OPEC from myth to reality.

Since "Project Independence" was launched in 1973 with the promise of ending energy dependency on foreign countries, (48) an energy crisis has been a matter of concern for all U.S. presidents. (49) On December 22, 1975, the United States enacted the Energy Policy and Conservation Act which created a one billion barrel Strategic Petroleum Reserve. (50)

In 1975, Gerald Ford declared that "the state of the Union [was] not good" because prices were too high, millions of Americans had no work, the deficit was of about $30 billion, the national debt $500 billion, and for years nothing had been done to end U.S. dependency on others for essential energy. (51) The immediate reaction was imposing import quotas and using presidential powers to establish higher fees on imported oil. (52)

Possible courses of action for the United States were described at the time as policy choices between self sufficiency, (53) unilateral international oil policy, and a multilateral international oil policy. (54) The unilateral oil policy was described in 1974 as having four components:

1. [S]pecial oil supply arrangements with selected oil-exporting countries,

2. [E]fforts to improve bargaining relationships with the exporting countries,

3. [M]easures to prepare for interruptions in oil imports, and

4. [E]fforts to defuse the Arab oil weapon. (55)

All these policies were tailored toward preventing the formation of a strong and solid block of petroleum exporting countries, particularly from the Middle East. More than thirty years later energy independence is still a "goal." (56)

The U.S. oil policy is based on a geographically diversified supply provided essentially by Canada, Saudi Arabia, Venezuela, and Nigeria without creating an excessive dependence on any single one of them to the extent it may trigger the "oil weapon"; having an available emergency reserve to meet potential disruptions through the Strategic Petroleum Reserve; and promoting a transition to cleaner and nonfossil fuel sources of energy. (57) The other most important consumers have similar dependence, emergency supply, and supply diversification issues.

B. Some of the Major Changes in the Oil and Gas Industry Since OPEC's Formation.

When OPEC came to life, production, marketing, and prices were controlled unilaterally by the multinational companies and there was really no concern for the environmental and social impacts of the extractive industry such as global warming and ozone depletion. (58) Today many things have changed. The price of oil is established primarily through the New York Mercantile Exchange and the London International Petroleum Exchange (59) and substantially influenced by speculation and perceptions regarding "geopolitical tensions." (60) Crude oil production is determined by multiple operators, many of which are national oil companies. (61) Further and most meaningfully, the industry involved in the exploration, exploitation, and marketing of oil and gas resources must deal with issues such as resource wars, international military interventions, the threat of international terrorism, sustainable development, energy poverty, environmental protection, nation building, and transparency.

When OPEC was formed, "sovereignty" was used to protect the national bounty, and the main concern was preserving the member countries' immediate and most important source of income. (62) Now, the seven sisters no longer even introduce themselves exclusively as petroleum production companies. (63) In the 21st century sovereignty may be associated with a state's capability to successfully afford a peaceful, stable, sustainable, and rule-abiding environment to the population living within its borders in which hope and the pursuit of happiness are possible for all. (64) These concepts involve such issues as energy security, economic independence and financial viability of many nations, man's capability to stop the continued deterioration of the environment, establishing mechanisms through which the people may benefit from their land's natural resources, and determining rationally and peacefully access and control over scarce nonrenewable resources.

The petroleum industry in the 21st century will focus on production of oil and gas from unconventional sources such as heavy oils, tar sands, oil shale, renewables, nuclear power, biomass, and clean coal technologies such as coal liquefaction in a potential transition into a hydrogen based economy. (65) In addition to technological developments, population growth and economic activity, international politics and carbon pricing will play a crucial role in the closing years of the hydrocarbon age. (66) Securing a stable oil and gas supply and preventing drastic price fluctuations will be very important while alternate sources of energy are developed.

Peace in the Middle East, a future for the underprivileged of the world, effective actions to prevent multiple forms of environmental contamination, and the economic feasibility of the oil producing countries when oil is no longer relevant are all issues that require serious attention by the international community of states. Unfortunately, the selfish interests of individual nations and their short term objectives have limited effective cooperation. Nation-states' individual foreign policies are not capable of providing solutions to goals that go beyond a presidential term, and concern humanity as a whole.

C. Oil and Gas Will Be the Dominant Energy Sources for at Least Two More Generations.

In the year 2000, the European Union acknowledged that if nothing was done fossil fuels would continue dominating its energy needs. (67) Oil prices, availability, and adequacy of oil supplies continue to play today, as it was the case in 1973, a critical role in formulating foreign policy. (68) Economic growth in the next twenty-five years is expected to continue at a rate of 2.7% per year, with the fastest growth in China, India, Indonesia, and Malaysia countries which are expected to grow at a rate of more than 5% per year. (69) Demand for energy is thus expected to increase by almost 50% from 205 million barrels per day of oil equivalent to 335, and according to ExxonMobil this means that the world will need 60% more energy in 2030 than in 2000. (70) Greatest energy demand growth will most likely come from Asia (3.2% increase) and Latin America (2.2% increase). (71) Currently 45% of the European Union's oil imports come from the Middle East. (72) At the same time, in 2005, the Arab countries became the most important source of Chinese oil imports. (73) The vehicle fleet in Asia will quadruple in twenty-five years. (74) Fuel demand is expected to grow particularly to satisfy electric generation and transportation needs. (75)

Therefore, we may conclude with ExxonMobil that "[t]hrough the year 2030, traditional fossil fuels will continue to supply the vast majority of energy needs" and that the largest fuel share today and in 2030 is and will be oil. (76)

Total oil reserves have been estimated around 3.2 trillion barrels while total production may have reached one trillion. (77) If accurate, this means that two trillion barrels would remain. (78) In 2005, the world's top oil consuming nations included the United States, China, Japan, Russia, and Germany. (79)

These figures confirm OPEC's importance in satisfying the world's thirst for oil. OPEC's oil is cheap and easy to develop. (80) Most technical analyses agree that with increased demand OPEC's production should grow from its current 30 million barrels a day (b/d) to 47 million b/d by 2030. (8l) Carbon dioxide emissions are also expected to grow with 85% of such increase attributed to developing countries. (82)

The United Kingdom has recognized its challenge of becoming a "net energy importer"(83) as oil, gas, and coal production have decreased and made energy diversification a matter of its national energy policy, through many sources of energy and many suppliers. (84) However, unlike the United States, the United Kingdom acknowledged "mutual dependence" and a trade off of supply for income. (85)

D. A New OPEC in an International Environment in Which the End of the Hydrocarbon Era Is in Sight

So far, the balance of most international organizations is quite poor. (86) International bureaucracy and meaningless resolutions prevail over effective practical answers to man's daily needs. (87) Yet, more than ever, an international order that may control the selfish aspirations of individual nation-states is required. International good governance solutions may be required when traditional state sovereignty powers fail. Many important international issues such as energy security and the stability of the world economy may not be seriously and effectively discussed at the U.N. General Assembly (88) and the Security Council is per se an exclusive forum. (89) Smaller, effective, professional, and specialized international organizations are required to adequately address many issues that while producing global effects lack an efficient international forum. (90) The time is ripe for technical international organizations that may have power over nation-states regarding issues that may not be left to world politics for the sake of mankind's peace and security. Thus, true supranational entities must be completely reshaped to overcome provincial national prejudices, discrimination, and inequality. Only strong international organizations may strive for the effectiveness of universally accepted values preventing their distortion by military and economic power.