By Irfan Asghar
 In the wake of the unleashing of energy forces, the global balances of political power are undergoing tectonic shifts. The whopping spike in oil prices is going to make a striking transformation in the realms of politics as well as economies.
 
    The OPEC's revenue has tripled from $200 billion in 2002 to abut $600 billion in 2006. There are enough straws in the wind to indicate that power is rushing to the oil-producing countries. The cold facts and stark realities of the energy market have reduced the influence of the US and its allies as about two thirds of remaining oil reserves lie in the Middle East and the majority of natural gas reserves are owned by Russia, Iran and Qatar.
 
    At this time, the US counts on imported oil for 60 percent of its consumption needs and it uses 25 per cent of the world's oil. America's policy of treading carefully now while pressing for or advocating democracy in the Middle East testifies to the ground reality of its diminishing influence. The European nations have also toned down their criticism of various autocratic propensities in Russia since the cutting off of gas supplies by it in 2006.
 
    On the contrary, the whacking surge in oil prices has led to windfall profit for oil producers which in turn has emboldened producers like Russia, Iran and Venezuela to assert themselves and set about pursuing political and strategic objectives of their won. The oil revenue has given such leverage to oil-producing countries that they can flout all the rules, flaunt their oil reserves and spout anti-western sentiments still going from strength to strength.
 
    Consider the political consequences of the operation of these energy forces. Venezuela's oil revenue has registered more than a 100 per cent increase during the period from 2002 to 2006. It is engaged in posing a potential challenge to American interests whenever it can and Hugo Chavez has used his nation's oil to embarrass George W Bush by offering cheap gas to the poor Americans.
 
    Iran's oil revenue has increased threefold, from $20 billion in 2002 to over $60 billion in 2006. This has helped it to stand up to US pressure. Analysts contend that as long as oil remains tight and prices stay high, Mahmoud Ahmadinejad's inflammatory rhetoric and nuclear ambitions will persist.
 
    Similarly, Russia is flexing its energy muscle to reinvent itself. It claims itself an energy superpower and it is bent on making its presence felt in international politics. President Vladimir Putin has put resource nationalism in the global political lexicon. Moscow has shut down private Russian firms and pushed out westerners. High oil prices give rise to clear and manifold risks.
 
    Firstly, as a sequel to the increase in the oil prices, the purchasing power of consumers who drive the world economy takes a nosedive. Secondly, high oil prices deal a severe below to the business activity and upset or disturb the balance of payments of non-oil-developing countries. Thirdly, the surge in oil prices touches off the forces of inflation. Fourthly, high oil prices enable oil-producing countries to disregard international regulations.
 
    Analysing the causes of the recent price increase, the following major factors can be identified: * The increase in demand because of increased activity of certain emerging economies like China and India. Energy demands have received a fillip in the US and Europe also. * A significant loss supply from Nigeria because of an insurgency in its delta region. * Reduced levels of production in lraq and Venezuela * Reduced production of oil in Iraq due to the violence gripping it. There was a similar price hike in the 1970s, but at that time the major cause of price increase was the 'supply shock' which owed its origin to disruptions such as the 1973 embargo or the 1979 revolution in Iran.
 
    To halt the increase in prices, countries diversified their energy supplies and consumers conserved. Resultantly the prices came down. The issue of deep concern is that by 2030, the world's population is expected to reach eight billion. As it grows, economies grow as well and such growth requires energy. Even with improvements in energy efficiency, the worldwide energy demand is expected to grow about 40 per cent by the year 2030.
 
    As energy is so vital and there are many forecasts that oil prices will register further increase and touch new heights, the world needs to wake up to these formidable challenges. We need to take concrete measures to counter the challenges the energy industry faces and meet the basic energy needs of a rapidly growing world population. New and multi-dimensional institutions that can bring together the wide range of groups, nations, corporations and individuals are required to tackle the energy problems.
 
    The oil-rich countries need to pump the oil windfalls in expanding the production and supply of oil. No doubt, according to Geological Survey estimates, the amount of conventional oil that remains to be recovered is twice the amount produced so far, but the process of its extraction is going at a glacial pace. Further exploration of oil and gas reserves should be stepped up. Besides this, new technologies should be explored because four dimensional seismic imaging technology is used to detect oil and gas movement in reservoirs deep below hearth's surface and Nan technologies are employed to separate hydrocarbon molecules at refineries.
 
    Efforts should also be made to develop the new alternatives. Significant headway has been made in this direction. Governments and companies are stepping up their investment in energy research and development. Investors are pouring hundreds of billions of dollars into the energy sector to find alternatives to the conventional sources of energy. The US energy business department is spending $1.8 billion on research and development. This amount is likely to grow. Wind energy and solar energy will be used at a large scale in the time to come. Nuclear power can also be harnessed to meet energy demands. It is the only mature technology with significant potential to supply large amounts of emissions- free base-load power.
 
    Help is going to be sought from biology and genetic engineering fields in this regard. On top of this, there is an even bigger shift underway from fuel to electricity. In 1950, twenty percent, of the US economic output came from industries powered by electricity. Today that number is sixty per cent and is rising fast. Petrol is increasingly being confined to one pivotal sector, transportation. And even in this sector the future is electric.
 
    Within ten to twenty years, depending on market forces and government efforts, the hybrid electric motor will replace the internal-combustion engine. The summation is that energy, being the linchpin and lifeline of global economy, is going to override all other factors in global politics. Public reactions to fluctuating prices and supply disruptions around the world amply demonstrate the importance of energy. It will play a pivotal role in determining global centres of power in the emerging scenario.