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Using named examples, evaluate the economic and political impacts of disruption to energy supply pathways. (15) An energy pathway is the route or journey energy takes from the source country to the consuming country. It is often seen that economic and political impacts disrupt energy supply pathways. To begin with, some countries in the Middle East are quite often recognised as to having political problems such as dictatorships which leads to the formation of unstable regimes.
The relationship between the Middle East and western powers like the USA are often quite severed, This proves to be fatal as such countries are reliant upon energy reserves in the Middle East. Hence matters are quite often stretched further when key players such as OPEC represent countries like Saudia Arabia and Iran in the Middle East, as well as determine oil prices. This may place stress upon the USA who suffers from energy insecurity due to its energy deficit and due to its reliance and need for oil may have to face as well as conform to rises in oil prices.
As, it is now believed that the control over energy prices is in the hands of the suppliers due to the combination of a lack of energy reserves for finite resources and huge global demand for natural resources. Additionally unsettled geopolitical relationships between countries can lead to severed political relationships as well as huge economic losses. In 1991, 600 Kuwaiti oil wells were set on fire by Iraqi troops after the first Gulf War. The fires burned for 8 months.
Not only did this impact upon the oil production of the country, but caused great economic losses in the economy, as services were also required to put the fire out. Russia an energy surplus is said to be tactical with whom it supplies its natural resources to. The political conflict between Russia and Ukraine during 2006- 2008 saw Russia demanding four times as much the price for its resources, but the failure to do so left Ukrainian gas cut off. Here we are shown an example of how political power can affect the economy.
The Arctic is now seen to be a resourceful land, bringing hope for the future and many nations. With 25% of the worlds unexploited oil reserves matching the reserves of Saudi Arabia, it also is the home to many minerals, coal, gas and diamonds. It has transformed from a once barren land, to a land of riches. Meaning competition for territorial demands is seen and acted upon. The world would benefit from commercial wealth, as companies such as Shell if they were permitted to drill out oil in the now sacred land reaping with economic wealth.
However, countries outside the Arctic circle like China are showing a greater interest and desire to demand their share of the Arctic. Here we see the growth of both economic and political power lobbying members of the Arctic circle such as Greenland and Denmark to obtain a Permanent Observer Status in the Arctic council. Whilst within the Arctic circle two dominant characters have conflicting views for their own benefit- Russia and the USA, causing tension to rise concerning the future of the Arctic.