How to Predict a Revolution in the Dark

A CIA-published essay describes why energy markets are windows into the world's secrets.

January 19, 2018 5:00 am
A man stands on a platform on an oil and gas terminal on January 2003 in n the Persian Gulf off of Ras Al Tanoura, Saudi Arabia. (Reza/Getty Images)
A man stands on a platform on an oil and gas terminal on January 2003 in n the Persian Gulf off of Ras Al Tanoura, Saudi Arabia. (Reza/Getty Images)

In the opening scene of The Social Network, future Facebook founder Mark Zuckerberg, played by Jesse Eisenberg, mentions that his friend and Harvard classmate Eduardo Saverin once made $300,000 in a summer “betting oil futures.”

“He made $300,000 in a summer?” Zuckerberg’s stunned movie-girlfriend Erica Albright says.

“He likes meteorology.”

“You said it was oil futures.”

“If you can read the weather, you can predict the price of heating oil,” Zuckerberg answers before moving on to a totally different topic in the speediest Sorkin-ese.

That conversation didn’t happen in reality, as Erica Albright doesn’t exist, but the story about Saverin reportedly did.

According to the book The Accidental Billionaires, which was written with the input of the real-life Saverin, he had a “nerdish obsession with meteorology” and spent the summer of his sophomore year “analyzing barometric changes and predicting how those changes would affect oil distribution patterns,” so he could bet ahead of the market and pull in more than $250,000 in three months.

Drawing a meaningful connection in the cause and effect of two complex subjects that are at first glance unrelated is a neat and profitable trick for a savvy investor, but a new essay published by the CIA describes how it can be applied to the deadly serious work of intelligence analysis as a predictor of major world events.

If you can read energy policy, you can predict revolutions, it would seem.

The essay, written by international energy expert Brenda Shaffer and published in the most recent edition of the CIA’s unclassified Studies in Intelligence journal, argues that a careful examination of the energy production and consumption of a nation can reveal secrets about everything from its internal stability to its realpolitik relationships with its neighbors.

It’s not a new tactic — the CIA has published dozens of old “International Economic & Energy Weekly” analytic reports dating back decades — but Shaffer told RealClearLife that today very few government agencies worldwide systematically analyze and give proper prominence to energy issues that can give true insight into a nation’s machinations.

For instance, Shaffer describes how a power outage is not always just a power outage.

“The inability of the state to maintain stable supplies of electricity is an indicator of the state’s poor capacity, more broadly, to deliver public goods, and it is a precursor of domestic unrest,” Shaffer writes. “Disruption of electricity supply disturbs citizens’ ability to carry out routine tasks, heightens their exposure to crime, harms appliances, machinery and food stocks. Water supplies are generally threatened, as water supply systems are typically dependent on electricity for their operation. In agricultural areas, disruption of electricity supplies can cause the shutdown of water pumps and lead to loss of crops. Unable to work or engage in other activity, people become more likely to be drawn to protests …  Lack of capacity to provide electricity is often viewed by publics as a symptom of the weakness of a ruling regime and can encourage demonstrations and demands for regime change.”

Shaffer, who is currently a visiting professor at Georgetown University, notes that blackouts preceded major upheavals from Cairo to Baghdad in recent years. Governments tend to pay attention when people are furious and in the streets, Shaffer said, but an observant analyst of domestic energy infrastructure would’ve seen it coming miles away.

When discussing major energy-producing countries, like many in the Middle East, Shaffer said it’s logical to tie the level of production to the regime’s grip on the levers of power. When there’s less production, or when prices drop, there’s less money to go to “maintaining patronage networks and funding security services that underpin the regime’s stability.”

Shaffer said that’s one reason the U.S. and other international intelligence agencies should have predicted unrest in Egypt and Syria ahead of the Arab Spring there in 2011 and beyond.

“There was no need for any special or covert intelligence gathering; instead, analysts needed only to analyze data the U.S. government was routinely collecting and publishing,” Shaffer argues. “Despite clear evidence that energy export revenue to the regimes in Syria and Egypt was rapidly declining, few analysts in academe published assessments that the governments in Syria and Egypt were vulnerable to instability because energy export revenues were their main sources of income.”

Shaffer said there were clues as to which regimes had the best chance of surviving the Arab Spring intact as well — specifically, the ones that could afford to subsidize energy and “other goods” domestically, giving the average citizen a significant price cut at the pump and elsewhere, to help manage discontent.

In the geopolitical balance of power, energy data could hint at how beholden one nation is to another.

“Relevant data can also point to energy security challenges, many of which are or can become national security challenges. Knowledge of this data can point to the greatest threats to stability and economic growth and the most serious points of potential vulnerability to external influence,” Shaffer writes.

Shaffer notes that Poland, for example, is often cited as vulnerable to Russian influence because more than 90 percent of its gas is imported from its eastern neighbor. However, she argues that that might not be as meaningful as it seems, as Poland doesn’t actually use very much gas compared to other energy sources.

“So, Russian disruptions of supplies to Poland likely would have little impact on Warsaw’s ability to continue basic functions,” the essay says.

Shaffer told RealClearLife that she wrote the essay to help educate government officials and observers of geopolitics who may otherwise overlook the importance of energy analysis in the complex task of reading the world.

A State Department Foreign Service Officer, for instance, may diligently study the history, language and culture of a country before an assignment there, but Shaffer said he or she might not realize that understanding its “fuel mix” is likely equally as important to explaining the country’s dynamics.

Lee Ferran is an Emmy Award-winning investigative journalist and the founder of Code and Dagger, a foreign affairs and national security news website.

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