v8n2_03 - A Concert in Energy Security: Building...

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The Whitehead Journal of Diplomacy and International Relations A Concert in Energy Security: Building Trans-Atlantic Cooperation to Confront a Growing Threat by Richard G. Lugar I t is a pleasure to be here today at the American Council on Germany. As a member of the Council’s Congressional Advisory Committee, I applaud the effort that brought this group of leaders together to discuss the challenges that we face and the need for a unified response. In today’s geo-strategic environment, few threats are more perilous than the potential cutoff of energy supplies. The use of energy as a weapon is not a theoretical threat of the future; it is a current reality. Those who possess energy are using it as leverage against their neighbors. In the years ahead, the most likely source of armed conflict in the European theater and the surrounding regions will be energy scarcity and manipulation. We all hope that the economics of supply and pricing in the energy market will be rational and transparent. We hope that nations with abundant oil and natural gas will reliably supply these resources in normal market transactions to those who need them. We hope that pipelines, sea lanes, and other means of transmission will be safe. We hope that energy cartels will not be formed to limit available supplies and manipulate markets. We hope that energy-rich nations will not exclude or confiscate productive foreign energy investments in the name of nationalism. And we hope that vast energy wealth will not be a source of corruption within nations whose people desperately ask their governments to develop and deliver the benefits of this wealth broadly to society. Unfortunately, our experiences provide little reason to be confident that market rationality will be the governing force behind energy policy and transactions. The majority of oil and natural gas supplies and reserves in the world are not controlled by efficient, privately owned companies. Geology and politics have created oil and natural gas superpowers. According to PFC Energy, foreign governments control up to 79 percent of the world’s oil reserves through their national oil companies. These governments set prices through their investment and production decisions, and they have wide latitude to shut off the taps for reasons of politics and power. Richard G. Lugar is a United States Senator from Indiana and the ranking member of the Senate Foreign Relations Committee. This text is a revised version of a speech delivered at the American Council on Germany during the EU-US Summit in Washington, DC on April 30, 2007. 23
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LUGAR The Whitehead Journal of Diplomacy and International Relations The vast majority of these oil assets are afflicted by at least one of three problems: lack of investment, political manipulation, and the threat of instability and terrorism. As recently as five years ago, spare production capacity exceeded world oil consumption by about 10 percent. As world demand for oil has rapidly increased in
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This note was uploaded on 02/01/2012 for the course INTERNATIO 101 taught by Professor Staff during the Fall '09 term at Boise State.

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v8n2_03 - A Concert in Energy Security: Building...

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