Wars have been fought over oil ever since we started powering the engines of commerce and transportation with petroleum products instead of horses and oxen, wood for steam engines, or wind for sails. It’s been both highly sought after and a strategic asset. One advantage the U.S. had in WWII was the ability to produce its own oil and gas, something Japan lacked. In fact, the United States imposed economic sanctions (sound familiar?) and an oil embargo on Japan in the late 1930s because it opposed Japan’s war in China and later its occupation of what was then called French Indochina.
Then
Because the U.S. provided 80 percent of Japan’s oil at the time, the embargo put Japan in a bind. Rather than cave to the demands of the U.S., Japan reacted by launching the famous Pearl Harbor attack. Their aim was to knock out the U.S. Pacific Fleet, giving Japan free rein of the Pacific, especially the oil-rich Dutch East Indies. The attack not only failed to wipe out the U.S. fleet, leaving its aircraft carriers unscathed, it galvanized the U.S. to enter WWII and eventually defeat Japan. Ironically, the U.S. then once again became Japan’s largest oil supplier.
Consider this a cautionary tale about what happens when sanctions are so severe the sanctioned country determines it would rather fight back than compromise.
Now
Fast forward 80 years, and gas and oil remain a strategic asset and can be used as both a weapon and a weakness. Just look at the energy love triangle between Europe, Russia and U.S., the latter of which objected to Europe’s dependence on Russian energy. The Nord Stream II pipeline was later blown up, catapulting the U.S. into the position of a leading supplier of liquid natural gas (LNG) to Europe. Even today, Russian and Ukrainian air attacks continue to target oil storage tanks, refineries, pipelines and other energy infrastructure.
Oil remains an important source of wealth. The term “petro dollar” demonstrates the link between oil and the U.S. dollar, which is still the world’s reserve currency despite being in what might be seen as a decline. If oil and gas are the lifeblood of the globe, then the dollar is how you pay for your next fix.
But something else is shaping up to challenge oil, and it also is found underground.
The Next Strategic Asset
Just as soldiers on horses were replaced by soldiers driving fuel-guzzling iron behemoths, tanks are being rendered obsolete by drones. Artillery remains useful, but lacks the accuracy of a loitering munition that is guided remotely or smart enough to attack an enemy vehicle when it emerges from hiding.
We already have unmanned aerial vehicles, but few of them fly themselves. That kind of autonomy, both in the air and on the battlefield, is coming. The new F-47 sixth-generation fighter aircraft announced last week, is designed to work in tandem with “collaborative combat aircraft,” meaning drones with a great deal of autonomy.
On land, robotic dogs and more humanoid figures are being evaluated in the field. But these devices do not run on diesel; they require powerful batteries, which require lithium. Advanced technology increasingly requires what are known as rare earth minerals, a group of 17 metallic elements that have unique magnetic properties and electrical conductivity.
Autonomous devices—humanoids and other land-based drones that can decide when to attack, fighter aircraft than can decide to willfully intercept a missile aimed at an airplane occupied by a human, torpedoes that can loiter near a port and decide which ships to attack, and similar machines that can use discretion—also require artificial intelligence. That requires chips, massive computing power, special circuitry, and cooling technology, all of which require advanced materials.
Are they Worth Fighting Over?
Compared to oil, which is relatively plentiful and can be found in many parts of the world, rare earth minerals are, as the name implies, difficult to find in quantities worth mining.
Not wanting to be in the position of Japan, a country without oil, the U.S. is taking steps to lock in supplies of lithium and other important materials that are used in high-tech products, both consumer goods and weapons. That may mean buying them, but it can also mean fighting for them. Or, in the case of Donald Trump and Greenland, it can mean using threats as a negotiating tool.
People will tell you that AI will change the world, and they are right. But it’s going to change far more than employment figures as AI takes jobs. It will also change politics, foreign policy, international relations, finance, and war.
Countries in the Middle East, which became wealthy because of oil, will be challenged by countries that become wealthy because of metals. People and countries who realize this are moving quickly to get ahead of the curve.
Investing
I am not a financial advisor, so I will not tell you what to do with your money, but I will encourage you to think about how you invest it. Imagine if in 1970, before the Arab Oil Embargo, you purchased stock in Standard Oil, which became Exxon and then ExxonMobil in 1999. Or if you purchased Google shares at its IPO for $85. Or bitcoin in 2015 when it was $300 to $400.
I missed out on all of those bargains, but I acquired three ounces of gold in 1998 when it was $273 an ounce. Gold is now worth 11 times that, not bad, but Bitcoin is worth more than 200 times its value just a decade ago.
I have never met a prepper who could spend all the money they wanted on prepping. There is always something more we need, another gadget, a better weapon, more food, or land for livestock. Maybe you want to buy a bugout location, or move off grid. Correctly play the trend of rare earth minerals being the next oil, and in ten or twenty years, you might afford your fully kitted out prepper dream home.
Assuming we survive that long. Assuming there is no collapse and the U.S. dollar still exists.
Lots of assumptions. Lots of risk. Life is a gamble. Risk can bring rewards or destruction. Bet with your head, not over it. And stay prepped, because winner and losers could be determined not just in the financial markets but on the battlefield.
