Monday, 8 March 2010

Little Known Fact No 2 – Oil and Sheep

Did you know; that in The Falkland Islands there are 160 sheep for every islander?
Did you also know; that for every sheep there is thought to be 120,000 barrels of oil reserves?

The foreign Office official position is that the sovereignty of the Falkland Islands depends on the wishes of the islanders. The war in 1982 was not about oil; but as the world faces shortages of black gold it may be a convenient time to drill for more in the waters off these remote islands. When the prime assets are sheep, the incentive to fight over the islands is low. If there proves to be commercially viable oil fields then the game changes.

In the unsustainable world in which we live the politicians will weigh off the cost of protection of this remote outpost with the potential revenue streams – sticking, of course, to the official line that it is the wishes of the residents that are paramount.

There is another possible outcome. The world could take the huge steps required to learn to live without fossil fuel. It seems preposterous, but it is feasible. Saudi Arabia understands the dangers and this is why the kingdom is so obstructive in negotiations over climate change and the need to reduce carbon emissions. Falkland Islanders should also not count their barrels of oil before they are pumped. If the world takes the required action to stop climate change, then the commercial and political case to make the Falkland Islands a new oil producing nation may never add up.

I suspect that there will be a window of opportunity for an oil boom in the Falklands. However wool from sheep is a better long-term bet for the Falkland Islands in a sustainable world society.

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