The future of East Asian energy security: An introduction

Abstract

As the 19th century turned into the 20th century, oil demand was booming and prices were soaring in the face of a limited supply of oil, especially from sources outside of the United States. The vast resources of the Middle East had not yet been discovered. A frenzied competition built on tenuous alliances and hostile takeovers was driving a cut-throat race to secure oil concessions, build oil wells, establish refineries, and build storage tanks and massive ships from the Gulf of Mexico to Singapore. Already it seemed, oil was running out. The contest to secure supplies of oil was fierce, and primarily being waged between international corporations--Standard Oil, Royal Dutch and Shell were in the prime of their corporate youth, and vigorously cutting deals to tie up known oil reserves around the world. They were also fighting fiercely for control of markets. Oil itself was already emerging as a commodity that was vital to the wellbeing of the world's emerging superpowers, themselves largely in the Americas and Europe. Within 20 years, with the shift from coal to oil as a primary fuel in transportation and the military, oil would become a commodity that was not just important to the wellbeing of nations, but central to their growth and survival. Southeast Asia has always played a signature role in the complicated dynamics of supply and demand in the energy markets. An East End merchant's son, Marcus Samuel, was scouring the most accessible parts of Borneo for oil for the group that would become Shell, and would soon find it in large quantities. Nearby, the Netherlands's newly minted champion oil company, Royal Dutch, was starting to export oil in large quantities from Sumatra. Singapore was already the weigh-point for a burgeoning traffic in oil and oil products, control over the Straits of Malacca was starting to preoccupy the world's great powers. Southeast Asia was in the oil business, and it was supplying the seemingly unquenchable thirst for energy created by the rapid industrialization of booming economies of the western world. More than one hundred years later, a massive tooling-up of the world's eastern economies is generating the same seismic pressures on the world energy markets. In the first decade of the 21st century, the slow awakening of two countries with a billion or more energy-hungry consumers each-q2hina and India--has helped create the most sustained boom in oil prices since records of oil prices began in the middle of the 19th century.