

Globalization
Season 2 Episode 6 | 56m 19sVideo has Closed Captions
Learn how energy enabled rapid globalization.
Learn how energy enabled rapid globalization, both as both a widely traded product and as a facilitator for moving goods globally. In the ancient world, globalization was always a goal, but modern forms of energy provided the missing link.
Problems playing video? | Closed Captioning Feedback
Problems playing video? | Closed Captioning Feedback

Globalization
Season 2 Episode 6 | 56m 19sVideo has Closed Captions
Learn how energy enabled rapid globalization, both as both a widely traded product and as a facilitator for moving goods globally. In the ancient world, globalization was always a goal, but modern forms of energy provided the missing link.
Problems playing video? | Closed Captioning Feedback
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Learn Moreabout PBS online sponsorship- The story of globalization would never have taken place without new sources of energy.
Energy transforms the possibilities of interaction and of building global markets.
- Globalization is directly linked to the ability of humans to access powerful forms of energy that allow them to move goods and people all around the globe very easily.
- We can get any type of consumer good anywhere in the world, and it's a growing trend.
It means our economies around the world are becoming more interconnected.
- Globalization is fundamentally about integrating the world's economies more and more.
The most important part of all of our individual economies, is the energy that underlies those, and therefore, the most important part of globalization is the energy that underlies globalization.
[Narrator] Energy has driven most of the trends in the last century, but perhaps the biggest trend of all, is the convergence of our world.
Modern forms of energy like coal, diesel, jet fuel, natural gas, or electricity, are the lifeblood of the global system, moving the world's goods around by truck, rail, ship, or plane, energy drives the vascular system of our global economy.
It's made the world smaller, and changed humanity by both solving age-old dilemmas and creating new problems.
[upbeat theme music] [Narrator] To understand ourselves and each other, we must understand the force behind the global events that shaped the world.
[helicopter blades whirring] [ship horn blasts] [thunder rumbles] This is "Power Trip: The Story of Energy."
[jet engine roaring] [upbeat music] [Michael] Globalization is the global movement of people, goods and culture.
[Suzanne] Globalization means a world market in which the prices for labor, capital and goods and services, are the same everywhere.
Energy is probably of all product markets, the one that is most global.
And the fact is, that we really do have now, a world energy market.
[Michael] The Port of Los Angeles is a place where energy and goods and globalization all come together.
[upbeat music] - We have 27 marine terminals with 270 berths all moving cargo, energy products, as well as containerized cargo.
There are six marine terminals, and they moved just shy of 11 million container units in 2021.
It's about a thousand-foot width of a channel.
- In these container ships, that's a standard size.
We're looking at Evergreen or Ever Lucky.
- It's not even close to the largest.
I always tell by the cranes, right?
You can see how much extra room the crane has to reach out.
This is the symbol of the Port of LA.
It's called the Angels Gate Lighthouse.
- Port of Los Angeles is one of the first ports in the world to have an environmental division.
And that started in the '70s.
[Michael] And what are the environmental issues you worry about?
[Christopher] Air quality, water quality, impacts to adjacent communities.
[Michael] There's energy in the fuel to move the boats.
Sometimes the boats are carrying energy one way or another.
Then you have energy for the operator, like there are davits and things like that.
Are those all electrically operated?
[Tony] Yes.
- And that electricity you get from the local utility, and they're pushing for cleaner electricity as time goes on.
- Correct.
Yeah.
- We can feel the energy in this boat right now.
[Michael chuckles] As it gets faster.
- This is a great one.
- Yep.
- Don't lose your briefcase.
- Yeah.
[upbeat music] - I mean these are all coming from different locations around the world.
[upbeat music] - Over the last 10 years, we've seen changes not only in the American consumers buying habits, but how we get product to market.
- When you move the goods from around the world, you have to be efficient with the way that you move those goods, and you optimize those movements.
- We have giant container ships, which are an extremely efficient and inexpensive per object moved way of moving things.
You know, Asia to Europe, Asia to the United States.
- Those containers include things like cars, and microchips, and plastic toys, and books and printed goods, and clothes.
These container ships are just massive with hundreds of containers stacked up.
It's just hard to imagine the scale.
And each container contains like households worth of stuff.
So there's just a lot of things that are moving through that port, which is a sign of how dependent we are in the United States on goods manufactured from around the world.
