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Energy 2 : Energy Trade
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Energy 2 : Energy Trade

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  • 1.
    • World Coal Trade
    • Coal is an awkward fuel to handle – bulky, heavy, irregular shape and dirty. But it is widely found throughout the world. Reserves may last 150 years.
    • In the 19c industries moved to where the coalfields were, rather than moving coal to them. (Nearly all Britain’s large conurbations are on top of coalfields except London – that’s where the factories grew up)
    • Two developments in the later 20c caused coal to become an international fuel :
      • Vast open-cast mines allowing coal to be extracted cheaply
      • Bulk coal-carrier ships which could cut the cost of transporting coal from one continent to another.
    • As a result, coal is now moved around the world from areas of surplus – Australia, S. Africa, Poland, to areas which are in energy shortage – China, Japan, etc. – especially NICs
    Fun Fact : Europe’s largest coal-fired power-station – Drax, which is on top of the Yorkshire coalfield, actually imports coal by ship along the Humber from Poland as it can be mined from there and transported to Drax more cheaply than it can be obtained from the deep collieries and high-wage mines of the Yorkshire coalfield next door.
  • 2. List the countries which are net coal importers (consume more than they produce) in rank order List the countries which are net coal exporters (produce more than they consume) in rank order What do you notice about the world’s top 5 coal consuming countries? Is the world trade in coal likely to Increase in the future – or decrease? And why?
  • 3. Which continent will have very few coal-fired power stations – and what is it likely to use for its energy supplies instead?
  • 4.
    • World Oil Trade
    • Oil is the most versatile and widely used world energy source. Used as petrol, diesel or kerosene or converted into Electricity.
    • It is used to heat homes, factories, move goods (transport) and make a variety of products – plastics, fertilizer..
    • It is easy to transport by pipeline, ship, petrol lorry or train.
    • Production is dominated by a few countries which were LEDCs until the 1970s – focused on the Middle East
    • Consumption is dominated by the wealthiest industrial nations
    • This leads to a flow of oil revenue (money) from MEDCs to a few LEDCs which have rapidly grown rich as a result (Saudi Arabia, Bahrain….)
    • Organisation of Petroleum Exporting Countries (OPEC) aims to keep the price of oil high by restricting their own production and agreeing high prices amongst themselves to gain maximum income. They raised the oil price twice in the 1970s leading to economic problems in importing countries like the USA
    What do you notice about the main ‘consumers of oil’ from these maps?
  • 5. Draw a vertical bar to represent oil reserves for the top 10 producers : scale Icm : 20 billion barrels
  • 6. 1960’s: Historic low prices as oil production dominated by MEDCs 1973 : OPEC triples price of oil following Israel-Arab war Mid 1970s: High oil prices result in economic slump in MEDCS  reduces oil demand so price falls 1979 : OPEC triples price of oil again following recovery of MEDC economies 1980 : Iran-Iraq war – both countries raise oil production to pay for war  oil surplus, price falls 1991: Iraq invades Kuwait  first Gulf War. USA releases strategic reserves 2001 : Second Gulf War Industrialisation by China sucks in oil. Creates a shortage so price rises High oil price encourages Venezuela and Russia to develop their expensive oil reserves
  • 7.
    • Oil prices go up if:
    • There is a shortage of oil in the ground
    • There is high demand leading to a shortage of supply
    • Oil producing countries are at war
    • OPEC countries agree amongst themselves to reduce production
    • OPEC countries agree amongst themselves to raise their prices
    • Oil prices go down if:
    • New oil supplies are discovered increasing the amount available
    • There is falling demand due to economic problems in MEDCs
    • Oil producing countries increase their production to get more income
    • OPEC countries agree amongst themselves to increase production
    • People choose to limit their energy use by buying energy-efficient cars
  • 8. Global Uranium Producers
  • 9.
    • World Uranium Trade
    • Uranium is a metal which is mined to form the basis of nuclear fuel rods. It is radioactive.
    • It wasn’t seen as valuable until the 1940s – and the development of atom bombs. Uranium is the basis for nuclear weapons.
    • Uranium is not found in many places around the world. Australia and Canada produce most.
    • Most uranium goes for nuclear power-station fuel in MEDCs. These expensive power-stations are too costly for most LEDCs
    • International trade in uranium is tightly controlled because of its danger in producing nuclear weapons.
    • Some LEDCs/ NICs are trying to obtain uranium for ‘peaceful nuclear power stations’ such as Iran and North Korea. But many MEDCs are suspicious that this is an excuse to convert the nuclear fuel into weapons-grade plutonium and create their own nuclear bombs.
    • Iran is at present developing its first nuclear power station ‘for peaceful energy’ using Russian help. Many western countries are worried they want it to develop a nuclear weapon. Israel has said it will bomb any nuclear power station which starts operating as they worry they will be attacked. Iran has some of the world’s largest oil reserves.
  • 10. European Gas Trade
    • Gas is a very popular fuel at present because :
    • It is easy to transport by pipeline or as a liquid (LPG)
    • It has been relatively cheap
    • It doesn’t generate as much CO2 or pollution as coal or oil
    • Supplies are generally good and can continue for 30 years or so
    • Russia has vast amounts of natural gas – and has been supplying more and more of Europe since the decline of communism in the early 1990s. Many European countries rely on Russian gas for home heating and industry.
