Download Natural Gas

Key #3 Why are Energy Resources
Important for Development?
• Develop. Is based on the availability of abundant
low-cost energy
• MDC use more energy for things like food
production, running factories, heating homes, &
transportation
• Renewable energy: unlimited supply & is not
depleted when used by ppl
– Ex. hydroelectricity, geothermal, solar energy, fusion,
wind, biomass
• Nonrenewable energy: cannot be renewed
– Ex. coal, natural gas, petroleum
Supply & Demand
• Supply: quantity of something that producers have available for
sale
• Demand: quantity that consumers are willing and able to buy
– Heaviest consumer demand are in MDC, whereas most reserves are in LDC
– Uneven distribution (supply)
• Fossil Fuel: energy source formed from the residue of plant &
animals buried millions of yrs. Ago
– Ex. coal, petroleum, natural gas
• Coal: major energy resource especially in N. America &
Europe
• Petroleum: important after vehicles became pop., used
for making plastics
• Natural gas: heat homes & produce electricity
Demand for Energy
• China leader in demand of energy resources ,
then U.S.
• Demand for energy in U.S.
– Businesses: most use coal
– Homes: most use natural gas
– Transportation: petroleum for vehicles, coal for
subways & streecars
• Demand for fossil fuel consumption is now higher
in LDC than MDC
– What do you think is the reasoning behind this?
Supply of Energy
• Coal: located today in mid-latitude regions
– China supplies nearly ½ world’s coal
– Developed countries ¼ (primarily U.S.)
– Developing countries ¼
• Petroleum: formed from residue deposited on seafloor
– Russia & Saudi Arabia together supply ¼ of world’s petroleum
– Other developing countries (mostly in SW & Central Asia) ½
– Developed countries (primarily U.S.) ¼
• Natural Gas: formed from residue deposited on seafloor
– 1/3 of natural gas supplied by Russia & SW Asia
– 1/3 by developed countries (primarily U.S.)
• TX, OK, and Appalachian Mts. Region)
Supply of Energy
– MDC import fossil fuels, especially petroleum, from LDC
– U.S. & Europe import ½ their petroleum
– Japan imports more than 90%
– Many LDCs w/ low HDI also lack energy resources, &
they lack the funds to pay for importing them
– What happens when fossil fuels are extinguished?
Energy Reserves
– World faces an energy challenge due to rapid depletion of
remaining supply of the major fossil fuels
• Proven Reserves: discovered deposits of energy
– Coal: at current demand will last 131 yrs.
• U.S. has approx. ¼ of proven reserves, most LCD reserves are in
China & Russia
– Petroleum: at current demand will last 43 yrs.
• LDC have 85%, mostly in SW Asia, N. Africa, & Central Asia
• Saudi Arabia, Canada, & Iran have together more than 40% of
world’s proven reserves
– Natural Gas: at current demand will last 49 yrs.
• Less than 10% in MDC, mostly in U.S.
Russia, Iran, & Qatar have nearly 60% of world’s proven reserves
• 5 other LCDs have the rest
Energy Reserves
• Potential Reserves: supply in deposits that are undiscovered but thought to
exist
• Undiscovered fields: probably smaller & in more remote places like
beneath seafloor, expensive & environmentally hazardous to extract
• Enhanced recovery from already discovered fields: needs special
tech. & is time consuming
• Unconventional sources: need new ways to extract resources
– Ex. oil sands: saturated w/ thick petroleum commonly called tar ,
must be extracted through mining (expensive & environmentally
hazardous)
» Oil sands found in Alberta, Canada, Russia, & Venezuela
» Canada is now thought to have 13% of proven petroleum
reserves
– Ex. Fracking for natural gas
» Use hydraulic fracturing to extract natural gas from rocks
» Fracking requires lots of water, which is in high demand for
human consumption & agriculture
Controlling Petroleum Reserves
• OPEC: organization of petroleum exporting countries,
started in 1960
– Arab OPEC members: Algeria, Iraq, Kuwait, Libya, Qatar,
Saudi Arabia, & UAE
– Other members include Angola, Iran, Nigeria, & Venezuela
– Created to enable oil-rich countries to gain control over
their own reserves
– U.S. & European transnational corp. had originally
explored & exploited the oil fields, & were selling it at low
prices to MDC
– After creation of OPEC governments set prices not
corporations
Changes in Petroleum Sources
• United States:
– produces more petroleum than it consumed in 1st half of 20th
century
– Transnational co. in 1950s said it was cheaper to import
petroleum than to extract it domestically within the U.S.