- If energy were very, very high costs in the supply chain, it would be a whole different world.
What we've done with so-called globalization, is focused too much on the economic efficiency during normal operations, versus the lack of resilience when something goes wrong.
[Reporter 1] Furious citizens hurl barricades and abuse at the police in the port city of Guangzhou, where some areas have been locked down for weeks.
These restrictions have been disastrous for the economy.
[Reporter 2] Because getting items from overseas has become so unpredictable, Methodist has started paying to have critical supplies like gloves and IV fluids made in the U.S.
The hospital even chartered a plane to China, to get the swabs needed for COVID testing.
[Narrator] Inside an average home, you'll find dozens of products, which were created around the world.
Fruits on your counter might be from one country.
Cabinets might be created in another country.
The carpet might be created in another country.
Lights in another.
The nails, nuts and bolts holding it all together, somewhere else still.
Our houses are galleries of goods from around the world, all enabled by energy to make each item, and then ship it to our house.
We call this shipping system the supply chain.
But what happens if due to energy shortages, the supply chain is disrupted?
That means that countries with shorter supply chains, tend to be more resilient.
During the COVID-19 pandemic, countries like France had fewer shortages in stores because more items are made locally.
[dramatic music] - Globalization has been the most powerful force ever created for lifting people out of poverty.
Literally, billions and billions of people in this century, have moved from subsistence form of life with high infant mortality and extremely short lifespans, to a much better quality of life, when you're gonna live 60, or 70 or 80 years in relative material comfort.
- At the same time, it can drive conflict though and drive people apart.
'Cause now these energy resources are extremely valuable.
They are physical objects in many cases that can be taken by force, and so they're kind of the ultimate zero-sum good that can be competed over, and so as a result, it's both wonderful and catastrophically bad all in the same time.
[birds chirping] - Energy has been a market early on, either indirectly by taking wind or water, and turning it into a marketable good like wheat or ground grain.
The energy was used to make the thing you would sell.
Energy itself was also a good that could be sold.
I'm thinking more like firewood, or charcoal that you would sell for people to use for heating and cooking.
- When did globalization begin?
Some people actually believed that it began with Marco Polo and the Silk Road in the 13th century.
- And the Silk Road was the famous transit corridor that Marco Polo walked on.
- But it was a series of diffuse trade networks that linked China along with other parts of East Asia, through Central Asia all the way to Europe.
And for China, it's a point of pride because it really put China at the center.
- It wasn't a single road.
They were paths traders took with camels and horses.
- This is before airplanes, before trains, before cars.
You had to walk or ride to get all the way there.
- Have the problem of traversing rugged terrain, deserts, mountains, jungles, et cetera.
You also faced the possibility of robbers along the way.
You might face hostile countries that demand tolls and tariffs and whatnot.
It is through the Silk Road that some Europeans began to discover what silk was and exotic spices, porcelain, bone China.
[Suzanne] Tea was probably the first foreign commodity that actually figured in ordinary households.
- The trade was relatively limited, but involved monetary transactions for the first time, because the Europeans would use silver to pay for goods and services rather than barter.
[Beckley] There was a whole merchant class that sprung up because of the Silk Road, people that might have otherwise been forced into farming, which was the overwhelming job that people were doing then.
It gave them an alternative.
They could function as merchants, go-betweens along the Silk Road.
It creates larger markets for artisans, for producers of everything from spices to silk, to agricultural products, to various metals.
- The main limitation of globalization during the era of the Silk Road, was that it was land-based, and land-based trade is expensive.
Oceanic trade is much cheaper.
- If you've ever tried to move a heavy object, it's just a lot easier to float it on a boat than to try to lug it over land.
[Narrator] Even in ancient times, globalization relied on energy.
Vikings harnessed the kinetic energy of wind thousands of years ago to travel the vast Atlantic Ocean.
- The Vikings, they knew how to harness the wind in a way that no one else did.
Historically, the most famous Icelander in the U.S. is a guy called Leif Erikson, and he was, according to one saga, the first man to discover North America.
He arrived around 500 years before Columbus.
And all of this is documented, not just in sagas but also in archeology.
We have found archeological remains of Vikings in North America and Canada.
It's been debated how far down the east coast he went, but some evidence suggested he may have gone as far as New York.
