The document discusses how peak oil may lead to changes in political economy and enforcement of individual entitlements. It argues that the current liberal trade system relies on cheap fuel but rising oil prices could force changes. This may affect quality of life and promote changes to political and economic policies. The paper will examine whether perceived scarcity from peak oil leads to these changes or if changes stem from promoting human rights as defined by international law. It outlines some theories that will provide context and examines civilization goals of ensuring citizens' economic rights.

1. Peak oil may promote changes in the political economy and in individual
entitlement enforcement?
By Robert Silva
San Francisco State University
Introduction and Background
The liberal trade scheme is reliant on a cheap fuel source to promote individual to
individual trade interaction. The individual trade to individual trade is the method of
entitlement enforcement. The promise of liberal trade is to promote economic
development and to promote a higher standard of living of the individual. The current
rising oil prices due to scarcity could force the international trade system to adopt a
new method of trade interaction because the current production schemes go across
vast geographical regions. Will this have affect on individual consumer’s quality of
life and living habits? The underlying argument of this paper is the lack of leadership
to promote an adequate quality of life, and have the foresight to promote innovation to
lessen the burden of suffering created by scarcity. This may promote a change in the
political economy. The political economy is the policy structure of economic
decision making. Authority structures can be democratic or oligarchic in nature.
Problem Formulation
The specific aspect to this problem I am looking at is; the decline of abundance of oil
may promote constriction to economic activity? The result could affect the individual
ability to provide for essential entitlements. This could call for the populace to
demand for changes of the political economy in trade and economic practices. The
change of the international political economy may also be altered because of damage
to the environment - a common survival promotes common mandates. The last reason
the political economy could change is because of power sustaining and seeking of
individual actors.
The systemic theories I am addressing that are to give context to the decision making
in economic policy making process are David Ricardo’s “comparative advantage” and
Joseph Schumpeter’s “creative destruction.” The theories become almost heuristics or
rules of the thumb when dealing with a given situation about making economic
decisions. The theories could be almost considered under rationalist choice because
they deal with maximization of output, sustaining and creating economic activity
which can relate to relative gains. Comparative advantage is nested into the structure
this means it is in the process that it does not affect the structure but only the actors.
Creative Destruction explains how practices change the structure which promotes
economic activity. As the results influences the actors and the common knowledge.
This is because technology the result of innovation promotes a new common
knowledge thus this allows new understanding to emerge. This also could be
considered to have a sociological affect or norm diffusion among the people.
1

2. Does the theory of David Ricardo’s comparative advantage1
hold true when
transportation cost that promotes trade denies the economic advantage of off shoring?
Must there be a comparative advantage in transportation to promote contemporary
productions networks? When the comparative advantage is lost does this mean the
structure changes and possible the political economy. This leads to the next logical
step is the market following the rational cycles of innovation to sustain the current
political economic institutional arrangement. Institutional is defined by codified
practices that promote predictable behavior to any given situation.
This is to address innovation of technological advance and Joseph Schumpeter
theory of creative destruction. 2
The theory of creative destruction could be the
method a comparative advantage is created through creating new technologies
through innovation that creates efficiency, thus creating a comparative advantage. The
example of innovation could be explained by the following. Early trade was based
camels and walking on land for example the old silk road. The wind power of sail
powered ships over the seas was the next transporting method. Then there was coal
powered trains over vast expansions of land. Then petro based airplanes in the air
over land and sea promoting efficiency in time and use of resources. Each innovation
propelled efficient transport and trade which lead to building of new infrastructures
and economic activity. As a fuel source declined so did economic activity that was
support by the fuel source. Efficient methods of travel and transport allow for deeper
integration thus affecting people’s quality of life, the sharing of culture and the
creation of a global cultural due to business activities that was enabled by cheap travel
and ability to trade. Each innovation expanded economic activity not just in the
creation of the infrastructure and the vehicles of trade but in other aspects of the
economy. Since oil is declining is there a sign of new technological advance taking
its place? Evolutionary economic changes do precede the last condition but emerges
from the situation before.3
This could assert that structure is not the only thing that
affects economic policy, but the agents could have affect on evolutionary steps of the
economy.
The migration of labor to produce the new innovation to spread the scientific
advancement causes the workforce to migrate to one mode of production to another.
As the old production structure fads away as the new production structure creates the
new technology. The workforce transfers to the next technological level of production
creating income and demand for the products being create thus economic activity and
increasing the quality of life to the populace apart of the trade regime. A trade regime
is a group of treaties and regulation that coordinate trade behavior between states. The
technology supports the trade regime because of market calculation defined by
comparative advantage. The technology promotes the comparative advantage of the
practices.
