A scramble for energy resources?<\/p>\n
Asia's Deadly Triangle: How Arms, Energy and Growth Threaten to
\nDestabilize Asia Pacific<\/p>\n
By Kent E. Calder<\/p>\n
Nicholas Brealey Publishing, London, 1996,<\/p>\n
253 pages<\/p>\n
SINGAPORE: In a recently published book, Asia's Deadly
\nTriangle, Princeton University's Kent Calder has raised the
\nspecter of a future energy "gap" developing in East Asia in the
\nnext few decades.<\/p>\n
Calder's basic thesis is that if the region's rate of economic
\ngrowth is sustained at around current levels there will be
\nincreasing competition for oil and other non-renewable energy
\nresources. This may lead to supply bottle-necks, cost increases,
\nor both, which will increase tensions among energy deficient
\nstates scrambling for a diminishing and more expensive share of
\nthe energy cake.<\/p>\n
Calder points out that the levels of energy dependence in
\nNorth-east Asia, already high, are rising. Japan relies on
\nimports for 88 percent of its primary energy supply and 90
\npercent of its oil. South Korea has an even higher level of
\nenergy dependence than Japan, North Korea has no oil at all and
\nTaiwan has major energy vulnerabilities.<\/p>\n
The situation in South-east Asia is more complex. Thailand,
\nCambodia and Singapore are major energy importers. Vietnam, Laos
\nand possibly the Philippines are likely to be future modest net
\nexporters, while Malaysia and Indonesia are significant suppliers
\nof energy, mainly to the Asian region.<\/p>\n
But here again the overall energy picture is worsening, Calder
\nargues, because of sky-rocketing domestic demand, high energy
\nexploration and development costs, political and strategic
\nuncertainties associated with some economically exploitable
\nenergy deposits, and a decline in recoverable oil reserves.<\/p>\n
However, the really bad news on the energy front is that the
\nproduction of oil from Indonesia, the region's largest oil
\nsupplier, is falling, while domestic demand in Indonesia and East
\nAsia's other emerging economic giant, China, is soaring.<\/p>\n
Indonesia's oil production has fallen steadily since the late
\n1970s and it will become a net importer shortly after 2000.<\/p>\n
The situation in China is even bleaker. Although possessing
\nsubstantial reserves of its own and, having been a significant
\noil exporter as recently as 1990, China's energy balance
\ndeteriorated so quickly, thereafter, that by 1993 it was being
\nforced to import oil, mainly from the Middle East. Energy experts
\npredict that China will be importing as much oil as the United
\nStates by 2015.<\/p>\n
Calder makes two important points about these developments.
\nThe first is that because China accounts for nearly a quarter of
\nthe world's population its thirst for energy threatens to create
\neither an energy gap, or at least introduce major uncertainties
\ninto the market.<\/p>\n
The second is that East Asian energy demand is focused to an
\nunusual degree on oil. Alternative energy sources may be able to
\nfill some of the potential gap in supply. However, the high level
\nof regional oil dependence, allied with problems and costs linked
\nto alternative sources of power - solar, geothermal, LNG, coal
\nand nuclear - will limit oil's substitutability.<\/p>\n
Is Calder right? Like all forecasts of this kind, Calder's
\narguments rest on a number of assumptions about aggregate energy
\nsupply and demand which are open to interpretation.<\/p>\n
If regional economic growth slows significantly, or the market
\nresponds more quickly and effectively than Calder anticipates to
\nrising East Asian demand, then the forecast energy gap, like the
\n"missile-gap" of the 1960s, may prove to be illusory.<\/p>\n
Calder's assessment that the demand for oil in China will rise
\nfrom 600,000 barrels a day to three million a day by 2010 is not
\ncontested, but some oil industry analysts believe that future
\nglobal production is sufficient to meet this level of demand
\nwithout major disruptions in supply.<\/p>\n
Yet he does make compelling reading. His basic energy demand
\nforecasts are supported by several authoritative studies, and his
\nskepticism about finding economically viable and environmentally
\nacceptable substitutes for oil is well founded.<\/p>\n
There is also little doubt that China's latent potential
\ndemand for energy has the capacity to profoundly affect world oil
\nmarkets, even if the impact and time frame is difficult to
\nforecast precisely.<\/p>\n
The issue transcends simple supply and demand calculations. If
\nthe perception develops that shortages are possible, the level of
\neconomic and strategic uncertainty will rise, and governments and
\nthe market will react accordingly.<\/p>\n
If oil prices rise, richer countries such as Japan will be
\nmuch better placed to compete on international oil markets than
\nEast Asia's less wealthy economies. Should the rises be
\nsubstantial, then growth may be significantly impaired,
\nparticularly among the region's less developed states, with
\nobvious implications for social and political stability.
\nOne other point which Calder touches on, but could have developed
\nmore, is that certain kinds of energy usage will incur growing
\nenvironmental and political costs.<\/p>\n
Coal and nuclear power are two notable examples. Coal, while
\nrelatively abundant, is polluting and a primary source of
\ngreenhouse gas emissions, which are directly linked to global
\nwarming.<\/p>\n
Nuclear power, on the other hand, produces no greenhouse gases
\nbut has an environmental image problem and is politically
\ncontentious, domestically and internationally, because of past
\nnuclear accidents and waste disposal problems.<\/p>\n
These factors will complicate future energy usage and
\nexacerbate the energy vulnerabilities of East Asian states.<\/p>\n
-- Alan Dupont<\/p>\n
Alan Dupont is the Director of the Asia-Pacific Security
\nProgram at the Australian National University's Strategic and
\nDefense Studies Center.<\/p>",
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