June 04, 2006	Sunday	Jumadi-ul-Awwal 7, 1427

RIYADH, June 3: Global economic growth and the consumption of energy are no more interlinked. Although it may sound outrageous in the first go, the two appear to have been decoupled. Despite increasing crude consumption over the last many decades, the global economic growth is down to only 1.5 per cent on average, argued World Energy Council Secretary-General and CEO Gerald Doucet, outlining the WEC ‘Energy Policy Scenarios to 2050.’

Delivering his keynote presentation before a select gathering of diplomats and energy fraternity at the Riyadh based International Energy Forum, Mr Doucet almost conceded that energy was no more the driving force of the global economy. And he argued with plain logic.

According to the WEC, the global GDP for the last few decades had been growing at an average rate of 1.5 per cent per annum only. Now this is in contrast to some other estimates. The IEA puts the global GDP growth over the last few decades averagely at three per cent. The WEC, however, has its own reasons for the gloomy estimate.

And in sharp contrast to this dip in GDP growth rates, the global energy consumption has grown manifold over the last four decades. No or little relation between the two, it thus seems.

What does this mean? Apparently the fact is that energy is not the reason, or to be on safe side the sole major cause, of GDP growth in the world. “A significant deduction indeed! It turns the very phrase, that we live in a fossil fuel driven civilisation, almost upside down,” Mr Doucet accepts. He conceded that the issue was a subject of fierce debate within the global energy fraternity.

In his almost 65-minute presentation before the select audience, Mr Doucet had other interesting observations too!

In this era of globalisation, while the world (leaders) appreciate the fact that the world has to be more open to each others products’ (and ideas), Mr Doucet raised the question why it could be hazardous or strategically unacceptable, for any country or region, to be dependent on another country or region for its energy requirements? Why the word interdependence is bad, when viewed in terms of energy, Mr Doucet asked. A million-dollar question indeed, with apparently no plausible answer at our level.

This is simply geo politics, Mr Doucet. It could be very prudent and indeed essential to allow free flow of things –- from Mcburgers to goods of Israeli origin into all parts of the world, including Saudi Arabia, under the WTO regimen, yet for some it also appears strategically important to carve out a way clear of the Middle East for its energy needs. Apparently that does come not under the purview of the WTO and cannot be challenged at the WTO headquarters.

This becomes all the more important in view that the non-Middle Eastern oil would be peaking around 2010, declin ing by one million barrels per day then on.

Reliance on oil from the Middle East will naturally grow and not recede, he argued. So what the heck, he apparently posed.

And then setting aside, rather forcefully the very idea of peak oil theory, so vehemently being argued by Mat Simmons and Company, Mr Doucet observed that in a world faced with ‘energy poverty’, more than 1.6 billion people today are ‘energy starved -– with no access to energy’. But this problem has nothing to do with limited energy resources rather it is an issue of investment in the sector. Indeed this investment has to be financed by someone. And in order to generate this sort of money to be invested in the sector, prices have to be right so as to attract the investors. ‘Ultimately, it is the consumer who has to pay,’ if one wants uninterrupted flow of energy.

Mr Doucet also touched on another very interesting yet controversial subject. He stressed on establishing rules for energy trade. He argued that trade barriers need to go down, if one has to ensure free and smooth flow of energy products from energy rich regions to energy hungry nations. Citing the example of Brazil, and with the Brazilian ambassador in Riyadh sitting only a few seats away, Mr Doucet pronounced there was no justification in blocking the flow of competitive sugar-based ethanol from Brazil into the US — apparently to protect the inefficient corn-based ethanol producers in the US. Protectionism would hurt. This goes against the very basics of free trade, he strongly argued.

In this era of free trade, Mr Doucet continued to argue, the Chinese CNOC should also be allowed to buy stakes in US energy companies, Mittal also has the right to buy Arcelor. Attempts to prevent market forces from playing their due role, would only aggravate things. Indeed it is against the very basics of capitalism. Protectionism won’t help.

If the world intends to get out of the energy imbroglio, it needs to come to terms with the realities. If protectionism is bad in one sector, and for the under developed, it is ought to be bad in other sectors and in the industrialised world too. There cannot be a choose and pick policy, some one in the right quarters, those who claim to be the leaders of the free world, needs to get this message through -– as very clearly outlined in the WEC ‘Energy Policy Scenarios to 2050.’ The task but is daunting.