The current trade regime was based on liberal principles. The state creates the
environment for innovation, production and trade. The major actors in the liberal
1
David Ricardo’s Comparative Advantage” Theory of Comparative Advantage” http://iang.org/free_banking/david.html
2
Joseph Schumpeter, “Creative Destruction” From Capitalism , Socialism and Democracy, http:/ ew York: Harper, 1975) [orig.
pub. 1942],:/transcriptions.english.ucsb.edu/archive/courses/liu/english25/materials/schumpeter.html pp. 82-85
3
Joseph Schumpeter, The Theories of Economic Development An Inquiry into Profits, Capital, Credit, Interest, and the Business
Cycle, Harvard University Press 1961 copyright 1934 p.59
2

3. trade regime are non-governmental actors. States doe not innovate, produce or trade
but coordinate and promote methods of production and trade.
This paper will look at the constraints upon the economy that affects decision making.
The major constraint I will be exploring is concept of peak oil that promotes a
perception of scarcity. Scarcity could be caused by other factors such as war; artificial
market manipulations and collusion create by lack of production. The perception of
the story of peak oil could cause individuals and groups to respond in different
methods. Scarcity could lead to resource competition and possible violent conflict to
control resources. This could be a motivation of states to nationalize oil assets to
ensure populations benefit from the resources of there territory. This could fall under
the promotion of human rights. The motivation enforcement of economic human
rights could stem from international obligations and duties to its population. Another
reason a state would nationalize oil reserves are to promote relative power through
economic pressure because personal desire to sustain power over the domestic
populace and international competitors. This leads to the conclusion political
economy could be a method for the promotion of human rights or dynastic control.
Major Questions of the Paper/Hypothesis
The question could be economic policy changes may be to promote the civilization
goals, which would be to promote economic rights of citizens. Does notion of peak oil
creates a perception of scarce resources may cause changes in the political economy
or changes of the political economy come from promotion of human rights?
.
Methodology
The method is a constructivist approach. I think this could explain continuity of
events and define structure and actors relationships. I will be defining the civilization
goals which would be the contemporary economic rights defined by international law.
The second is defining the oil industry and supply this would help clarify scarcity and
possible resource competition. Then explore if some actors perceive the peak oil is the
promotion of scarcity. Then I will begin to apply empirical evidence of observations
in the media, speech acts, narratives, discourse of the major decision making actors in
the political economy about the structure how they are responding to peak oil. Then
compare the empirical evidence to the civilizations goals. Then do an analysis of
empirical evidence which could be narratives and speech act to discern if the officials
are promoting civilization goals because of scarce oil.
-Then the next step to check if the leaders are promoting the rhetoric is to look at
quality of life indexes and social welfare demographics to ensure the leaders are
promoting the rhetoric. The null hypothesis would be support by military build ups,
increase spending on security, crime rate indexes and corruption rates. This would be
the next paper after the discovery of the policy and intention of the leadership this
would give time to see the affects of the policy.-
3

4. Civilization Goals
International law and economic rights,
The goal of this section of the paper is to define the civilization goals of economic
practices and policy. Since the United Nations defines other aspects of the duties and
obligations of states. I will be using the Universal Declaration of Human Rights to
help define civilization goals of the Liberal economic practices. Since the World
Bank, The International Monetary Fund and The World Trade Organization are
considered a part of the United Nations system and important bodies.4
Economic rights are defined in the Universal Declaration of Human Rights (UDHR).
The common interpretation of legality or legitimacy of the UDHR is that it could be
considered apart of customary law. For these reasons, states have used the UDHR as
guidelines to create domestic constitutions.5
The UDHR was accepted by all
sovereign nations as an authoritative code of rights this was without reservations or
disagreement.6
The UDHR also asserts that human rights issues are under the domain
of the international community.7
This is supported by the notion the state’s government are sovereign or have
the ability to create obligations and duties to other states and each state is an equal
persona in international law. This is asserted in Article two section one of the United
Nations Charter. Only the state can enter into contract with other states. Thus the
decision of the state to follow obligations and duties of other states has the authority
to enforce the contract, law or treaty in the domestic arena. This makes individual
citizens responsible to adhere to international law and promote and respect rights. But
first the treaty must go through proper acceptance processes, or be ratified to be
considered supreme law of the land. In the United States Constitution, the laws of
nations or treaties once ratified are supreme laws of the land which means no
domestic law can countervail or contradict. If a treaty or a practice is not accepted by
a state but another state does accept the practice. Then it depends on territorial
jurisdiction where the situation is occurring about enforcement of treaty. A state
cannot ignore another state’s practices when it is an accepted practice or customary
norm of that state. Although, a state must respect another state’s practice as long as it
conforms to international principals which does not infringe on individual human
rights.