    Britain has its own gas supplies in the North Sea but these are running low. As a result an undersea pipeline has just been built between Norway’s gas fields and Easington to supply the UK up till 2025
  • 11. Russia has stopped gas supplies to Europe twice in recent years. It says that Ukraine is not paying them enough for its gas – and so Russia stopped supplying it. But the gas pipeline also feeds other European countries and they stopped getting their gas supplies. Both times there has been a crisis – it has been winter. Russia re-started gas flows, but said Ukraine must not use any of the gas passing through it. Places like Romania said they still weren’t receiving gas. Russia said it was because Ukraine was siphoning off ‘their’ gas as it passed through the Ukraine. Ukraine denied this and said Russia had never restarted supplies. Russia used to ‘own’ Ukraine as part of the USSR. It has never been friendly to it since it broke away and declared independence in 1992.
  • 12. What are the consequences for European countries if they have energy conflict with Russia? What are the consequences for Russia if it has repeated energy conflict with other European countries?
  • 13. International Energy Conflicts China opens one new coal-fired power station each week in its drive for growth Conflict with other countries because……..(hint: carbon emission) Conflict with other countries because……..(hint: nuclear safety) Iran secures deal to import Uranium from South Africa Saudi Arabia halves Oil production for the year. Says it wants to ‘save resources’ Conflict with other countries because……..(hint: price of oil…..effect on the economy)
  • 14. Energy TNCs – Trans-National Companies
    • Some of the world’s biggest TNCs are involved in the Energy Trade.
    • Companies such as BP, Britain’s biggest company, Exxon-Mobil, Shell, Total – make billions of dollars in profit each year by controlling much of the flow of oil – from getting it out of the ground to selling it in their own garages
    • They can influence the price of oil by finding new reserves (price can go down), or reducing production from existing oil reserves (price will go up).
    • Because oil demand and use is closely linked to development – as countries economically develop, their demand for oil goes up and TNCs have more customers.
  • 15.
    • BP Activities:
    • Exploration – seeking new oil reserves. Geologists inspect likely rock formations – often in very difficult conditions (deserts, deep oceans, polar regions – as most of the oil in ‘easy’ locations has already been discovered. For similar reasons most exploration is now in LEDCs
    • Drilling – working with the governments of different countries for the right to extract the oil. BP will pay ‘oil revenues’ to the host country for the right to extract its oil. BP works in many countries at the same time so if there are problems in one country – they have oil coming out of the ground in other countries.
    • Transport – BP moves crude (unrefined) oil all over the world to oil refineries, by pipeline, oil tanker or oil lorries. It rarely refines it in the country where it extracts it.
  • 16.
    • BP Activities contd
    • Refining – crude oil is heated to give different products at different temperatures: kerosene, petrol, diesel, fuel-oil, bitumen, tar. The Oil refineries are the most profitable part of the operation – so BP likes to locate its refineries in ‘safe’ countries where production is likely to be uninterrupted – such as the USA, Europe, Japan, Australia – and where ‘demand’ is highest – ie in MEDCs
    • Transport – the refined products are transported direct to customers – often by road tanker such as ‘petrol’ to garages.
    • Sales – BP sells its oil products to many other companies – but has its own outlets too, such as BP garages.
    • Research : BP is involved in researching alternative energy supplies for when oil supplies run out. It is researching energy-efficient jet engines which use less oil as well as solar cars and getting energy from fuel cells, and solar panels.
  • 17. Is it good to have BP operating in your country?
    • You will get an income from selling the ‘exploration and drilling’ rights to BP
    • You will get an income from the sale of oil from BP
    • Jobs will be created in the drilling and transport departments
    • Roads and ports may be improved by BP to they can operate effectively
    • You will be involved in international trade – and could use the links with MEDCs to develop other exports so they stay ‘friendly’ with you – and your oil.
    • There may by considerable pollution from the drilling operations, tanker filling and pipeline leaks
    • Most of the available jobs will be low-skill, low-pay. BP will reserve most skilled jobs for its own workers
    • A few of your people may become very rich – whilst others remain poor – leading to unrest amongst your population.
    • Your oil supplies may get used up faster than you want them to be.
    • You might be invaded by neighbouring countries to get hold of your oil.
    • If the world price of oil goes down – you could find you make less money than you need if you raised your spending in the ‘good’ years.
  • 18. Nigeria : Oil Nightmare. The Niger Delta, a region the size of England, is littered with violence and gas flares - the offshoot of oil extraction - whose roar and heat you can feel for hundreds of metres around. (See BBC report) The flares have become symbols of the region and the paradox that exists in an area where you find one of the world's richest oil regions alongside some of the poorest people. People here blame the fallout from the oil industry for their ruined environment, ill health and unemployment. On the waterfront at Port Harcourt, the city at the heart of the oil industry, we found slums where people live without running water and electricity, and miles from the nearest school or clinic. No wonder many are angry. One woman told us: "We are suffering. We don't have jobs. They make so much money with oil, but we don't see it." Shootouts and stolen oil The maze of waterways makes policing the delta incredibly difficult. With unemployment at 90%, many people of the Delta are tempted to join the criminal gangs who terrorise the area, kidnapping foreign oil workers and launching raids on oil platforms (see BBC report)