The Intersection of IPE and Energy

Security: A Theoretical Exploration

Introduction:
Since the dawn of humankind, energy has been the Schlüsselstein (keystone) of civilization’s
progress. The mastery of fire, attributed to the audacious Herculean labor of Prometheus in
Greek mythology, as Aeschylus jots, "With a flicker of defiance, Prometheus reached into the
divine hearth and seized a spark. He carried it to Earth, a gift to humanity, a beacon of
knowledge and power."1 With a bit of digression to the main theme of the Greek tragedy. As
a fundamental driver of economic growth and geopolitical stability, therefore,
mythologically, Prometheus’ act marked the beginning of humanity’s reliance on energy.
Apart from mythology, this human development is transforming the course of history. From
primitive hearths to modern power grids, energy has remained an indispensable catalyst for
societal advancement. In terms of international relations, as the International Energy Agency
stated, energy security is ‘uninterrupted availability of energy sources at affordable prices. 2
Energy security has emerged as a pivotal concern in international relations, as Hashim Khatib
in his writing alludes to the importance of energy security and likens it to sustainable
development efforts, as, unless unaltered and affordable energy security is not completely
ensured, sustainable development in varied fields isn't possible. 3 The relationship between
energy security and international political economy is of cardinal essentiality, as international
political economy is the symbiotic relationship between economics and politics; change in
one aspect effects the other and vice versa. In the same manner, the intricate dynamics of
energy production, consumption, and trade have created complex interdependencies among
nations, accentuating the demand for a nuanced grasp of energy security’s theoretical
grundlages.
This research ventures on a theoretical exploration of energy security within the sphere of
international political economy through the lenses of liberalism and Realism or Mercantilism,
if we look at it more in discipline-centric terminology, with also skimming through the

1Prometheus bound by Aeschylus (full text). (2012). Moodle USP. Retrieved October 26, 2024, from

[Link]

2
Energy Security – Topics - IEA. (n.d.). IEA. [Link]

3
Khatib, H., Barnes, A., Chalabi, I., Steeg, H., Yokobori, K., & Planning Department, Organisation of Arab Oil
Producing Countries. (n.d.). Energy Security. In WORLD ENERGY ASSESSMENT: ENERGY AND THE
CHALLENGE OF SUSTAINABILITY (pp. 112–113).
[Link]
constructivist perspective of looking at IPE. By integrating these liberal-realist and liberal-
constructivist perspectives, this study aims to provide a comprehensive framework for
analyzing the multifaceted nature of energy security.
This investigative inquiry embarks on a comprehensively exhaustive examination of the
complex interstices governing energy security, situating its examination at the intersection of
state agency, institutional configurations, transnational entities, resource scarcity,
technological advancements and economic determinants, which systematically weakens the
topology of energy security.

Research Questions
1. How do the theoretical schemas of Mercantilism, Liberalism, and Marxism make us
understand the energy security policies and shape Global Governance in the context
of Energy geopolitics?
2. How do MNCs (Multinational Corporations), specifically ExxonMobil and Shell,
shape global energy governance and influence energy security policies in the Global
South, and what are the implications for international economic relations, and global
politico-economic relatons?

Literature Review
Energy security has burgeoned as a vexing quandary with seismic repercussions for global
governance. In this literature review, the International Political Economy's theories would be
utilized in order get the holistic grasp of Energy Security policies and global governance.
 Mercantilism/Realism:
Firstly, a fundamental comprehension of Mercantilist thought is indispensable for a
nuanced understanding of its enduring impact on contemporary energy security and
global governance paradigms. Two famous Mercantilist theorists, Eli Heckscher and
Jacob Viner, proposed through their writings three core points: the importance of
economic strength in bolstering state power, the emphasis on protectionist policies,
the advocating for an export-oriented economy over an import-oriented one, and
stratified valuation of economic activities, with manufacturing considered superior to
primary sectors such as agriculture, some economic activities being better than
others.4 Energy resources are crucial for any country, states consider the energy
resources as strategic assets for national power and security 5. Based on this
observation, the Oil Embargo of 1970s, in which Middle Eastern countries used oil
embargoes as a strategic geopolitical tool, henceforth, this illustrates the strategic
importance of energy resources6, moreover, Pulitzer-prize winner author, he sheds
4
International Political Economy. (n.d.). Routledge & CRC Press. [Link]
Political-Economy/Oatley/p/book/9781032232669