The concept of democracy makes the state or government the speaker to the
international community for the individual citizen. This promotes states cannot create
laws, treaties to make other states infringe upon their citizens rights or even state’s
rights, as define in the authoritative code call the Universal Declaration of Human
Rights. Thus the individual’s uses the state as a vehicle to express interest and rights
to other citizens through their state in the international community. The UDHR is the
guiding principles or the supra norms of laws, practices and policies of the
international system and defines the purpose of the statecraft. The result of this is
individual citizens have the protection of UDHR so a majority or a few cannot use the
state to create obstacles to entitlements or rights. The same concept expressed in the
4
United Nations Organizational Chart http://www.un.org/aboutun/chart_en.pdf
5
Damrosch and Henkin, et al. International Law Cases and Materials Fourth ed. West Group St.Paul p595
6
Ibid.
7
Ibid.
4

5. United States Constitution limitations upon government. The UDHR does assert an
obligation upon the state to promote an environment so individual rights can be
fulfilled. This is important aspect to this paper. The state is responsible to promote
economic activity and functions to promote the liberty of the citizen, to reach
entitlement fulfilment. Liberty is the concept the freedom to practice rights, so the
state is responsible to remove hindrances be it from private actors, or municipal,
provincial, or city ordinances that interfere with right enforcement or liberty. The
state has the option to derogate rights and limit liberty in times of crisis that are
defined by law and have legitimate aim.
The economic rights defined by Universal Declaration of Human Rights are
located in articles 23,25,27,28 the important aspects are the right to work, the right to
social security, the freedom of association in trade unions in Article 25 of UDHR the
right of a quality of life that adequate for a health and well being for the individual
and the dependents. Plus people have the right to medical care.8
In Article 23 the
individual has the right to work and has a free choice of work and protection against
unemployment and favourable working conditions. In Article 22 describes that each
individual has the right to social security through national effort and with international
co-operation. In Article 21 expresses that people have a right to own property. These
articles promote that individual have the right to partake in the economic system and
cannot be barred from work if able to work.9
The state is supposed to promote an
economic environment that will promote all these rights. The civilization goal is for
people to work either in a company or work by operating and owning a company, to
provide for adequate quality of life and well being for their citizens.
In article 27 expresses that the individual has the right partake and share in the
cultural, artistic advances of society, and have the right to share in scientific advances.
This is the article could support that technological advances are needed to ensure the
individual partakes in uses of resources that the technological advances use. The use
of oil and cars could be considered a technological advance or a scientific
advancement. -Does globalization promotes a society. Or does the United Nations
constitute a global society because of premises of democracies and states are vehicles
for communication and coordination rather than objects that create divisions? - The
need for efficiency in methods of distribution and uses of resources could be
considered a strong motivation to promote and enforce human rights. Also Article 22
could be used by states to subsidize innovation and policy to ensure distribution of
services and resources. Article 25 could be the bases to promote innovation and
technological advances in efficient methods to use resources to ensure and sustain an
adequate quality life. This is where the Liberal economic could have been created to
promote this civilization goal, because of underlying theories of the economic scheme
promotes efficiency. The goal is to meet the needs and rights of the people. The
notions that are written in the document and each right are considered in equal in
priority.
The major financial and trade bodies falls under the United Nation’s organization and
the guiding principles of the Untied Nations is the Universal Declaration of Human
8
Universal Declaration of Human Rights
9
Universal Declaration of Human Rights
5

6. Rights, thus through practical reasoning, the policies of these institutions should
promote the civilization goals.
Theories of past practices and behaviour
This section is show possible power seeking by elites by using rational market
reasoning to justify transference of decision making authority and weakening the
relative power of the employee. This section is to give a possible model or pattern to
base analysis off of. Since this case study was documented and is a good example of
possible misuse of arguments of comparative advantage and innovation to weaken the
relative power and marginalize a portion of society in a nation state.
To support this notion one could look at Andrew Glyn’s book Capitalism Unleashed.
This book describes the transference of state control of economic policy to employer
control economic policy. The arguments could be considered as rational calculations
to promote economic activity. These are the arguments of the transfer of decision
making through rational reasoning of market and monetary policy to promote
development. 10
The assumption was the system was not working because of
democratic practices of the factory, voting of the labor to make decisions about.
