The geopolitics of resource scarcity

February 4, 2013

A thought provoking new report from Chatham House looks at the effects of perceived resource scarcity on the increasing practice of “resource politics.”  Whether resources are growing scarce or not, politicians and societies are often behaving as if they are.  Such behavior, intended as a hedge against resource dislocations, are instead fueling volatility and continual upward pressure on commodity prices, which in turn fuels more pressure for non-free market policy behavior.  It is a negative feedback loop which appears to be inescapable at the moment.  New cartels, based on the OPEC model, are forming or being discussed for other commodities; nations are instituting export controls in attempts to protect domestic consumers; other nations are seizing control of resource production and sales.  These acts, and others, have created a clear and distinct break in commodity price pattern of recent decades (click on image for a larger view):

Resource Volatility

The Chatham House report proposes the creation of a new body of major resource producers and consumers who could act to break this loop.  The problem, as always, is that collective action can seem to be detrimental to apparent individual benefits.  The US, for example, is self sufficient in food and is projected to be energy independent within two decades.  US leaders would be asked to forsake the power position of leading global exporter of both food and fuel at a time when insecurity of those very commodities begin to pressure our primary geopolitical foe, China.  The figure below represents resource trade as it currently stands; by 2030, several of those heavy trade lines will be flowing out of North America.  It is asking a lot to give that privilege up.

resource trade

Click for a larger image




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