Post COVID-19: What future awaits crude oil?

(A review of Daniel Yergin’s ‘The New Map: Energy, Climate and the Clash of Nations.’ Penguin Press; September 2020).

The world and its energy markets are in turmoil and are in frantic search of a future of stability. But what if that search yields the very opposite? What are the likely effects of COVID-19, global politics of distrust and resentment, ascendancy of hybrid cars and transition to renewable energy on oil-dependent developing economies? In other words, as a fractured world grapples with crises unleashed on humanity by coronavirus, is it not possible that just as the present is troubled, the future may also be imperiled? The way out of the unpleasantness felt in our today and the possible stunted growth of tomorrow is about the central theme of the 530-page ‘The New Map’ by Daniel Yergin, 1992 Pulitzer Prize winner and author of ‘The Prize: A history of the oil industry and the role of oil in world affairs.’

Yergin’s ‘The New Map’ was released on Tuesday, September 15, 2020, at a time the world and its economy started peeping out of the isolation holes of COVID-19. The book divides the world into six thematic parts (Maps) and addresses the themes in forty-six chapters. The subtitle, ‘Energy, Climate and the Clash of Nations’ provides a window to the subject matter. Written in very simple, fluid language with a steady pace, the story starts with an Introduction which succinctly summarises each of the parts and chapters. It ends with a conclusion that mixes assurances with uncertainties and warnings. In form and content, ‘The New Map’ is a total book that uses facts and figures encased in history, geography, engineering, economics, international relations and politics in a perfect mix to deliver its message of hope and fears.

The author makes it clear right from the introductory section that the book “is about the new global map that is being shaped by dramatic shifts in geopolitics and energy” and the direction the drivers of the map are taking the world. He, however, warns that the “map” he is about to discuss is as complex as the intricacies of global politics and economic power-play. The author says: “This is no simple map to follow, for it is dynamic, constantly changing. It has been made even more complicated by the coronavirus that swept out of China and across the planet in 2020, bringing grief and vast human suffering and disarray. It also shut down the world economy, disrupted commerce both local and global, destroyed jobs and businesses and impoverished many, plunged the world economy into the deepest recession since the Great Depression, added enormously to public debt, accentuated the tensions among countries, and created vast turmoil in global energy markets” (Page xiii).

Themes discussed by the author include the United States shale oil revolution and its impacts on world energy markets, global politics and economy. The evolution of shale, its technology and politics are treated exhaustively in the first part named ‘America’s New Map’. The author treats the impacts it has had on the US’s domestic economy. Using 2007 as the baseline comparison, he says “the U.S. trade deficit in 2019 was $309 billion lower than it would have been if there had been no shale revolution.” He contends further that “without shale, the United States would have continued to be the world’s largest oil importer” and, in addition, would also “have become a large importer of LNG, competing for supplies with China, Japan, and other countries…” (page 29).

The intersection of shale oil and production of Liquified Natural Gas (NLG) also catches the attention of the author. And he discusses it in details. There is a mention of how shale gas became a key contributor to “the ‘manufacturing renaissance’ in the United States and to the increased competitiveness of the United States in world economy” (Page 30). LNG’s evolution and how it has, over the years, impacted businesses worldwide is discussed too. To further show the great part NLG can play in the wealth of nations, the author tells his readers how “no country has benefited more from the growing global LNG business than Qatar.” He says that Qatar “has the highest per capita income in the world, and a sovereign wealth fund of $350 billion— all for a country with about three hundred thousand citizens – and more than two million foreigners…” (Page 37). The author also examines the paradigm shift from a bi-polar oil world of OPEC Vs Non-OPEC to what he describes as a world dominated by “the Big Three —the United States, Russia, and Saudi Arabia,” a structure that has redefined the concept of energy security and pricing (page 65).

‘Russia’s Map’ occupies the book’s second part. This is a discussion of the great role oil has played in President Putin’s mission to “restore Russia as a great power globally, build new alliances, and push back against the United States.” Yergin examines what Putin meant when he loudly proclaimed his country as the champion in global oil matters. The Russian president is quoted as saying: “I have never referred to Russia as an energy superpower. But we do have greater possibilities than almost any other country in the world. This is an obvious fact” (Page 71). The author delves into Russian economic and political history to contend that Russia’s rebound is directly linked to oil and gas. He says this assists that country to exert its position in international relations and politics. For instance, he says Russia’s earnings from oil and gas account for 40 to 50 percent of that nation’s budget, 55 to 60 percent of its export earnings and about 30 percent of its GDP (see page 71). Perhaps a reflection of how Russia is important in global economic power play is the fact that it supplies about 35 percent of Europe’s total gas production (Page 78).

The book also discusses “the fissured and violent” relationship between Russia and Ukraine with far reaching reverberations on economies and relations with Europe and the US. It is the author’s argument that these crises “put a new emphasis on energy security for both Russia and Europe” (Page 83). There are also discussions of what the author calls “clash over energy security” among European powers; Ukraine and new sanctions, the politico-economic effect of Moscow granting Edward Snowden asylum and how US, EU, Japan and Norway sanctions delivered new shocks to the Russian economy. He states that sanctions notwithstanding and leveraging on oil, the Russian economy by 2017 “crawled back” into positive growth “and by 2019, it was growing at 1.6 percent”. Overall, Yergin asserts that Russia looks set to “become the fourth major pillar for NLG supply in the 2020s.”