Andrew Glyn looks at the British political economy and the economies of United
States, Europe and Austria-Asia as case studies. The time period studied was the
1950’s to 1960’s called the golden age because of economic expansion and growth
but it was followed by economic destabilization in the late 1960’s and 1970’s.11
The
common believed arguments made was because the strengthen position of labor that
did not allow for further expansion. Andrew Glyn points out the capitalism natural
flow -pointed out by Joseph Schumpeter called creative destruction- did not allow to
follow its course. The economic boom of the 1950’s and 1960’s was coming out of
change of economic practices from agriculture jobs to industrial and service jobs this
was cause of economic expansion innovation and distribution and implantation of the
new technology in society.12
The popular argument was low unemployment with low inflation promoted rapid
economic growth and higher living standards which lead to an unprecedented
economic boom. High employment strengthened bargaining position of the worker
this lead to wage increases.13
The decline of agriculture jobs forced the workers to
move to cities and this gave rise to trade unionism. This is also supported by political
influence of the worker to organized and influence the political structure by
promoting a legislative that would support the worker’s bargaining position. This
promoted a profit squeeze for employers and limited their freedom to control capital
outcomes of production. This means the authority to make decisions about
productivity how many units are produce during a day and how many hours the
10
Andrew Glyn, Capitalism Unleashed, Oxford 2006 P. viii-ix
11
Ibid. P. 2
12
Ibid. chapter 3
13
Ibid.
6

7. worker had to work, and the amount of wages being paid to the worker. This created a
situation that promoted conflict between employer and employees. The strike was a
method the employee enforced barging position because of high employment. It was
hard to replace striking workers, this lead to a loss of millions of man hours of
productivity.14
This was argued as one aspect that led to stagflation.
The second part of the formula that confounded economic stability was because of
monetary practices which could be attributed to inflation and resource competition
which can equate to supply and demand for energy and commodities in the global
market.15
The monetary practices caused inflation could be inferred because the lack
of capital accumulation because of the worker’s control over the factory outputs and
demands for a higher wage.16
This led the employer to seek loans to purchase goods
which added more money to the currency pool with same production levels reduce the
purchasing power of the currency. Plus with foreign competitors paying fewer amount
in wages to their employees and not inflating their currency with loans to purchase
energy and raw resources. The lack of loans did not disrupt their currency valuation
which can be interpreted as purchasing power parity and the creation of larger deficits
to domestic lenders and international creditors. This also promoted foreign
competitors to produce a cheaper product which allowed infiltration into markets
because of price competition or created a comparative advantage in price but maybe
not in quality. This weakens economic stability and constricted economic activity
because sales were diminishing because of competition.
This led to shift from government policy to share holder control and allowing market
forces to dictate decisions. This lead to the undermining labor’s bargaining power
because of restrictive macroeconomic policies, renewed emphasis on market forces
and shareholder values and intensifying international competition.17
Tight or
restrictive monetary and fiscal policies led to unemployment.18
Unemployment helped
promote the control over productivity and wage by the employer because of
competition among employees for jobs. The logical causation would be that people
will take jobs at a less valued waged and this also created a pool of potential
employees of the newly unemployed. The implantation of technology or automation
also helped create a needed employee pool to promote divisions in labor.19
The
psycho-sociological influence was job insecurity had risen in rich countries, thus do
not cause problems and accept what is given to you as an employee. The ability for
the employee to choose their jobs was contrived by rational calculations of the
market. This could be to promote the relative power of the employer over the
employee. This was supported with data of rise of unemployment rates in blue and
white collar sector jobs. The free movement of capital allowed for a comparative
advantage to cheaper labor pools thus globalization was a fix for stagnation of capital
14
Ibid. chapter 1
15
Ibid. chapter 2
16
ibid
17
Ibid chapter 3
18
ibid
19
Ibid.
7

8. expansion, -or the increase activity of labor refining and distributing resources. The
lack economic activity was because of the perception of strong bargaining position of
labor. The counter argument was destabilization of economy is a natural occurrence
and sign for needed innovation to take place and should be seen as a need for a new
era or evolutionary step in development.
