But while some countries will continue fiddling with solar-powered electric vehicles and whatnot, they will be busy warring in space, gearing up for the space race to mine for minerals in hopes of a longer-term bet; namely, finding a cheap alternative to oil such as Helium-3, which can be used for nuclear fusion.

New Players

Israel is one of the rare countries that has managed to wield some power without having great oil riches. Still, it is moving onto the next phase to get in on the natural gas action, with a $15 billion plan to export natural gas to Egypt yet this year, with a little help from US-based Noble Energy.

Egypt hopes to get in on the bridge fuel too and has plans to become a hub for natural gas transport in the region.

Other takers in the natural gas space include Australia, Qatar, Cyprus, Greece, and Turkey—all who are making significant inroads.

Taking the Cake

Investing in natural gas would seem a prudent middle step. After all, no one knows how long the “bridge” will need to be before something cleaner and more efficient comes along. And no one understands this better than Russia, who seems to be positioning itself nicely for whatever may come.

Russia has some oil clout–some may say moreso than OPEC itself. But Russia’s longest stick is natural gas, as highlighted by the controversial Nord Stream 2 project. It has low-cost oil, it supplies a large amount of natural gas to Europe, and it is loudly calling for work in the nuclear fusion space, with President Putin saying that it is a national priority and the only way forward.

In the decades to come, transportation, energy, plastics, and world influence will undergo profound changes as the powers vie to stay on top with whatever powers the world of tomorrow.

Crude Oil


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