– Reduced its dependency on imported oil in 1970s (what were
some reasons?)
– Prices of oil dropped in 1980s & 90s so consumption grew
– High prices & conservation efforts has decreased demand for oil
in late 20th & early 21st century
• Europe & Japan have always imported
• China changed from a net exporter to an importer during 1990s
• With increasing use of petroleum in LDC large users of oil like China,
India, & the U.S. may have little influence over when prices rise &
supplies decline
Alternative Energy Sources
• Fossil fuels currently are still less expensive than
trying to harness other types energy
• Types of alt. energy sources:
–
–
–
–
–
–
–
Nuclear energy
Hydroelectricity
Biomass
Wind power
Geothermal energy
Nuclear fusion
Solar
Source
Type
Description
Nuclear
Energy
Nonrenewable
•Adv.= produces lots of energy from sm. amount
•Disadvantage= high costs b/c of elaborate safety measures
•14% of world’s energy
•MDC produce 2/3 of its power
•Highest dependence in Europe (France 80%)
•U.S. (VT 70%, CT, NJ, SC all 50%)
•Produces energy by splitting uranium atoms called fission
•Product of fission is radioactive waste
•Can make bombs (U.S. & Russia have several thousands; China,
France & UK have several hundreds; India & Pakistan have several
dozens; N. Korea a handful; Israel may have some
•Limited supply= proven reserves will last about 124 yrs.
•Australia (24%), Kazakhstan (15%), Russia (10%)
Hydroelectricity
renewable
•2nd most popular source of electricity after coal
•Generated by movement of water
•Has been used before recorded history
•2/3 generated in developing countries, 1/3 in developed
•Brazil=largest user (85%)
•Canada (66%)
•U.S.= 4th largest producer
Nuclear
fusion
renewable
•Fusing of hydrogen atoms to form helium
•Adv.= produces lots of energy w/ little amount
•Disadvantage= can occur only at very high temps., current tech.
Source
Type
Description
Biomass
renewable
•Derived from plant material & animal waste
•Wood used for electricity & heat
•Crops like sugarcane, corn, & soybeans can be processed into fuels
•Brazil uses biomass for cars & trucks
•Usage limited b/c of inefficiency, other purposes like
food/shelter/clothing, & deforestation
Wind Power
renewable
•Moving air turns turbines which generate electricity
•Construction of windmill less evasive to environment
•Wind “farms” have been constructed throughout U.S.
•20% of Denmark’s electricity
•Restraint= cost of constructing wind turbines
Geothermal
Renewable •Energy from hot water or steam
•Most feasible near where crustal plates meet
•CA, Italy, New Zealand, Japan, Iceland, & Indonesia use it
•Reykjavik, Iceland most all homes & businesses use geothermal
steam
Solar
Renewable U.S. uses 1%
Adv.= limitless, doesn’t harm environment or cause pollution
Passive solar energy: captures energy w/o special devices
Active solar energy: converts to heat energy or electricity
LCDs fastest & largest market for photovoltaic cells (esp. rural areas)
Power of Place: Oil and Water
Ch.9 Key Process #4
• Why do Countries Face Obstacles to
Development?
– Gap btw. Rich & poor countries is substantial
– LDC must develop more rapidly to reduce disparity
by increasing the per capita GNI & utilizing
additional funds to support improvements in
social and economic conditions
– 2 major obstacles:
• Adopting policies that successfully promote
development
• Finding funds to pay for development
Strategies and Models for International Development
•International Aid
–Important, but can foster dependency
–Loans, in particular, lead to loss of sovereignty
•Self-Sufficiency Model
–Attempted in Mexico (economy stagnated)
–Attempted in India (industrial quality suffered)
•International Trade Model (Economic Growth)
–Rostow’s Model
–World Bank lending
•Basic Needs Model/Appropriate Technology Model
–Microlending (Grameen Bank, Kiva.org)
–Non-Governmental Organizations (NGOs)
•Revolutionary/Radical Reform Model
–Cuba, U.S.S.R
Two main models of development that an LDC can take: self-sufficiency or
international trade
–DEVELOPMENT THROUGH SELF-SUFFICIENCY:
•a country should spread investment as equally as possible across all
sectors of its economy & in all regions and encourage producing goods for
people within country
•The growth may take time, but will occur over a broader spectrum.
