- Jahangir Amuzegar
- Published Date:
- April 1983
Not unpredictably, there is a complex energy bind as we approach the end of the twentieth century. The oil importing industrial countries have anchored their industries, their means of transportation, their home comfort—in short, their whole energy-dependent lifestyle—largely to hydrocarbon fuels. For most of these countries, as well as the majority of the oil importing developing countries, domestic oil (and gas) needs must be supplied partly or largely from abroad. The major international hydrocarbon suppliers, in turn, are limited to a relatively small group of oil exporting developing countries, most of whom are members of the Organization of Petroleum Exporting Countries (OPEC).
Several interrelated factors, such as the large and growing needs of the world for fuel, the rapidly dwindling proven oil deposits in some oil producing countries, the two rounds of unprecedented crude oil price increases in 1973–74 and in 1979–80, the slow growth of domestic absorptive capacity in some oil exporting developing countries, and the periodic emergence of world oil shortages and gluts, have converged to create the so-called energy crisis.
The energy crisis can be divided into (1) the short-term problem of satisfying world energy (and oil) needs in the next decade or so while alternative sources are being developed, and (2) the long-term establishment of a steady, secure, and equitable global energy system for the next half century and beyond. The short-term problem is related partly to the efficient management of oil supply and demand and partly to coping with the sharply higher oil prices of the 1970s, which resulted in world payments imbalances. It is concerned mainly with examining projected supply and demand for oil in the 1980s, with a view to ensuring an “oil balance” in both physical and financial terms. The long-term problem is concerned with the search for sustainable sources of energy that can meet the various energy requirements of all nations in an efficient, reliable, and equitable manner. It involves the development of renewable energy sources in the face of continued population growth, the requirements of the present lifestyles in the industrial countries, the necessity of higher standards of living for the world’s poor, and technological progress.
The two thorny economic problems created by the energy crisis—the mobilization of global energy resources and the management of oil-related payments imbalances—are of vital concern not only to the world oil industry, special energy interests, the members of OPEC, and the many oil importing countries; they are of equal significance to the multinational private banking community, energy research groups, and the international financial organizations. The urgency and significance of global energy management is further underscored by the genuine concern (and confusion) on the part of the public regarding the projected life of present world oil reserves, the equilibrium price of oil, the cost of alternate sources of energy, the optimum use of oil revenues, and the practical mechanisms for dealing with payments surpluses and deficits. An efficient and equitable solution to the energy crisis, both in its fundamental supply/demand implications and its financial spinoffs, will be achieved only through a complex process that requires cooperation among three major groups of countries: the oil exporting developing countries, the oil importing industrial countries, and the oil importing developing countries.
The purview of this study is an examination of the role of the oil exporting developing countries in meeting their own economic development needs and their appropriate contribution to the international adjustment process. The responsibilities of the industrial countries and of the other developing countries in energy conservation, increased efficiency in oil use, internal economic adjustment, financial bilateral and multilateral transfers of capital and real resources, and the search for alternative sources of energy fall beyond the scope of this study. The focus is on the near-term problems and policies of the oil exporting developing countries1 within a global framework, but a brief glance at the past and at the future may be useful.
The study thus briefly looks at world energy developments and the role of petroleum in the future. It is devoted mainly to a search for an appropriate national economic framework within which oil revenues can best be managed by the major oil exporting countries—a framework which, it is hoped, can relate domestic development strategies and policies to the exigencies of the international adjustment process. A concluding section attempts to outline the essentials of global cooperation designed to simultaneously satisfy the interests and aspirations of the oil exporting countries and meet the needs of the energy-deficient countries.
This study has been prepared at a time when new developments in global energy may challenge some of the basic projections and terms of reference. For example, the industrial world’s dependence on imported oil—declining in 1980 to the level of 1973 despite a 19 per cent economic growth during the 1973–80 interval—may continue to recede, with important implications for OPEC’s external posture and its role in projected world payments imbalances. OPEC itself, left with only two or three relatively small countries as its main capital surplus members, may no longer stand out as a separate group or category for the purpose of adjustment analysis.
Similarly, the declining world demand for OPEC oil—as low as 15.8 million barrels a day in April 1982, and an average of 18.5 million barrels for the entire year 1982, compared with a peak of 31.2 million barrels a day in 1977—along with the increased Saudi Arabian desire for internal absorption, may no longer pose the “OPEC surplus” as a major recycling problem for the international economic community. And, the expanding global private capital markets—particularly in the Arab world—may be able to take care of future payments imbalances without the need for much official international intervention.
Yet, given the manifest uncertainties in the behavior of these and other exogenous variables, the study’s fundamental concerns with the problems of world energy balance and international financial stability seem essentially justified and its findings and suggestions valid and enduring.