Andrew Glyn points out that “the production supply side did not prevent economic
expansion and growth”20
This could be asserted to mean the resources were abundant
to produce goods. It was the lack of markets to purchase goods. The natural transition
of technology or development of goods was taking place destabilization could have
been a sign of reaching the limit of the market. There was a lack of new innovation to
promote a higher quality of life in place to switch labor in creating and producing new
goods to be sold in existing transforming market. As the agriculture jobs went to less
develop countries and industry and service jobs took the place there was no
innovation to take the place of industrial and service jobs of the 1970’s. The computer
industry was still growing. Free flow of capital could be a viewed as a method to
distribute innovation to other regions because high wages of the established economy
made the items to expensive to purchase. The fact Andrew Glyn put forth, it was the
lack of innovation or the creating of a new product to improve quality of life, and
changing system to produce the new product. The old system finished its purpose
spreading the level of technology to promote a higher quality of life, which enables
new concepts and innovation. The economic system needed to change or retool to
mass distribute the new innovation to promote higher qualities of life, which created a
new demand. This can relate to change from agriculture to industry in the 1950’s and
1960’s and loans in the 1970’s. As seen in the 1990’s the spreading of the computer
and internet which promote economic growth and expansion when the market has
reached its limit in a region seen in the 2000’s loans try to replace innovation to
promote economic activity.21
The purpose of explaining is innovation promotes economic development. The
obligation of the state is to ensure each individual has the right to income and benefit
from the society they live in. Innovation promotes economic activity and therefore
income. It could be viewed this is the purpose of economic activity and the need to
promote efficient methods of production and distribution to ensure each individual
has the right to access resources and technological advancements this leads to income
and fulfilment of economic human rights as seen in historical patterns of
development.
This example in Andrew Glyn’s book shows that the most rational decision could
have been to innovate to promote a comparative advantage and therefore a new
industry, but the market dictated to move the industry to a cheaper labor pool. When
this happen it weaken the relative bargaining power of the employer. This also
diminished the size of the potential purchasing market because of purchasing power
parity of the domestic populace. If the employer was looking at the offshore labor as a
potential market or foreign markets then this was a rational choice based on own
20
Ibid. p13.
21
Ibid. Chapters 1-2
8

9. needs and relative power position. This decision was not made in the employee’s
interest. The decision to offshore could have to promote an efficiency in development
as seen with the creation of automation, but did limit the ability of the citizen’s to
acquire an income because the jobs that went overseas were not replaced with new
jobs. This could be perceived to promote the relative power of the employers over the
employees because it past cycles that were effective was followed by the creation of
new innovation thus economic activity. The state’s obligation would be to promote
income for its populace. The historical prestigious method could be considered done
through innovation of new technology and scientific advancement.
The current situation
Define peak and oil ontology International Energy Structure22
This section is to look at the oil industry to begin to describe the oil structure. This
section will hopefully give insight why oil is used because it carries a comparative
advantage. Although the comparative advantage of oil could be lost because of
theories of supply and demand. This also gives a chance to look at theories of peak oil
to understand them. This section is to support that some leaders in the politics and the
political economy perceive the concept of peak oil as the cause of scarcity.
Oil seems to be the cheapest liquid fuel source and easiest method to promote
development. This follows the theory of comparative advantage. The question is the
infrastructure being built around a technology that is limited by production rates and
finite access to resources to keep infrastructure operating. The need to define the oil
infrastructure is vital because production outputs do affect the speed ability to create
and maintain infrastructure, and promote trade since oil is related to transportation
and transportation is related to trade. Japan began accelerated growth because of the
introduction to oil.23
This is to support changing to a new technological level promote
economic activity. Trade is the key idea that is running the current ideology and
practices of the international trade regime. Development, growth and maintenance of
the infrastructure and economy are based on energy sources that promote
transportation, communications, and production. This supports that oil promotes the
current political economy. The table below shows the production rate of oil and rank
of countries that produce the most oil. The table is broken up in rank, overall
production rank in the world and how many barrels per day which is important
because it takes some many barrels of oil to keep daily economic activity per day per
state.
Rank 2004 / (billion barrels, 2006) / production 2004 million barrels (mb)24
1. Saudi Arabia 267 billion bb 10.4 mb/d
22
Taken from personal paper Japanese Foreign Policy Paper
23
Chikara Higashi, Japanese Trade Policy Formulation Praeger 1983 p.2
24
Hisane MASAKI, Japan Joins the Race for Uranium Amid Global Expansion of Nuclear Power
http://www.japanfocus.org/products/details/1626
9

10. 2. Russia 60 9.3 mb/d
3. USA 21 8.7 mb/d
Crude oil = <5.2 mb/d
4. Iran 132 4.1 mb/d
5. México 13 3.8 mb/d
6. China 8 3.6 mb/d
7. Norway 8 3.2 mb/d
8. Canada 179 3.1 mb/d
9. Venezuela 79 2.9 mb/d
10. United Arab Emirates 98 2.8 mb/d
11. Kuwait 104
(Some sources say 48 billion -
The difference is 5% of world reserves) 2.5 mb/d
12. Nigeria 36 2.5 mb/d
13. United Kingdom 4 2.1 mb/d
14. Iraq 115 2.0 mb/d
15. Other FSU
Kazakhstan + Azerbaijan 47 1.9 mb/d
16. Algeria 12 1.7 mb/d
17. Brazil 11 1.5 mb/d
18. Libya 39 1.5 mb/d
19. Indonesia 4 1.1 mb/d
20. Angola 6 0.9 mb/d25
Theories about oil reserves and production
Most recognize theory about peak production in oil is called Hubert’s Peak. M King
Hubert a geophysicist predicted that United State’s oil reserves would meet the half
way point of exhaustions.26
Hubert’s prediction did not come true during the decade
of the 1970’s. Hubert’s predictions forecasted that the world oil supply will meet its
peak within five years.27
The fact the oil is depleting and is not infinite. The people
promoting alternative energy sources are not just activist but European leaders. This
promotes that leaders of countries are perceiving peak oil as a cause of scarcity. The
fact oil promotes transportation and has a direct influence on the liberal economic
system because it was cheap and easy transport and use.28
This had led the way for
think tanks to promote alternative sources of energy. 29
The cost is creating a new fuel
infrastructure has been a barrier to entry for most new fuel sources. Oil is going to be
the fuel source to promote development in the developing world because it is still
considered the cheapest. Hubert’s predictions are based on basic ecological
processes, which can relate to cycles of consumption. The possible theory of depletion
25
Top 20 oil producers
26
http://www.princeton.edu/hubbert/the-peak.html
27
Ibid.
