[Colorado-Valley]

One of the military sites I like to read is John Robb's "Global Guerrillas," a study of emerging terrorist networks and of how they are working to bring down the world's industrial states. Here's his latest post:

THE GUERRILLA OIL CARTEL

The control over the price of oil is in now in the hands of global guerrillas -- the open-source, system-disrupting, transnational crime-fueled sons of global fragmentation covered by this author. These actors can now, at will, curtail the supply of oil through low-tech attacks on facilities in Iraq, Nigeria, central Asia, and India. The amount of oil effectively under their control exceeds five million barrels a day, more than Saudi Arabia's two million barrels a day of swing production.

Means and Motives

It's important to note that this capacity to disrupt production is substantially different than any terrorist threat we have faced in the past. With terrorism, the potential of damage has always been from single large attack on a major facility or node (extremely difficult to accomplish and relatively easy to recover from). Today's threat is based on sustainable disruption -- ongoing, easy, low-tech attacks that are nearly impossible to defend against (everything from pipeline destruction to employee kidnapping). The goals of these attackers can be divided into three complimentary categories:
• Delegitimization of the target state. Attacks meant to "hollow out" the state, through an inability to deliver critical services or a denial of income/investment, to create zones of local control.
• Coercion of the core Western states. Either to damage the US or a target state through economic means.
• Criminal profit. By increasing the prices of oil and its refined products, the profits generated by criminal enterprise (bunkering of oil, smuggling, etc.) are radically improved.

What this means

This situation is merely the first stage in the larger epochal war between non-state groups and nation-states. It is by no means the worst of what we will need to deal with. Other more profound developments will occur as this trend progresses (for clues, read older briefs from this weblog seen in the left margin). In the meantime, given that the demand for oil continues to increase (due to the growth of China and India primarily) combined with the inability to bring new supplies to market, the price of oil will continue to climb. $100+ a barrel oil is not unforeseeable. This will likely result in the following:

• An expansion of the guerrilla oil cartel to new locations. The success of guerrillas to control production in Iraq and Nigeria will spawn similar developments in other locations. High on that list is Russia, the world's largest oil producer, and the Caspian Sea producers.

• Market corrections. High oil prices will eventually result in a global recession that would reduce demand. However, this reduction in demand may not be enough to reduce prices and may only reduce their ability to increase. Alternative energy sources and conservation will over the longer term gain considerable traction. Those companies/localities that are planning for high oil prices by radically increasing the efficiency of their products/infrastructures will reap windfalls in the future.

• Collusion between global guerrillas and other market participants. So far, there isn't any signs of coordination between groups. This will change. As we have seen in other situations, network connections will develop and open-source coordination and collaboration will occur. Additionally, global guerrillas may find useful and powerful allies among states (Iran?) that desire to curtail production; corporations (CNOOC?) that wish to wrest control of oil production from competitors; and market participants (hedge funds? or individuals?) that desire to profit from rapid price changes. If this surprises you, remember that in Adam Smith's world, it doesn't matter how you make a buck, it's only important that you make it.


Okay, okay, I wory about these things too much.

But I can only envision two ways that industrial states can overcome the global guerrilla movement:

• Become extremely police-state, and put everyone in the world behind barbed wire and under constant surveillance.

• Decentralize energy and localize manufacturing so that guerrilla attacks on infrastructure cannot cripple whole countries and the communities in them. For instance, this week the country of Georgia returned to the Stone Age because its energy grid collapsed when a couple of guerrillas blew up a gas pipeline supplying the country. This attack probably cost the guerrillas a hundred bucks worth of explosive.

So, what do we do about this kind of thing?

[SHiFTY]

Only to be expected as the price goes up- organised crime will try to profit from anything of value.

Also as the difference between rich and poor countries gets more shockingly extreme, there will be more of this- 1/2 the worlds population lives on less than $2 a day - a barrel of oil is a months worth of work!

In the end I imagine the oil companies (govt and private) will have to employ armies of mercenaries to stand by while they pump the oil out of the poor countries and ship it to the rich countries. There will be no cost too great to keep the oil flowing...

[DesertBear2]

$this->bbcode_second_pass_quote('SHiFTY', 'I')n the end I imagine the oil companies (govt and private) will have to employ armies of mercenaries to stand by while they pump the oil out of the poor countries and ship it to the rich countries.

[Trab]

$this->bbcode_second_pass_quote('DesertBear2', 'H')ow do you protect an LNG tanker with mercenaries?

[DesertBear2]

$this->bbcode_second_pass_quote('Trab', '')$this->bbcode_second_pass_quote('DesertBear2', 'H')ow do you protect an LNG tanker with mercenaries?

[Trab]

Point taken...

Protecting the whole infrastructure is pretty much impossible, as we're seeing in many places (Nigeria, Georgia, Iraq) these days.

That said, I think that TPTB will exert as much effort as possible keeping the energy flows running as fast as they can, even to the point of neglecting other parts of the infrastructure to do so. Witness the various reports out of SAIC, etc.