•Accomplished by protecting internal businesses by setting barriers that
limit the import of goods from other places using tariffs, quotas, or by
licensing
•Limiting the amount of goods that can be exported to other countries.
–Ex. India, which for years made effective use of barriers to
promote internal growth. Hard to due w/ rapid pop. as well
Self-Sufficiency
•Problems with this approach:
–Inefficient domestic market – too small to make a
profit;
businesses are assured of the market & don’t
have to compete by developing new products or lowering
their prices
–Companies feel they are protected from competition,
so don’t
keep pace with technology
–Lg., often corrupt bureaucracies lead to illegal
activities
• Proposed solution: World Bank, etc. lend money to LDCs to
develop hydroelectric power, flood protection, etc.
DEVELOPMENT THROUGH INTERNATIONAL TRADE: This model was developed
by W.W. Rostow in the 1950s. (Considered a liberal development model)
Rostow model is divided into five stages:
1.The traditional society: before a country has started to develop. A large
number of the population is engaged in subsistence agriculture
2.The preconditions for takeoff: a group of elite businessmen begin to organize
the economy and create infrastructure for future manufacturing and services.
3.The takeoff: Rapid growth is experienced in few select businesses. These
advances “fuel the fire” by providing capital for the other businesses to utilize.
4.The drive to maturity: Modern technology, previously confined to the takeoff
industries, diffuses to every facet of the economy which then realizes rapid
growth.
5.The age of mass consumption: The economy shifts from second sector to
tertiary and consumer goods begin to grow in numbers.
*similar to demographic transition model
Models of Development
Rostow: International Trade Approach
Rostow - Stages of Growth
1.
•
Village in Lesotho. 86% of the resident
workforce in Lesotho is engaged in subsistence
agriculture.
Copyright: Tracy Wade, http://www.sxc.hu/
Traditional Society
Characterised by
– subsistence
economy
– existence of barter
– high levels of
agriculture and
labour intensive
agriculture
Rostow - Stages of Growth
2. Pre-conditions:
The use of some capital equipment can help increase
productivity and generate small surpluses which can
be traded.
Copyright: Tim & Annette, http://www.sxc.hu
– Development of mining
industries
– Increase in capital use in
agriculture
– Necessity of external
funding
– Some growth in savings
and investment
– Many countries under
colonization were in this
stage
Rostow - Stages of Growth
3. Take off:
At this stage, industrial growth may be linked to
primary industries. The level of technology
required will be low.
Copyright: Ramon Venne, http://www.sxc.hu
– Increasing
industrialisation
– Further growth in
savings and
investment
– Some regional growth
– Number employed in
agriculture declines
– Many countries after
colonization moved to
this stage
Rostow - Stages of Growth
As the economy matures, technology plays an
increasing role in developing high value added
products.
Copyright: Joao de Freitas, http://www.sxc.hu
4. Drive to Maturity:
– Growth becomes selfsustaining – wealth
generation enables
further investment in
value adding industry
and development
– Industry more
diversified
– Increase in levels of
technology utilised
Rostow - Stages of Growth
5. High mass consumption
– High output levels
– Mass consumption of
consumer durables
– High proportion of
employment in service
sector
Service industry dominates the economy –
banking, insurance, finance, marketing,
entertainment, leisure and so on.
Copyright: Elliott Tompkins, http://www.sxc.hu
•MDC’s are in stages 4 or 5, LDC’s are in one of the first three.
–Rostow’s model is often considered overly optimistic by assuming that every
country will develop.