- In the 1500s and 1600s, advances in navigation and ship building allowed for a much more efficient use of wind, what we call the era of exploration.
Early colonizers, Spain and Portugal and so on were colonizing primarily to extract precious metals, raw materials from the colonies.
And then to use that to trade with the east.
- If you look at the United Kingdom, a lot of its empire that was built in the 1600s through the 1800s, was set up to get resources, say from North America or islands in the Atlantic, to the United Kingdom.
There was global trade of food items like molasses, or drinks like rum, or sugar and tea from India and other places.
And the motivation mostly was that people would trade from within the empire.
- The initial reasons to colonize India were primarily for trade under a very mercantilist approach, which is that the purpose of mercantilism was to sell more products to the rest of the world than you were importing, in order to build up your stock of gold and silver, your specie, domestic monetary base.
And so the charter companies like the East India Company and so on, were given monopolies to trade in these parts of the world.
The combination of energy resources that England had on its own, and the raw materials from its colonies allowed England to become an industrial power.
- Modern energy changed the way global trade happened because it made it faster.
- Fossil fuels ended up being the primary driver of globalization, 'cause it essentially allowed humans to harness machines that obliterate previous limits on distance.
- When Benjamin Franklin with sailing ships, goes from the United States to France to defend the American Revolution, it takes him a month and a half to get from the United States to France.
By the time you have steamships in the 1880s, steamships are crossing the Atlantic in something like eight days.
Eight days means that you're able to get news about stock prices in New York to London in a week.
But what's really going to transform that story, is gonna be once you have the Transatlantic cable.
In fact, communication between London and New York is gonna be virtually instantaneous.
So the technologies that drove globalization, were highly dependent not only on new forms of communication, but on new sources of energy.
- And so Britain surges ahead of other countries.
It becomes vastly more wealthy.
If you just look at graphs of per capita income between Britain and other countries, you just see this massive divergence.
In fact, scholars call it "The great divergence" 'cause Britain leaps ahead, and is able to then build these trade networks all around the world that further enrich it and empower it as a giant empire.
Both Japan and China started off with this assumption that they could kind of wall themselves off, that they didn't have a lot to learn from European barbarians and their local struggles a half a world away, China was still a pre-industrial economy.
The overwhelming majority of people were essentially working small plots of land, family farms, and then they would pay taxes to the central empire, and as a result, you didn't have the kind of regimented use of machines.
It was only really when the Americans and the Europeans sort of imposed themselves on both Japan and China literally sail up with warships, that both in China and Japan, there was a renewed push to try to adopt some of these technologies.
The use of coal and fossil fuels rather than muscle power, the use of firearms on a large scale, and modern military tactics, steam powered battleships.
All of these methods were really brought home in a very violent way in the opium wars between Britain and China, starting in 1839.
It really starts over a trade deficit.
Britain had been opening up treaty ports within China, conducting trade, silk, tea, spices.
The problem for the British was that they were buying lots of Chinese products.
There wasn't a whole lot that the Chinese wanted to buy from the British, and so the British were giving silver to the Chinese, and so they were running out of silver.
Well the balance of payments was getting thrown.
The British said, "We need a product that the Chinese will buy."
And so they turned to opium, which they could grow in India where they had their empire, sell the opium, get a bunch of Chinese citizens hooked on that, and then take the money, the profits from selling those drugs, and use it to bankroll the rest of the empire that Britain had running.
And so the Chinese of course realized that literally millions of their citizens were becoming opium addicts, and so they tried to wage a war on drugs, and Britain eventually came in with its navy, and just obliterated China's offensive forces in the opium wars.
The British, even though their army was much, much smaller than China's in terms of the number of troops, or the number of ships they brought, just had much more advanced technology.
The Chinese forces were sort of a mix.
They had some cannons and some rifles, but they also had a lot of bows and arrows, and spears, a lot of things that you would've seen a thousand years before.
The Chinese literally called this, "The start of the century of humiliation."
So from 1839 all the way until 1949, when China's unified under communist rule, China gets torn apart, first by the British, then they're followed by the French, then by the Russians, and the Japanese, and the Germans, and the Americans.
And so there's just these jackals that according to the Chinese narrative, basically ripped China apart.
And that still occupies at a very important piece in China's psyche today about what is driving Chinese foreign policy.
[Suzanne] The most useful idea of globalization is when enough products that are essential to people's everyday life, like energy, like food products are exchanging on a global market.
