Jan 10 - 16, 20

The distributional imbalance of world natural resources, and not the terrorism or belligerence of some of the world leaders, is at the root of dwindling prospects of world peace. When the Mother Nature shortchanges the mightiest world military power by apportioning only a tiny share of the world oil reserves, we cannot and should not long for the rarest of luxuries - peace. One of the latest BP world energy reports shows the US having proved (read declared) oil reserves equal to 2.1 per cent of the total world [proved] oil reserves. Middle Eastern countries enjoy 56.5 per cent of the pie with OPEC member nations sitting on a huge chunk of 77.2 per cent.


North America (US, Canada, Mexico) 73.4 73.3 5.5%
South & Central America 198.9 198.9 14.9%
Europe & Eurasia 137.2 136.9 10.3%
Middle East 753.7 754.1 56.5%
Africa 127.5 127.7 9.6%
Asia Pacific 41.7 42.2 3.2%
Total World 1332.4 1333.1 100%

The enigmatic relationship between the fait accompli oil concentration in the Middle Eastern regions and world peace has been nonchalantly viewed by Alan Greenspan in his book The Age of Turbulence in the following words:

"It should be obvious that as long as the United States is beholden to potentially unfriendly sources of oil and gas, we are vulnerable to economic crisis over which we have little control. Petroleum is so embedded in today's economic world that an abrupt severance of supply could disrupt our economy and those of other countries. U.S. national security will eventually require that we see petroleum as an energy source of choice, not necessity.

The burgeoning global economy devours vast amounts of energy. Despite the dramatic fall in the amount of oil, and more generally energy, consumed per dollar of world output, all credibly longer-term forecasts conclude that to continue on the path of world growth over the next quarter century at rates commensurate with those of the past quarter century will require between one-fourth and two-fifths more oil than we use today. Most of this oil will have to come from politically volatile regions because, as we have seen, that is where most of the readily extractable oil resides." And then, he admits, "I am saddened that it is politically inconvenient to acknowledge what everyone knows: the Iraq war is largely about oil."

Mr. Greenspan's concern about the oil-rich regions' political instability has nothing to do with the sense of fairness and justice. Rather, it ensues from the insecurities of an economist who is simply worried about the economic prospects of his country and welfare of his own people. The world knows at large that the much-hyped regional instabilities have been masterminded and financed by the United States itself. Anyway, the capitulation of world conscience to the will of a domineering military power is not an issue here. The point is how the developing economies like Pakistan should chart their course of economic actions in the face of current scenario and U.S. appetite for the world energy resources. I revel in turning back to the master economist and central banker for his expert evaluation of developing nations' future prospects. Alan Greenspan writes:

"Two powerful economic forces drive the shift in world GDP shares toward the developing world. The first is demographic -the great mass of the world's younger workers live in developing nations. The second is productivity growth fostered by the shift to free-market capitalism. As I note in the concluding chapter of this book, developed nations, by definition at the cutting edge of technology, need now innovative insights to boost productivity. Developing nations generally can upgrade just by adopting existing technologies."

Two growth aspects mentioned in the observations made by Greenspan are directly relevant to PakistanÝs economy: use of existing technology and development of productive human capital from the huge mass of its younger people. Total subjugation to the forces of free-market capitalism is not advisable, as the free-market-economy model has been constructed to suit more to the developed nations rather than to the developing ones. Regulatory accent-points need to be instituted in the model wherever necessary. From energy standpoint, Pakistan needs to draw heavily on its natural resource base. Aggressive and proper use of coal, water, and natural gas resources can guarantee energy security. The low profile of its resource base - not by national but international standards ˝ is an insurance against the onslaught of predatory forces. Pakistan may rest in peace so long as it does not strike oil like the Arabs did in sixties. Its gas resources are also quite meager to draw any unwelcome outside attention; the anecdotal mineral wealth of Balochistan too should not cause any immediate concern. The massiveness of Thar coal reserves might attract vested interests both from within and without. Nevertheless, generation of energy through underground coal gasification (UCG) remains the most viable and attractive option for Pakistan. Improved water resource management and construction of dams for power generation can hugely compliment UCG projects.


COUNTRIES 2005 2006 2007 2008 2009 2009 SHARE OF TOTAL
North America
(US, Canada, Mexico)
7.83 8.00 8.88 9.18 9.16 4.9%
South & Central America 6.84 7.24 7.36 7.32 8.06 4.3%
Europe & Eurasia 57.26 57.06 56.99 62.26 63.09 33.7%
Middle East 72.80 72.75 74.18 75.82 76.18 40.5%
Africa 14.07 14.38 14.62 14.71 14.76 7.9%
Asia Pacific 13.48 13.75 14.65 16.00 16.24 8.7%
Of which Pakistan 0.85 0.85 0.85 0.84 0.91 0.5%
Total World 172.28 173.18 176.68 185.28 187.49 100%

PakistanÝs energy options are shaped by its natural resource position and the incumbent cost of production involved. The capital cost outlay, besides an economy's resource base, is usually the guiding factor when it comes to choosing from a number of available energy options. Hydro, solar and wind energy options carry a capital cost of around $2.5 per KWH. This somewhat high capital cost compensates in the shape of a low generation cost and higher plant lives. Energy generation based on natural gas carries a low capital cost of $1 per KWH and also a low generation cost of Rs3- 5 per KWH. But, the meager gas reserves that can now hardly last for another 20 years force us to rule out this option. Oil-based energy generation carries a capital cost of around $1.5 per KWH with generation cost ranging from Rs9 to Rs10 per KWH.

Volatile world oil prices, environmental concerns, and shorter plant lives - resulting in drastically reduced generation capacity - make this option the most expensive and unlikely proposition.