Tuesday, October 21, 2008

The Day Oil Loses its Strategic Value: Geopolitical Preview

That day isn't today, but it's worth shooting for. With the price of oil falling as fast as it rose to its near $150/barrel max 3 months ago, and the fortunes of 3 US adversaries going down (for the moment) with it, Jim Woolsey's comments on salt are worth reading. I heard him do this piece at an MIT debate a few weeks ago, but this excerpt is from NRO last year:
Not long ago, technology broke the power of another strategic commodity. Until around the end of the nineteenth century salt had such a position because it was the only means of preserving meat. Odd as it seems today, salt mines conferred national power and wars were even fought over control of them. Today, no nation sways history because it has salt mines. Salt is still a useful commodity for a range of purposes. We import some salt, so if one defines independence as autarky we are not “salt independent”. But to most of us there is no “salt dependence” problem at all — because electricity and refrigeration decisively ended salt’s monopoly of meat preservation, and thus its strategic importance.
Unfortunately, oil prices are not dropping today because newer forms of energy have replaced it, but rather because the global economy is taking two steps back. Some are celebrating, but on a DOD Round Table telecon yesterday, DDR&E's Mindy Montgomery noted it's not just high energy prices that cause problems, but also the havoc extreme price volatility plays with the DOD budgeting process. Who reading this post in Oct 2008 would care to predict the price of a barrel of oil this time next year? What if your job/military/country depended on it? The sooner folks like Ms. Montgomery, OSD and the rest of DOD help new energy technology turn oil into salt, the better off we'll be.

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