End of political dominance over fossil fuel market

Dongying, China, Nov. 9, 2007: A worker checks the pumping equipment at Gudong oil field, part of the larger Shengli oil field (source: dpa)
Dongying, China, Nov. 9, 2007: A worker checks the pumping equipment at Gudong oil field, part of the larger Shengli oil field (source: dpa)

New advances in oil and natural gas extraction technologies have irrevocably altered the global market for these commodities. This is the twilight of the era of oligopolies for hydrocarbons producers, writes Princess Hildegard of Liechtenstein.

In the realm of hard commodities there are two distinct groups of materials, depending on origin. On the one hand, there are the mineral elements and metals such as copper, iron, precious metals, uranium and rare earth metals. All accessible reserves of these materials were formed by processes in supernovas and then projected to the earth out of the universe; their distribution on the planet’s surface is random and will not change – unless it is hit by a new meteorite bombardment. The very uneven distribution of the resources grants some countries a natural edge, in some cases even market domination, in the rare metals and minerals business.

The fossil fuels reserves, on the other hand, are a product of the vegetation on earth and are evenly distributed. Oil, coal and natural gas can be found even in the Arctic and in the Antarctic continent – which is a testimony of the dramatic geological and climatic change during the billions of years of the planet’s history. In the hydrocarbons business, the only differentiating factor for the producers are the technical means needed for extraction.

After some 100 years of technological evolution and the inevitable pricing decline, coal-producing countries no longer enjoy an economic and political windfall. A similar effect is now becoming apparent in the oil and natural gas industries, as new extraction techniques have thrown the door wide open to producers’ once-exclusive club.

It is no longer possible for any country, or a group of countries, to dominate the oil or gas markets by operating a regional or even global monopoly. At the moment, some producers are desperately trying to preserve their privileged position by ruining competitors with overproduction. The attempt will not work. The world of energy has changed too much for that.

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