28
Erika McDonald Hubert's Peak http://www.cleanhouston.org/energy/features/huberts_peak.htm
29
The Hubbard peak for world oil http://www.hubbertpeak.com/summary.htm
10

11. of peak oil could be consumption is greater than natural oil creation. The oil cycle
takes millions of years to go through its process while it takes months and years to
extract and consume oil, thus oil will deplete because the speed of consumption is
greater than the speed of replenishment.30
The more oil reserves that are discovered
the more oil will be used to build new infrastructure and activity this explains the
acceleration in economic activity and more rapid depletion of new reserves.31
I do not
think scientist do not disagree with Hubert’s theory of depletion of reserves, but they
disagree when the oil is going to meet its peak, because data to measure oil reserves
could be unreliable and maybe there exists more reserves that we have not found.32
In this section of the paper I will begin to show the effects of peak oil on the
economy. The factors the variables that I will be use to measure are overall consumer
purchases, services limited, complaints and justification of industry leaders why sales
are down. I would hope to explain with narratives and observations the effects of
rising oil prices which could be attributive to peak oil. The other explanation of why
oil is limited is because of production rates are stifled because of manmade acts of
terrorism or sabotage of oil production or collusion of production through syndication
of oil producers. The terrorism aspect could be caused by the necessity to control oil
producing regions, as put forth by Foster Bellamy in the article Imperialism of Oil.33
The notion of peak oil could cause oil dependent nations to conquer other nations that
have the resources of oil. The fact peak oil could be causation of acts of war for
conquering or to control. Terrorism could be a tool of provocation for conquering or
to promote war. This paper is not about provocation of war. Although war could have
a direct affect on the political economy and economic activity. For example “Oil
reached a record $117.54 a barrel yesterday, dragging up the price of gas to a new
peak, amid concerns about crude supplies after a Japanese tanker was attacked in the
Middle East and militants blew up a Royal Dutch Shell pipeline in Nigeria.”34
This
can support terrorism could affect the price of oil and promote an artificial scarcity.
The aspect that I am looking at is the limitation of individual right fulfilment. The
causal change could have started with the notion of peak oil then creation of war
which is terrorism, then colluding of prices which effects services offered to the
individual to promote needs. The assumption is peak oil has occurred because supply
cannot reach demand the support of this notion is rising oil prices. In America in
could have been argued the peak had been achieve in 1971.35
30
Erika McDonald Hubert's Peak http://www.cleanhouston.org/energy/features/huberts_peak.htm
31
Ibid.
32
Ibid.
33
Foster Bellamy “Peak Oil and Energy Imperialism” Monthly Review July-August 2008
http://www.monthlyreview.org/080707foster.php
34
Russell Hotten OIL World warns Opec as prices rocket
The Daily Telegraph (LONDON) April 22, 2008 Tuesday CITY; Pg. 2
35
Probing Question: Is Peak Oil a Myth?
11

12. Rising oil prices could cause ripples through the economy and the economy is
a method to fulfil individual human rights. The section is to show the price of oil’s
affects on services provided and the ability for individual citizens to achieve goods
and services.
Empirical Evidence and Analysis
In a news article from The Business Times Singapore October 22 2007, 36
Reports industry leaders are projecting a loss of profits and higher operations cost
because of expensive oil. Early in the article the author quotes He Shuhan, a Chief
operational officer of investment in Farseers Pte Ltd a educational firm states”…..
