Energy supply and globalisation Flashcards
How globalisation contributes
Energy production and consumption are unevenly distributed-this means that energy needs to be transferred between countries, increasing links between them. This contributes to globalisation.
Example of globalisation
Technological advances mean that long-distance energy trade is becoming easier, e.g. with tankers and cables. For example, the Yamal-Europe Pipeline is a 4000 km-long pipe that was built to carry gas from Russia to western Europe
Developing Countries
Energy resources are vital to countries’ development, so the control of energy resources is increasingly important. This means that different countries have different priorities when trading energy. What’s in one country’s interests isn’t necessarily in the interests of another country, or of the world as a whole.
Price
The country selling the energy will want to charge as much as possible, whereas the country buying will want to pay as little as possible. This influences the potential markets for an energy resource and determines whether extracting the resource is economically viable.
Environment vs. development
many countries exploit energy resources in order to increase economic development. However, exploitation can damage the environment (see next page). Countries may want to exploit energy resources in another country (e.g. China is developing oil reserves in Africa, which could cause environmental damage in some African countries) or in the global commons. In some cases, the global community may step in to prevent large-scale damage to fragile environments, e.g. the Antarctic Treaty bans resource development there. However, as resources dwindle, pressure to exploit new areas is increasing.
Energy security
countries with high energy consumption may pressure countries with large natural resources to develop and export them in order to meet their energy needs.
Political instability
Countries might avoid becoming dependent on countries that have an unstable governments, as conflict can interrupt supply of energy resources.
BP
BP is involved in oil and gas exploration and production worldwide, including in the USA, UK, Egypt and Russia. In 2016, its daily oil and gas production was over 3 million barrels of oil equivalent.
Crude oil is then transported to refineries and petrochemical plants- BP has refineries in, for example, the USA, Netherlands and Germany, and refined 1.7 million barrels of oil every day in 2016.
The products are then sold to industry and individuals across the world-e.g. BP has 18 000 retail outlets.
TNC’s control
Because of their wealth and their control of a valuable resource, energy TNCs are very powerful - they influence the global economy, politics and the environment. For example, TNCs can choose how much to charge for energy, and whether to vary their prices for different consumers. If one TNC drops its prices, others have to follow, starting a ‘price war.
Gazprom
Gazprom is partially controlled by the Russian government, and extracts, processes and sells Russian gas. State-owned TNCs can exert global influence, e.g. they may shut privately owned TNCS out of energy markets in some parts of the world, or can be used to help build political alliances (e.g. by providing low-price energy to a potential ally).
