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Oil has long been used as a geopolitical weapon. Could electrified transport change that?

Climate scientists have been clear that if we want to reduce carbon emissions and slow the pace of global warming, one crucial step is moving from a transportation system run on fossil fuels to one powered by electricity.

But it’s possible that doing so might neutralize other toxic aspects of the petroleum industry, such as volatile prices and armed conflict.

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“The ability to electrify transportation and get off combusting fossil fuels, and oil specifically, means we would solve massive geopolitical problems, which have been just a plague for the last 100 years,” said Adam Scott, executive director of Shift, a Toronto-based charity that advocates for sustainable investing.

Oil has always been an impetuous commodity, susceptible to wild price swings owing to a variety of economic and political factors. But between the COVID-19 pandemic and Russia’s invasion of Ukraine, the last couple of years have been especially nervy

On one day in April 2020, the price of a barrel of oil briefly went negative (-$37 US). Since then, it’s flirted with all-time highs, reaching $119 last month. And consumers feel it when they fill up.

The current surge in the price of oil has been a key driver of inflation around the world, but the cost of this commodity can be measured in more than just dollars. Oil has long been a lever for political change, as well as a pretext for war.

Oil has a variety of applications, including in home heating and the manufacture of plastics. But it’s predominantly used to make transportation fuels. So what happens when society at large moves away from such a mercurial, morally fraught commodity and starts to rely on electricity to power vehicles instead?

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Oil as a weapon

One of the chief problems with oil, Scott says, is that it’s priced globally.

“Everybody in Canada is angry about energy prices all of the time, but there’s very little we can do about it,” said Scott. “Even as the world’s fourth-largest exporter of oil, we have no influence over the price at all.”

The same goes for our southern neighbour. Despite being the biggest oil producer, the United States leans on other petroleum-rich countries when the price at the pumps becomes a political liability.

“We see the U.S. president begging the king in Saudi Arabia to produce more oil,” Scott said. “It’s painful to watch.”

Much of the world depends on Saudi Arabia’s vast oil reserves, which provides Crown Prince Mohammed bin Salman with a lot of geopolitical leverage. (Amr Nabil/The Associated Press)

Because it has been so lucrative, oil production has been a well-known source of conflict, from the CIA-assisted coup in Iran in 1953 to the independence struggles of South Sudan. A 2013 policy brief by the Belfer Center for Science and International Affairs at Harvard states bluntly that “oil is a leading cause of war,” estimating that “between one-quarter and one-half of interstate wars since 1973 have been linked to oil.”

Countries that are generously endowed with oil and gas deposits — sometimes called “petro-states” — often wield this over other nations.

Take Russia. In his new book, Price Wars: How the Commodities Markets Made Our Chaotic World, Rupert Russell explains how in the ’70s and ’80s, the Soviet Union manipulated the price of its petroleum exports to Eastern Bloc countries in order to ensure their loyalty during the Cold War. More recently, Russia has used such tactics with former Soviet states like Belarus and Ukraine.

If you’re using the “gas weapon,” Russell told CBC News, you “don’t have to mobilize armies. The whole system is set up. All you have to do is change the price and you can exercise this political lever.”

Russell also demonstrates a connection between high oil prices and militarism. Citing research by University of Denver professor Cullen Hendrix, Russell writes that rises in oil prices increase the chances that petro-states like Venezuela or Iran will engage in a militarized dispute (usually on their border). 

Higher oil prices provide these countries with more money, which they use to strengthen their armed forces. To hedge against any political blowback, they also build up their holdings of foreign currencies and buy off their domestic opposition, Russell says.

Russia’s incursions into Georgia in 2008 and Ukraine in 2014 coincided with high oil prices. The invasion in Ukraine in February began when oil prices were hovering around $100 a barrel for the first time since 2014. 

(Illustration: CBC; photos: Reuters)

Russian President Vladimir Putin “was just waiting for the commodities prices to go up again,” said Russell. 

He said that even in the face of strong international sanctions, a petro-state like Russia can still sell oil and gas — either through loopholes or by smuggling it out — because high prices are a sign there’s “strong global demand for those commodities.”

Decentralized energy

Electric power as a transportation fuel can be produced anywhere, in a variety of sustainable ways, which removes the geopolitical leverage that a lot of oil producers currently enjoy. 

“Right now, for example, you have oil and gas in the North Sea, in the [Alberta] tarsands, in Russia, in the Middle East. There’s a lot of power concentrated there, and those are centralized resources,” said Marie Claire Brisbois, a senior lecturer in energy policy at the University of Sussex in the U.K. 