•Examples of Rostow’s model can be seen in the oil-rich Middle East
states or the Four Asian Dragons (S. Korea, Taiwan, Singapore, and Hong Kong)
all of whom developed some internal advantage, i.e. oil or cheap labor, and
sold it to the MDC’s
Problems with Rostow’s model are:
–Resources are not distributed evenly, causing some countries to be left with
little internally to sell to MDC’s
–The stagnation of the world market
–the LDC’s could continue to become more indebted to the MDC’s.
•Rostow’s model is seen as a more applicable approach to development than
is the self-sufficiency model in the modern era.
– Countries like India that have recently switched to the international trade
approach have seen far greater results.
•To further promote this model the World Trade Organization (WTO) was
founded.
Models of Economic Development
Wallerstein’s World System Analysis (Structuralist Model)
Core: High Income
High use of technology
High % of tertiary activities
High levels of Education by the
majority of the population
OECD countries G8
Semi-Periphery: used to be
peripheral states
Increased economic development
BRICS, 4 Dragons, Middle East
Eastern Europe
Periphery: Low Income
Low use of technology
High % of primary activities
Low levels of education by the
majority of the population
Core-Periphery Model: Wallerstein
-Structuralist say it is hard to move from periphery to semi or core
Core
exploits
Semi-Periphery
exploits
Periphery
North-South Divide
BRICS: Brazil, Russia, India, China
South Africa added in 2010
G8: Top State economies
Canada, France, Germany, Italy, Japan, U.K., U.S.(Core)
Mexico recently admitted (semi-periphery)
BRICS: Semi-Peripheral States
Core-Periphery on a national scale
http://hdrstats.undp.org/en/countries/profiles/CHN.html
http://hdrstats.undp.org/en/countries/profiles/BRA.html
http://hdrstats.undp.org/en/countries/profiles/MEX.html
Institutions of International Development
•United Nations - formed in 1945 to promote peace. 189 current
members.
•World Bank - financial assistance and loans. Owned by 189 United
Nations members.
•International Monetary Fund - arm of U.N. that surveys and oversees
international money exchange to prevent monetary crises. Also provides
loans and training to help countries with balance of payment problems.
•Non-Governmental Organizations (NGOs) - World Watch, Human Rights
Watch, World Commission on Dams, Grameen Bank, Kiva.org, many others.
World Trade Organization (WTO)- formed in 1995 & works to reduce trade
barriers by negotiating reduced or elimination of trade restrictions on
manufactured goods and also by enforcing agreements; protects
intellectual property & copyright
Free Trade Agreements
Industrialization in
Europe
• North American Free Trade Agreement (NAFTA)
– US + Canada + Mexico, 1994
• Free Trade Area of the Americas (FTAA)
– Expanded NAFTA
Other Problems in International Development
•High Debt Countries both in developed and developing regions
•Hostility Regarding World Bank and IMF Structural Adjustment Programs
•IMF “Free Market” Requirements for Loans and Assistance
•Warfare and Instability Limit Foreign Investment
•Lack of Infrastructure (or Colonial Infrastructure) Limits Opportunity and
Investment
•Regardless of the approach taken, nearly all LDC’s face the challenge of
financing their development.
•LDC’s can borrow money from MDC’s to build infrastructure in order to
instigate growth, but many are unable to even pay the interest on the loans,
much less actually pay them off.
•Recently, MDC’s have grown increasingly unwilling to lend money to LDC’s
because of their history of defaulting.
•Many MDC’s force the LDC’s that wish to borrow money to adopt
•structural adjustment programs- economic policies that create
conditions encouraging international trade, such as raising taxes, reducing
govt. spending, controlling inflation, selling publicly owned utilities to private
corporations, and charging citizens more for services.
High Debt Poor Countries
For the World
• In 1970, the world’s poorest countries (roughly 60 countries classified
as low-income by the World Bank), owed $25 billion in debt.
• By 2002, this was at least $523 billion
For Africa,
• In 1970, it was just under $11 billion
• By 2002, that was over half, to $295 billion
Interest payments consume some small economies, encouraging export
earnings instead of internal improvements. Third World Debt kills.
Debt Forgiveness?
•In 2005, The IMF, after pressure from NGOs, announced debt
forgiveness relief programs for 18 of the poorest countries. However,
the Heavily Indebted Poor Countries (HIPC) program continues to
demand austerity programs that damage social welfare systems.