5
Klare, M. T. (2007). Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on
Imported Petroleum. Metropolitan Books.

6
Yergin, D. (2012). The Prize: The Epic Quest for Oil, Money & Power. Simon and Schuster.
 light on the Russia’s use of oil and natural gas as strategic assets to exert influence
over neighboring countries and Europe. According to Yergin Russia’s energy
preponderance has made it able to brandish considerable geopolitical power.
Furthermore, Daniel Yergin, says that states prioritize securing energy supplies to
maintain economic stability and military power, it can be observed in many cases, let
us again, use the example of Russia, which supplies natural gas to Europe, while
maintaining the influence in the neighboring countries, the incident of NordStream,
when on 26th of September 2022, an explosion occurred, because of which gas started
leaking, halting flow of natural gas into Europe, this incident raised few points;
Europe’s dependance on Russia, economic impact, as gas prices soared across
Europe, and geopolitical tensions peaked, as no one knew, that, who is responsible for
the sabotage. This intersection between Mercantilist concepts and energy security
policies has profound implications on global governance and market dynamics.
Conspicuously, the unceasing thirst for energy hegemony by the major powers has
skyrocketed the geopolitical tensions, as exemplified by the US-China and Russia
rivalries7 This Mercantilist driven agenda not only fuels market instability, argued by
Yergin in his book, The Quest (2011), but also halts and strains global cooperation, as
evidenced by the challenges faced by international organizations such as OPEC and
IEA8.

 Liberalism:
The second theory in the Interantional Political Economy’s discourse is Liberalism,
which, in its quintessence, this theory contravenes all the propositions proffered by
the Mercantilist thinkers, its cardinal tenets include the concepts like, Absolute
advantage put forward by Adam Smith, which contends that, countries benefit from
trading or producing goods they are efficient at, second concept being, Comparative
advantage, put forward by David Ricardo, which proposed that countries benefit from
trad by specializing in trades and goods at lower production costs, and the third main
concept, which is Gains from trade, put forward by Adam Smith, according to which,
trade intuitively is good, trade increases overall economic welfare, regardless of trade
balance.
So, what are the implications of Liberalism in consideration of Energy Security?
Liberals like Keohane and Ikenberry, in contrast to Mercantilism, belabor the role of
international cooperation, trade, and market-based solutions in achieving security.9
John Ikenberry, in his essay ‘Reflections on After Victory’, contends the character
and legitimacy of the leading states, rather than solely their power, shape international
order. Ikenberry hinges on the Post-War moments – 1815, 1919, 1945, and the end of

7
Victor, D. G., & Yueh, L. (2009). The New Energy Order. Foreign Affairs.
[Link]

8
Van De Graaf, T. (2015). The IEA, the New Energy Order and the Future of Global Energy Governance. In
Palgrave Macmillan UK eBooks (pp. 79–95). [Link]

9
Keohane, R., & Nye, J. (2017). Power and Interdependence: World Politics In Transition [Dataset]. In The
SHAFR Guide Online. [Link]
 the Cold War, when the old Order had perished, and newly powerful forces shaped
the new World Order. in the aftermaths of the 1945, the United States as the
Mächtiger force, the new puissant established a new order based on open markets,
security alliances, institutional frameworks, and strategic restraint. 10
Therefore, the newly built order gave space to energy security; global institutions and
regime promote energy security, such as the International Energy Agency is most of
the time cited as prototypical institution, which is keen on championing energy
security and stability.11 Moreover, according to liberal economic thought, the energy
markets can optimally distribute energy resources in a par excellence manner.
Moreover, liberalism has a more emphasis on open market-system, as discussed
earlier, and disdain the state’s involvement in market and any form of control over
companies and industries. Despite its allure and appeal, the liberal thought is always
heavily critiqued, first, its overemphasis on market, some critics view it in this way,
that, these frameworks, in some way and form favor few powerful countries,
perpetuating inequality, the post-colonial theorists may come with the concept of
institutional dependency. Samir Amin, in his seminal work Accumulation on a World
Scale (1974), excellently explains how the institutional structure of the Center
exploits the periphery, causes underdevelopment, and keeps them dependent on the
Center.12