Oil prices complicate the world economy ……..government leaders of oil dependent
countries will employ resistant policies such as import substitution which augments
and de-stabilise the global economy.” Import substitution is when a country begins to
produce a good or service that is usually imported from another country because it is
cheaper or has a comparative advantage. This statement supports that the price of oil
affects comparative advantage of states because it drives production prices up. This
also changes the structure, function and practices of the economy itself. The liberal
trade scheme promotes inter-state trade that countries manufacture and trade goods
and services. The lack of export trade promotes a balance of payment problems. This
disrupts the trade practice scheme laid out in the Breton Woods system because. The
assumption of the liberal economy is a country sells or exports a good that yields a
high profit so they may purchase or import a good that do not produce but need to
promote economic activity or fulfil the needs of their people. The goods and services
that are traded have a niche in the global economy because of rarity, price and
specialization. The product could also hold higher standard in quality or to promote
efficient use. The statement by He Shuhan supports that high priced oil reduces the
comparative advantage and may change the practices and decision making processes
in the current economic practices. In this same article the author states that oil prices
affect the individual consumer, that public transit bus fares had increased, and
disposal income will affect purchasing habits. This shows that scarce oil is affecting
the ability for individuals to fulfil entitlements. This has an also has an effect on
business because the lack of consumer sales. This affects the ability to fulfill the right
to income. The oil price increase has a negative effect on the individual’s quality of
life because not being able to purchase goods and creation of income. This report
came from a Singapore News article about Singapore’s economic status on oil.
In the article is “Peak Oil a Myth?” explains that the affects of scarce oil has affect
consumers in the United States to purchase more fuel efficient vehicles. This affected
Suburban Utility Vehicles sales to decrease and increase the sales of smaller more
efficient vehicles. The search for alternative fuel for transportation had begun to look
at Canada’s tar sand as a possible source to offset energy needs. American peak oil
has affect oil prices and with the development of China and India competition for
existing world oil resources exists. This article supports the notion that peak had been
reached thus supporting the perception which could cause an actor to act on this
common knowledge. This article implies innovation must take place but because of
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13. the comparative advantage in the use of oil, it is not reasonable in the market
calculation to begin to innovate and develop new energy sources. Although the price
of oil will become more expensive as the other countries begin to demand more
resources as they develop more complex economies.
To promote and create superior efficient vehicle is a first sign of innovation of
technology to use the same amount resources and to fulfil the needs of more
consumers. The SUV’s are being phased out and being replaced with smaller cars that
does the same function promote transportation with less resources used.
Reasons for Nationalization of Oil industries. The era of State Run Business.
The affect of peak oil or oil scarcity on could have caused the emergences of state
owned corporations such as the Saudi Aramco, Gazprom, Russia CNPC China and
NIOC Iran, PDVSA Venezuela, Petronas Malaysia. These national state-owned
companies are extracting, refining and distributing energy resources, plus competing
against other private businesses.37
This alters the Liberal or Bretton Woods
development and trade scheme. The concept is the states to create infrastructure and
the environment and collect taxes from the private business that employ and refine
and export goods to promote trade income to meet balance of payment of the states
current accounts. This supports that state are adopting different practice which alter
the structure and practices of the political economy because of perceptions to fulfill
human rights thus promote civilization goals.
In 1949 the desire to nationalize Iranian Oil was to promote a development plan of the
country. 38
The major areas of development were in the agriculture and industrial
fields. The goal was to use oil proceed to promote economic development. President
Truman was supported of Nationalization of Iranian Oil it was the Eisenhower
administration that disagreed with the economic policy move.39
The economic policy
could have been motivated to promote development of infrastructure of Iran to
promote higher quality of life for its citizens. Although the Iranian government had a
profit sharing deal with British companies on Iranian oil proceeds. 40
The
nationalization had United States support until change of leadership. Thus it could be
viewed to promote revenues to promote innovation and economic activity to promote
rights fulfilment.