•After the Indian Ocean tsunami in 2004, the G7 (Canada, France,
Germany, Italy, Japan, U.K., U.S.) countries pledged to forgive debt in the
12 affected countries. Sri Lanka and Indonesia, however, still owe
billions today.
•Rates of natural increase and infant mortality have remained much
higher in LDCs than in MDCs.
•Since 1980, the natural increase rate has declined at about the same
rates in MDCs and LDCs, while the infant mortality rate has declined
more rapidly in LDCs.
•Per capita GDP has increased more in MDCs than in LDCs during this
period.
Debt as Percent of Income
Many developing countries have accumulated large debts relative to
their GDPs. Much of their budgets now must be used to finance their
debt.
Foreign Direct Investment Flows
Most transnational companies invest in the three core regions
of North America, Western Europe, and Japan. Outside these
core regions, the largest investment is in China.
Development and Debt Finance
•The 42-year graph above indicates that with few exceptions, the
northern, western, wealthy, industrialized, developed nations have
benefited the most from liberalized trade and economic globalization.
In recent years, U.S., Japanese, and European multinational corporations
(MNC) have been created
–These companies take advantage of the cheap labor and
relaxed regulations found in many of the LDC’s to produce
products cheaply and sell them back home for much higher
–The main problem with MNCs is that LDC governments
concentrate only on creating the infrastructure to attract these
large companies, therefore using crucial funds to draw big
business instead of investing in the standard of living of its
citizens.
•In addition, the govt. may overlook labor violations in
order to keep the MNC from leaving.
•Is this a problem or a benefit for our economy?
What to do about the downward
economy?
Spend more= Stimulus strategy
•Gov’t should spend more than they collect in taxes in
order to stimulate the economy
•Put people to work on fixing and creating infrastructure
Spend less= Austerity strategy
•Gov’t should reduce taxes so people & businesses can
revive the economy by spending their tax savings
•Spending on gov’t programs should be sharply cut
Fair Trade
• Commerce in which products are made & traded according to
standards that protect workers & sm. businesses in developing
countries
• Craft products in N. America (ex. Ten Thousand Villages)
• Food products (coffee, tea, bananas, chocolate, cocoa, juice, sugar,
& honey) in Europe
• 2 sets of standards:
– Producer standards: many band together to form cooperatives
to get credit, reduce their raw materials costs, & get
higher/fairer prices
• Bypasses distributor & work directly w/ producers allows for
costs to be lower & producer gets greater % of retail price
– Workers standards: requires employers to pay workers fair
wages, permit unions, & comply w/ minimal environmental &
safety standards, encouragement to reinvest in community
Microfinance
• Provision of sm. loans & other financial
services to individuals and sm. businesses in
developing countries that are unable to obtain
loans from commercial banks
– Grameen Bank (1977): specializes in making loans
to women in Bangladesh & neighboring S. Asian
countries
– Grameen Bank at a Glance
What is being done to increase development now?
United Nations Millennium Development Goals
http://www.un.org/millenniumgoals/
Resources
• De Blij, Harm, J. (2010). Human Geography People, Place and Culture.
Hoboken, NJ: John Wiley & Sons Inc.
•
Domosh, Mona, Neumann, Roderic, Price, Patricia, & Jordan-Bychkov,
2010. The Human Mosaic, A Cultural Approach to Human Geography. New
York: W.H. Freeman and Company.
•
Fellman, Jerome, D., Getis, Arthur, & Getis, Judith, 2010. Human
Geography, Landscapes of Human Activities. Boston, MA: McGraw-Hill
Higher Education.
•
Pulsipher, Lydia Mihelic and Alex M. and Pulsipher, 2010. World
Regional Geography, Global Patterns, Local Lives. W.H. Freeman and
Company New York.
•
Rubenstein, James M. (2011). An introduction to human geography The
cultural landscape. Upper Saddle River, NJ: Pearson Prentice Hall.
• www.worldmapper.org
• http://en.wikipedia.org/wiki/BRICS
• http://www.un.org/millenniumgoals/
• http://hdr.undp.org/en/statistics/mpi/
• http://hdr.undp.org/en/statistics/hdi/