The third part is China’s Map. The China-US tension-soaked trade and political relations dominate this section. The author notes the vulnerability of China in its importing 75 percent of its petroleum needs, a weakness the US has weaned itself of through shale. But what China lacks in oil, it is making up for with technology, manufacturing and project funding across the developing world. Developing countries funding infrastructure projects with Chinese loans should read pages 186, 187, 188 and 190. There is a very dark sentence from the author on Page 187 in which he warns: “When countries cannot make their debt repayments, Chinese entities can take control.” He cites Port Hambantota in Sri Lanka on which a state-owned Chinese company took 99-year lease because the country defaulted in paying the $1.1 billion loan taken from China to build it. The author looks at China’s bulldozer movement “in all dimensions.” He examines China’s geographical, military, economic, technological and political ambitions while it methodically positions itself as the “workshop of the world.”  Hear the author: “It (China) now seeks to move up the value chain and become the global leader in the new industries of this century. China is also asserting its own map for almost the entirety of the South China Sea, the most critical oceanic trade route in the world, and now the sharpest point of strategic confrontation with the United States. Energy is an important part of that claim.” (Page xvi, also see Pages 142-146).

The fourth part, ‘Maps of the Middle East’ follows that of China. The author discusses the various wars and crises in the Middle East, including the Arab Spring. He also examines how “the four-decade confrontation between the United States and Iran and the prevalence of weak governance in many countries” have played out on the fortunes of this region. He looks at how ‘the maps’ of geology, oil and gas wells, pipelines and tanker routes have shaped the geo-politics and the economics of the Middle East. There is also a discussion of the future of oil, the fluctuating fortunes of its price and demand and the impact of coronavirus pandemic of 2020 crude oil on market behaviour. Decades ago, the problem of crude oil was shortfall in supply; today it is a crippling fall in demand. With this, the author asks rather darkly if, going forward, oil would continue to be relevant in global reckoning. “Will oil lose its value and importance in the decades to come?” He leaves this question and its answer hanging while stressing that “demand collapse for oil in 2020 has further fueled the urgency for oil exporters to diversify and modernize their economies, which Abu Dhabi had begun in 2007 with its Vision 2030.”

After countries in the big league of oil and gas, the author moves to what he calls ‘RoadMap’ (Page 327). The story here is about energy transition, renewable energy and technologies of change. It is also about the coming of the robot and about what the author calls ‘car versus car’. It is about what happens to the oil and gas market in the face of new technology and mobility transition. It is about change and resistance to change. These are realities building  tensions and conflicts across markets and economies. Again, with China introducing its “New Energy Vehicles Programme,” and auto makers in other countries shifting to electric vehicles, hybrid and plug-in-hybrid and self-driven cars, where is the place of oil in the future? This question is answered in the subsequent chapter.

Dr Yergin brings in the ‘Climate Map’ where Africa and other developing countries get a passing mention, especially while discussing transition from fossil fuel to renewable energy and what this means to the developing world. It is here you will hear the voice of Nigeria’s Minister of State in charge of petroleum, Timipre Sylva on where his country stands on renewable energy and why it is not a priority in Africa. Hear Sylva: “We’re told we have to move on beyond natural gas, to the next thing. The reality is that Africa is not there yet on renewables. We have to overcome the issue of energy poverty in Africa. Many, many things are not being taken into account with all the talk about renewables and electric vehicles.” (Page 406). The reluctance to shift to renewable energy is not limited to the developing countries. It is also a subject of debate – and politics – in developed economies too.

Then the author asks: what do the changing world energy markets mean for oil-exporting countries? And, like a seer gazing into his crystal ball, he answers his own question: “Markets will go in cycles. They always have, and oil exporters will face volatility, although what happened in 2020 was never anticipated. They may well have to live with periods of lower revenues, which will mean austerity and lower economic growth, with greater risk of turmoil and political instability. This emphasizes the need for these countries to address their over-reliance on oil” (Page 421).



With a combination of deft use of language, history, science, economics, and a riveting discussion of the global politics of oil and gas, the author has succeeded in illuminating and explaining the world as a new map of opportunities and concerns. He has achieved the objectives of showing how the shale revolution has affected the fortunes and fates of countries and peoples, and how it has enhanced America’s power in the world. He has also offered insights into the reason “new cold wars are developing between the United States on the one hand, and Russia and China on the other,” and the role of energy in these tensions.

We also see how political developments in the Middle East impact on global energy markets; how an emerging cold war is “swiftly” replacing the hitherto strategic engagement between the US and China; the challenge of what the author calls the ecosystem of oil and gas by a new mobility revolution and the controversy trailing discussions on replacing fossil fuels with renewable energy. And, finally, the author shows, in clear details, the short and long term impacts of COVID-19 on not just the energy market but significantly on where the world, particularly oil giants – the United States, Saudi Arabia and Russia – will be in a post-COVID energy era.

The conclusion is that despite having a fragmented tension-soaked world contending already with a potentially technology-disrupted future, oil will still hold its position as a resource of influence and power in global affairs. The book suggests strongly also, the imperative of oil exporting countries quickly curing themselves of the malaise of over-dependence on oil if they will escape economic shocks from an emergent energy landscape strewn with technological mines and geo-political treachery.

This engrossing book is a must-read, not just for political leaders and persons in the energy sector, but for every man and woman interested in where the world and its economy are coming from – and where they are going; how humanity got to this point of energy conflicts and confrontations and what the future holds for the strong and the weak.



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