 Marxism:
The Marxist thought originated in the works of German born political theorist and
economist Karl Marx; he is widely known for his critique of capitalism. A famous
economist, Robert L. Heilbroner, encapsulates Marx’s conception of capitalism;
he goes that, according to Marx, in the capitalistic world, there are two actors. The
first is the worker, who form a labor force, working for the survival, and a main
component in the production of capital, and the other is the capitalist, whose sole
purpose in this setting is to accumulate as much as possible, while giving the
working class as few as possible, so they can work for the capitalist to accumulate
more.13
Furthermore, Marx contends that this capitalist attitude leads to revolution; the
working class rises against the capitalist class 14. Concomitantly, a Marxist
perspective can be employed to elucidate the class-based dynamics, exploitative
practices, and capitalist imperatives that underscore energy security policies.
Energy resources are seen by the Marxists as a means of capitalist extortion and
exploitation, which lead to inequality and underdevelopment. David Harvey, a
10
Ikenberry, G. J. (2018). Reflections on After Victory. The British Journal of Politics and International Relations,
21(1), 5–19. [Link]

11
Lesage, D., Van De Graaf, T., & Westphal, K. (2010). Global Energy Governance in a Multipolar World.

12
Amin, S. (1974). Accumulation on a World Scale: A Critique of the Theory of Underdevelopment.

13
Commanding Heights : Marx’s Analysis of Capitalism | on PBS. (n.d.).
[Link]

14
Oatley, T. (2022). International Political Economy. Taylor & Francis.
 British academic and Marxist analyst, critiques the neoliberal structure and
policies, which lead to concentration of capital into few hands; he calls the
neoliberal process ‘accumulation by disposition‘, where public assets are
privatized, and the wealth is transferred from the poor to the rich 15. Harvey’s
analysis is applicable on various instances that has occurred, the connection fits
perfect, for an instance, the exploitation of energy resources in conflict zones, i.e.,
Iraq and Libya. The ExxonMobil is paradigmatic instance of neoliberal
imperialism, ExxonMobil’s involvement in Iraq’s oil industry after the US-led
invasion of Iraq on the prospects of Iraq having weapons of mass destructions,
which was a hoax, the whereabouts of those WMDs are still mystery 16. So, after
the invasion, the state-owned oil industry was privatized, which allowed
ExxonMobil to secure remunerative contracts and potentially extend profits
through financial speculation. This accumulation by disposition was carried out, in
the result of the US-led invasion created a crisis and chaos in the country, these
neoliberal reforms and privatization were justified by the crises that were created
by those, who later made neoliberal reforms. These neoliberal products dictate the
governments, getting subsidies, tax evasions, through these maneuvers, the wealth
was snatched from the public’s hands into the hands of those who already had
plenty, the ExxonMobil’s stakeholders thrived at the expense of poor Iraqis, the
local Iraqis got displaced, and wealth taken away from them 17. The above example
sufficiently illustrates Harvey’s conception of Imperialism, accumulation by
dispossession and disparate development.
The instance proposed illustrates, as conceptualized by a Zimbabwean critic, Sam
Moyo, that the pursuit of energy security is to serve the capitalist class; here the
capitalist class is the Europeans, and from them, energy security is the unaltered
flow of energy into Europe only18.
In conclusion, the Marxists would argue that the global energy systems are
characterized by disparate distribution and unparalleled development; it is
structured in a way that fosters dependency and imperialism. Marxism endorses
for energy democracy, no energy democracy, as defined by the energy justice
organization’s official website, which is, ‘all peoples and communities have the
right and ability to participate in, and make decisions about their energy
system’19. Apart from it, Marxism also advocates for decentralization and
community control over energy resources.

 Global Governance and Energy Geopolitics:

15
Harvey, D. (2005). The New Imperialism. OUP Oxford.

16
Juhasz, A. (2009). The Bush Agenda: Invading the World, One Economy at a Time. Harper Collins.

17
Muttitt, G. (2011). Fuel on the Fire: Oil and Politics in Occupied Iraq. Random House.

18
Moyo, S., & Yeros, P. (2011). Reclaiming the Nation: The Return of the National Question in Africa, Asia and
Latin America. Pluto Press.