Brazil is contemplating about nationalizing oil because the Saudi Arabia is reaping
revenues because of the nationalization of its oil. 41
A spokesperson of a Brazilian
37
Ian Bremmer, Reasons to be Gloomy Slate http://www.slate.com/id/2197115/ Sept 18 2008 p.1
38
History of Iran Oil Nationalization http://www.iranchamber.com/history/oil_nationalization/oil_nationalization.php
39
ibid
40
Ibid
41
Irwin Greenstein, “Will Brazil Really Nationalize Oil?” http://seekingalpha.com/article/93347-will-brazil-really-nationalize-oil
13

14. Union Alessandra Murteria is promoting a strike to use proceeds of oil revenues to
promote social projects. The rational calculation from nationalizing oil would be
because of the Saudi Arabia experience that trillions of dollars are being directed into
its sovereign wealth fund.42
That the trend is happening such as Russia, Venezuela,
Ecuador and Bolivia is nationalizing its strategic and economic assets. The official
leaders of Brazil, Edison Lobao the Brazialian Mines and Energy Minister believes
and proclaims oil should be to benefit the whole population rather than the stock
holders.43
This would be a common good argument and resources are meant to benefit
the people. The nationalization of Petrobras a Brazilian oil company would promote
economic development to promote a new economy and create millions of jobs. This
argument could fall under a civilization goal of creating income and promoting a
higher quality of life. The counter argument stated in article is that nationalized oil
companies do not innovate and prices usually rise because of lack of competition that
it creates a monopolistic environment. That stagnation will follow because of the lack
coercion of competition. Although there are cases to support that innovation and
economic expansion does happen while not running a non pure liberal economic
development scheme.
Conclusion
I think constructivist approach can explain the possible changes in economy and
economic practices. The perception of Peak oil could affect perception which can
affect rationalities then the method the actor chooses to deal with the problem of peak
oil or scarce oil. The papered did explored, war in some aspect, market controlling,
and changing of the political economic practices. This is supported with
nationalization of the countries oil industry, terrorism affects oil prices which could
create production rates. Some actors even spoke about import substitution which goes
against accepted norms of the trade regime which also alters the political economy.
The need for charts and graphs are good indicators to figure systemic problems. The
perception that I am putting forth economic stagnation comes for the lack of ideas and
desire to promote civilization goals. Statistics and graphs could be narratives of
market activity but do not explain why decision were made. The purpose of system is
just important as operating of the system. The notion an actor responses for the
structure in a certain policy trajectory cannot be explained. The constructivist
approach allows for the social construct to be created then on can begin to rationalize
from the structure and the heuristics of the system to see if outcomes promote the
civilization goals. This allows for auditing to discern if the decision maker is
promoting the supra norms of system.
I found that structure responses are not always about maximization of resources,
outputs or profit. That sometimes following a strict rational approach does not
promote the civilization goals. And not following a strict rationalist approach can
also restrict the enforcement of economic human rights. It could be argued that each
situation is unique but small theories can be applied to analyze any given situation
when fits the proper circumstances.
42
ibid
43
Ibid
14

15. Bibliography
Books
Peter Malamczuck ,Akehurst’s Modern Introduction to International Law 7th
Edition
Routledge
Damrosch Henkin Pugh Schachter Smit International Law Case Materials and
Studies, 4th
Ed Western Group
Ishay ,The Predictiment of Human Rights Volume V Petro University of America
Press
Ishay The History of Human Rights From Ancient times to the Globalization 2004
Morality and Expellency in International and Corporate Relations Volume xiii 1992
Security Reconstruction and Reconciliation UCL press 2007
The Paradox of the Plenty Karl 1997
Dickens, Global Shift 5th
Edition
Andrew Glyn, Capitalism Unleashed Oxford 2006
Warfare F Zuethen, Problems with Monopolies and Economic
Joseph Schumpeter The Theories of Economic Development An Inquiry into Profits,
Capital, Credit, Interest, and the Business Cycle, Harvard University Press 1961
copyright 1934
Medearis , Joseph Schumpeter’s Two Theories of Democracy Havard 2001
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16. David Ricardo’s Comparative Advantage” Theory of Comparative Advantage”
http://iang.org/free_banking/david.html
United Nations Organizational Chart http://www.un.org/aboutun/chart_en.pdf
Universal Declaration of Human Rights
United Nations Charter
David Ricardo’s Comparative Advantage” Theory of Comparative Advantage”
http://iang.org/free_banking/david.html
Joseph Schumpeter, “Creative Destruction” From Capitalism , Socialism and
Democracy, http:/ ew York: Harper, 1975) [orig. pub
1942],:/transcriptions.english.ucsb.edu/archive/courses/liu/english25/materials/schum
peter.html pp. 82-85
Erika McDonald Hubert's Peak
http://www.cleanhouston.org/energy/features/huberts_peak.htm
The Hubbard peak for world oil http://www.hubbertpeak.com/summary.htm
Foster Bellamy “Peak Oil and Energy Imperialism” Monthly Review July-August
2008 http://www.monthlyreview.org/080707foster.php
Russell Hotten OIL World warns Opec as prices rocket
The Daily Telegraph (LONDON) April 22, 2008 Tuesday CITY; Pg. 2
Probing Question: Is Peak Oil a Myth?
Copyright 2008 States News Service University Pennsylvania
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one and all; Jason Low takes a closer look at the importance of crude oil and its
impact on the global markets today section BTC
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