With renewable energy sources, “it’s no longer possible to control energy resources the same way,” given that the actual energy source “is the sun, it’s the wind, it’s the waves.”

Electricity’s major benefit, Scott said, is that it’s “a local commodity.”

This sort of energy independence, established on a large scale, would not only remove some of the dubious aspects of the oil industry, but eliminate the financial and environmental costs of shipping.

One of the promises of electrified transportation is that the ‘fuel’ can be produced locally and transmitted through existing infrastructure, like this utility tower. (Travis Golby/CBC)

Scott acknowledges there’s a lot of hand-wringing about the extra load that electrical vehicles will put on existing power grids, but he says that a lot of what is needed is already in place.

“People are always saying, ‘There’s not enough charging infrastructure,’ [but] there’s electricity in every building,” said Scott. 

He emphasizes that a fuel system based on electricity rather than gasoline will be set up differently. For one thing, there won’t be as many gas stations, because the majority of fuelling will happen at home.

A “dramatic scale-up” of fast chargers is still required for long-distance trips on major highways and in rural areas, but “there’s no technical reason why we can’t build out that infrastructure — it’s existing technology,” he said.

“The utilities will be the first to tell you, ‘Yeah, this can be done.'”

Russell Baker, a spokesperson for Toronto Hydro, said the utility wants “to make owning an EV easier and more accessible for all residents” and recognizes that “we have a critical role to perform in supporting transportation electrification in Toronto by preparing the local grid for increased electricity demand.”

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Setting the price

While gasoline has reigned supreme as the world’s automotive fuel, drivers have become inured to seemingly arbitrary price changes at the pumps — famously at the beginning of a long weekend.

Scott says electricity pricing is more transparent. While utilities across the country are a mix of market-based and regulated ones, changing the base rate typically requires consultation with various stakeholders, including residents. As a result, Scott thinks there’s less opportunity for price gouging.

In fact, some utilities are looking for ways to save customers money when charging their vehicles. Toronto Hydro is kicking off a pilot project in partnership with EV advocacy group Plug’n Drive and Elocity Technologies Inc. that will enable selected EV drivers to use a smartphone app to control their charging schedule, by charging when there’s less demand on the grid and electricity prices are at their lowest.

Brisbois points out that the relative ease with which residents can generate their own power — by installing solar panels on their roof, for example — will put added pressure on service stations to keep the cost of electric charging low.

The transition to electric vehicles will also change how we think about ‘filling up’ our cars. (Spencer Platt/Getty Images)

Brisbois agrees that there’s less chance of profiteering in this new model of fuelling — and says the oil and gas industry knows it.

She recently attended a meeting on the carbon transition hosted by the London-based think-tank Chatham House, and said the consensus among oil and gas representatives “was that they will never again be as profitable as they are right now, in exploiting oil resources.” 

“They talk about oil as being super-profitable. It’s a constrained resource. You can control access to it, you can manipulate prices in a way that you will never, ever be able to do with solar or wind.”

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The problem of extraction

While it seems like the transition to electrified transportation might have benefits beyond reducing carbon emissions, it is unlikely to eliminate all geopolitical tension. 

For one thing, there is a strong push to develop hydrogen for fuel-cell electric vehicles, with countries like China, Japan and Germany, among others, hoping to corner the market.

At the same time, while clean electricity can be produced just about anywhere, EV motors are made of materials — such as lithium, cobalt and nickel — that are still geographically concentrated and need to be mined.

“These are all extractive sectors, they’re all traded as commodities and they have geopolitical, economic but also environmental and social impact characteristics that have some parallels with oil,” said Thea Riofrancos, an associate professor of political science at Providence College in Rhode Island.

A worker assembles a Volkswagen ID.5 electric car at the company’s plant in Zwickau, Germany, in January. (Jens Schlueter/Getty Images)

Riofrancos, the author of an upcoming book entitled Extraction: The Frontiers of Green Capitalism, said mining these resources can still lead to the contamination of soil, water and air; loss of biodiversity; and dispossess people who live on the land. 

Riofrancos said what also concerns her is “a different kind of geopolitical tension.” Given the urgency of climate change, many countries, particularly in the Global North, are framing the energy transition as a matter of national security and incentivizing exploration for so-called critical minerals both domestically and abroad.

This could lead to a weakening of social, environmental and labour considerations, as well as consultation with Indigenous populations, Riofrancos says.

“I don’t think most ordinary people, including those who buy Teslas, are aware of the whole supply chain.”

While electrified transportation is not as “clean” as it’s often touted to be, Brisbois thinks it will change the longstanding global dynamic around fuel.

“It becomes much more possible to have very different politics around energy, because you’re not just going to have a few companies controlling the resources.”