19
Home Page - Climate Justice Alliance. (2024, August 2). Climate Justice Alliance.
[Link]
 Effective global governance requires international cooperation and joint
decision-making; global governance plays a crucial role in shaping of energy
geopolitics. To resolve these pressing challenges, there are institutions that
are crucial to support relative peace in the world and avoid conflicts.
Organizations like the International Energy Agency, Organization of
Petroleum and Energy Cooperation, and Energy Charter Treaty, assist in
cooperation and governance. Building on the works of Keohane, Oran Young,
and Ann Florini, the theoretical frameworks like regime theory,
institutionalism, and global governance theory provide valuable
understandings of Energy Security with respect to Energy Geopolitics20.#

The Role of MNCs in Shaping Global

Governance:
This inquiry emphasizes the role of MNCs in energy security, specifically examining the
influence of oil corporations, with ExxonMobil and Shell being the examples at the forefront.
Multinational Corporations or MNCs are organizations that have production facilities in
atleast two countries, they contribute a significant part in the global economy and trade.
According to the World Trade Organization, the MNCs account for about 80 percent of
global trade in goods and services 21. In terms of revenue generation, the top MNCs
collectively generate around 40 trillion dollars22, significantly impacting the global economy.
Let's come to the main point of the inquiry, without going further recklessly, as the focus of
the study is to examine the role of MNCs that have a role in energy security, mainly oil
corporations; ExxonMobil and Shell being the principal objects of concern. The collective
market size of top oil companies that are often referred to as the ’supermajors’, such as
ExxonMobil, Chevron, BP, Shell and TotalEnergies, overwhelms the market. In unison, these
companies account for considerable percentage of the world’s oil production with estimates
around 10-15 percent of the output. In terms of revenue, Shell generates revenue of 396
billion dollars, ExxonMobil generates 413 billion dollars, and above all of them the Petro-
giant, Saudi Aramco generates 604 billion dollars of revenue. These figures highlights the
economic might of these corporations. The OPEC+ countries control about 40 percent of
global oil production and around 80 percent of proven oil reserves. The statistics and data that
has been given shows the worth and might of these corporations.
This inquiry will examine the implication of this influence through the perspectives of
Postcolonial and Dependency theories, addressing the following question: How do
ExxonMobil and Shell morphs global energy governance and influence host countries’
energy security in the Global South?
20
Lennox, V. (2012, December 20). Conceptualising Global Governance in International Relations. E-
International Relations. [Link]
international-relations/

21
World Trade Report 2023 - Re-globalization for a secure, inclusive and sustainable future. (n.d.).
[Link]

22
Fortune Global 500 – The largest companies in the world by revenue | Fortune. (2024, August 4). Fortune.
[Link]
MNCs: The Post-Colonial Legacy:
The Postcolonial theorists contend that multinational corporations (MNCs) are the vestiges of
colonial leagcies, perpetuating unequal power dynamics in the Global South 23. One of the
most prominent Postcolonial thinker, Edward Said, about this underdevelopment in the
Global South said: ’The economic structures established by colonial powers have left a
legacy of dependency that continues to affect the political and economic realities of formerly
colonized nations’24. Historically, along with other resources, the colonial powers exploited
the energy resources, fostering dependency and underdevelopment in these regions.
The recent studies demonstrated that MNCs operating in extractive industries, particularly oil
and gas, reinforce these dynamics, compromising energy security in the host countries 25. Dr.
Ibeanu in his work, Oil, Globalization, and the Nigerian State, poses two main points, that
these MNCs create a marginalization of local communities, the place from where the oil is
extracted, the communities of that area get no benefits from it. He gives the example of Niger
Delta, where the perks gained from oil extraction are not shared with the local population,
because of which the local communities remain poor, and social unrest is imminent.
Moreover, he states about the dependency webbed by these MNCs around the host state, who
forever remain vulnerable to the fluctuations of oil prices. The exploitation of host countries‘
oil resources keep them underdeveloped, without gaining from their own resources, and the
host countries persist to be unable to form their energy policies, and host countries are always
vulnerable to the volatility of oil prices and supply flow. Furthermore, these corporations'
control over energy resources makes them enough powerful to influence energy governance,
hence prioritizing their own interests over host countries’ interests26.

Energy Governance and MNCs:

According to Klare, MNC’s lobby for favorable policies push for regulations, and influence
over politicians to favor trade agreements. Realists would observe these practices carried out
by the MNCs as securing interests to maintain power globally as well as within the host
state27. For an instance, in case of Nigeria, the local elite complicity in Shell operations in
Nigeria, which resulted in underdevelopment in energy sector? Moreover, Evans contends
that the MNCs along with the local elite perpetuate the human rights abuses 28, and engineer
energy governance in favor of MNCs.

