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Policy Experts See|No Alternative to Oil

WASHINGTON (CN) - Volatile oil prices and instability in the Middle East require the United States to strengthen its relationships with oil-producing countries in Persian Gulf, policy experts said Wednesday at a conference on U.S.-Arab policymaking.

The world is consuming 93 million barrels of oil per day, and that will increase, said Molly Williamson, a scholar with the National Council on U.S.-Arab Relations, which organized the annual conference.

Oil reserves in the Middle East are crucial for the U.S. energy supply, even though the United States today is one of the top five oil-producing countries, Williamson said at the panel on U.S.-Arab Energy Cooperation.

Sponsors of the conference include ExxonMobil, Chevron, Aramco, Halliburton and Marathon Oil.

Despite concerns about global warming and efforts to reduce carbon dioxide emissions and boost renewable energy, panelist Herman Franssen, executive director of the Energy Intelligence Group, said that every major long-term projection is that "fossil fuels will remain dominant for decades to come."

"It may be unfortunate, but it is the reality," he said.

Fossil fuels account for about 80 percent of energy use, according to the Institute for Energy Research, which agrees that fossil fuel will remain dominant in coming decades.

Franssen said the most optimistic assessments predict that use of fossil fuels will drop to 74 percent by 2040. Given that forecast, he said, Middle East reserves will be crucial for global markets because global population is projected to grow to 9.7 billion people in 2050, according to United Nations statistics .

A growing global middle class will demand even more fossil fuel as it aspires to higher standards of living, he said.

Electric car maker Tesla is making a "small but determined" inroad into the oil industry, Franssen said, and its efforts should not be underestimated.

"We have to watch it very carefully because ultimately there could be a major, major breakthrough, and that's as dangerous for the automotive industry as it would be for the oil industry," he said.

The Organization of the Petroleum Oil Exporting Countries estimates that 66 percent of OPEC oil reserves are in the Middle East, where oil is more easily accessible and cheaper to produce, particularly in Saudi Arabia.

"We should keep in mind that the Middle East is not a place to leave because of short-term attractiveness, if we were to become [energy] independent," Franssen said - so the United States needs to maintain significant influence in the region.

"Who controls the heartland controls the world," Franssen said, quoting Sir Halford MacKinder, who said that control of the heartland - Eurasia - was the key to world domination.

MacKinder (1861-1947), a British geographer, is considered the father of geopolitics and geostrategy. His 1904 paper, "The Geographical Pivot of History," virtually created the field, though he did not use the word geopolitics in it.

"We want to keep a finger on the pie," Franssen said.

Other panelists noted the strategic importance of waterways in the region, including the Strait of Hormuz in the Persian Gulf.

"Look at the amount of global energy that passes through that chokepoint," said panelist Richard Westerdale, director of the Bureau of Energy Resources at the State Department.

Forty percent of the globally traded oil today comes from the Middle East, and it must pass through three chokepoints - Bab al Mandab, the Suez Canal and the Strait of Hormuz. Protecting those waterways should be a key U.S. and Gulf Cooperation Council policy aim, Williamson said.

"Any major disruption, any fear of major disruption throws the global marketplace into a tizzy," she said. "The interests of the world are ill served by not doing everything possible to promote smooth, consistent transmission of this important commodity globally" through these chokepoints.

Russia's sudden, giant jump into the Syrian civil war could influence who controls the oil, and should be a major consideration in formulating U.S. energy and security policy in the Middle East, Franssen said.

"Everybody needs to worry about the conditions in the region," and the ramifications of the unrest there, Williamson said.

The Islamic State of Iraq and the Levant makes millions of dollars selling oil from oilfields it captured in Iraq and Syria.

"These are delicate times," Williamson said, adding that the volatility in today's oil market, though certainly not unprecedented, is nonetheless disturbing.

"When we talk about regime stability, when we talk about reliability and dependability of partnerships, we need to be very careful that if it weren't there, we are prepared to live with the alternatives," Williamson said in an interview.

Williamson urged caution and flexibility.

"What this requires of all decision makers, all policy makers, is a certain amount of agility," she said, urging restraint with pronouncements.

"We don't want to say things or do things that we may have to eat later."

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