23
Bhabha, H. K. (1994). The Location of Culture. [Link]

24
Said, E. W. (2014). Orientalism. Vintage.

25
Klare, M. T. (2007b). Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on
Imported Petroleum. Metropolitan Books.

26
Levy, D. L., & Newell, P. J. (2005). The Business of Global Environmental Governance. MIT Press.

27
Klare, M. T. (2007b). Blood and Oil: The Dangers and Consequences of America’s Growing Dependency on
Imported Petroleum. Metropolitan Books.

28
Evans, P. B. (2018). Dependent Development: The Alliance of Multinational, State, and Local Capital in Brazil.
Princeton University Press.
 Brief Case Studies: ExxonMobil and Shell:
The research until this point has been eagle-eyed focused on the basic understandings. Now,
in order to make the arguments posed in the research assignment more poignant, we will look
at some of the case studies: ExxonMobil operations in Iraq, the behind the curtains interplay
of politics with economics, and Shell operations in Nigeria, which already has been discussed
extensively.
ExxonMobil in Iraq: According to scholars the invasion of Iraq was foremost motivated by
a will and desire to control oil resources. The US-led invasion was motivated by the desire to
control the reserves, and maintain control through ExxonMobil, which in turn would re-
enforce US dominance29. The Marxist thinkers argued that ExxonMobil operations
perpetuated uneven development and dependence on fossil fuels, this instigated the core-
periphery debate, benefitting the core from the capital extorted from the periphery 30. This
brief theoretical case study reveals the intricate interplay of politics, economics and energy
security in ExxonMobil’s operations in Iraq. There were no weapons of mass destruction,
none found in Iraq31, the final report by CIA that surfaced in 2005 contended there were no
WMDs in Iraq, the country was ravaged, but for what? The answer is this case study.
ExxonMobil, from 2010 till 2020 earned about 80-100 billion dollars 32, with profit margins of
15-20 percent, although these are estimates, the real values are not revealed. Foreign
corporations with that much economic power has remained in vehement critique by
postcolonial theorists, the reason being that they have been actively influencing energy
policies in host countries.
Shell in Nigeria: Shell has been operational in Nigeria since 193733. Shell’s involvement in
Nigeria’s oil industry has been the subject of contentious debates, its involvement is critically
observed by the theorists, according to theorists, Shell‘s operations in Nigeria have
significantly impacted Nigeria‘s economy. According to studies, Shell’s profit margin
exceeds Nigeria’s government revenue allocation for social services 34. Moreover, Shell is
responsible for bribing and doing corrupt practices to keep its energy security monopoly in
the country35. Samir Amin accuses Shell of employing colonial practices in Nigeria,
29
Harvey, D. (2005). The New Imperialism. OUP Oxford.

30
The Structure of Dependence on JSTOR. (n.d.). [Link]. [Link]

31
CIA’s final report: No WMD found in Iraq. (2005, April 26). NBC News.
[Link]

32
Annual reports. (n.d.). Exxon Mobil Corporation

.[Link]

33
Who we are. (n.d.). Shell. [Link]
%20been%20active%20in%20Nigeria%20since%201937.&text=Shell%20has%20also%20been%20at,markets
%20for%20over%2040%20years.

34
Okonta, I., & Douglas, O. (2003). Where Vultures Feast: Shell, Human Rights, and Oil. Verso.

35
#ShellKnew — Finance Uncovered. (n.d.). [Link]
exploiting the resources on the expense of the population, creating a favorable economic and
energy policies to get ultimate benefits, while the populace anguish from the want and the
very resources from which the core and elite making immaculate capital 36. Mitchell in his
work, Carbon Democracy, put forward the nexus of corporate and state, as revealed by the
Global Witness Report, the corrupt politicians and corporates pat each other's back, one
through bribe, other by creating corporate friendly policies. Immanuel Wallerstein, who
came up with world systems theory, beautifully encapsulated that the capitalists of the core
exploit the resources of the periphery37.
Limitations:
The limitations of this study are as follows:
 Dynamic nature of energy security
 There could be variations in the conceptions and definitions
 Reliability on secondary sources
 Unparallel to the prevailing discourses
 Methodology could be quite qualitative based rather than quantitative bases
Conclusion:

36
Amin, S. (2013b). The Implosion of Contemporary Capitalism. NYU Press.

37
Wallerstein, I. (1979). The Capitalist World-Economy. Cambridge University Press.