And by global market, I mean one in which prices are converging, because there's enough international trade that people are feeling the pressure to produce things at more or less the same prices.
There was a period that I call "The first globalization," which is between 1870 and 1914.
- The rise of international shipping, with faster moving ships running on first coal than diesel, a desirable good like oil, crude oil that people wanted all around the world, really accelerated the globalization of the energy markets.
[Suzanne] U.S. grain was sold in Europe.
There were tremendous streams of migration from Europe into the United States.
Wages went up in Europe because so many people were leaving to go to the United States.
So globalization that really depended on the movement of human beings, was tremendous in the first globalization.
- One of the motivations for globalization is that if we have businesses around the world, and maybe an office in Germany, and the United States and China, it would reduce conflict and help us avoid war, because we have business interests everywhere, and a company won't want to have one of its offices bomb another one.
- The idea that globalization leads to peace, is very alluring.
It makes logical sense.
You don't want to kill your business partner.
So it makes sense that the more countries trade, the less they'll have to send armies across their borders.
But the problem is, it doesn't play out so neatly in practice.
- What many people believed in the end of the 19th century was, that this globalized world was one in which every country would lose so much if it went to war, that war had become basically both irrational and impossible.
One of the big best sellers of the beginning of the 20th century was a book by a man called Norman Angell, called, "The Great Illusion."
And the great illusion was that war was in some way profitable, and that war was in some way still possible.
Well, in one day, August, 1914, the great illusion, it turned out to be an illusion.
[Narrator] Before 1914, it was said that energy had ushered in the death of distance, since global markets were converging and international trade was flourishing.
Exports and imports of merchandise carried by steamships and coal fired vessels was at an all time high.
Then, a horrific war erupted across Europe, and between 1914 and 1918, globalization went into reverse.
[bombs explode] [Suzanne] When the British declared war on Germany, capital markets closed everywhere.
The French take German mines in France, in my own hometown in New Jersey, which was a textile town, there was a woolen mill that was owned by German investors, and the U.S. government took over ownership of the mill.
[somber music] [Narrator] Forty million people died in World War I.
Out of the ashes of this first great war, rose nationalism and protectionism, a reaction to the way economies had been interconnected before.
People wanted an alternative to globalism.
Even the term globalism was seen as obsolete.
- There was a backlash to the first era of globalization in the 1920s and 1930s where countries turned inward, raised tariff walls against each other's goods, left the gold standard, and where the political tensions between countries had an economic component.
[Narrator] With nationalism on the rise, movements like fascism appeal to some.
Economic ties between countries largely severed, but there was still a question of how each country could get access to energy.
Without an easy way to trade internationally, the only way to gain energy was to take it by force.
A rising Germany with limited oil reserves of its own looked east, to conquer parts of Russia to acquire the oil needed for its economy.
The Japanese empire likewise began to attack Pacific Islands and take oil refineries.
Much of the second World war was driven by a thirst for power, as the nationalists returned to an ancient mindset that justified taking resources by force.
[dramatic music] After World War II's horrific death toll, there was a new beginning for globalization.
Importing and exporting energy in a global marketplace, seemed preferable to invasion and conquest, but a long period of geopolitical tension was beginning between rivals; the Soviet Union led by Russia... and the United States and its European allies.
The Soviet Union closed itself off to most parts of the globe intentionally for decades, but their top down system was in a way their own vision of globalization.
Within the Soviet system, energy was controlled by the state, in what is referred to as a planned economy.
Energy was used for military and industrial growth.
This model was also followed by China and North Korea.
- From the end of World War II through the 1970s, there's a burst in manufacturing capacity in the United States.
United States becomes a major exporter of goods to other parts of the world.
At the same time, Japan and Germany, and countries that have been devastated by the war are rebuilding their manufacturing capacity.
The American view from the '40s to '70s was that globalization was good, because America was the dominant manufacturer, and we wanted more people to buy American goods.
Asian superpowers we think of today, are like Japan and China.
But they were pretty much isolated with their manufacturing and economic recovery after World War II for several decades.
- In the west, energy was like any market commodity, traded and priced competitively.
- Energy most definitely equals political power.
That is the lifeblood of a modern economy.
It powers industry, it powers households, it powers the military.
- Crude oil is the single most globally traded fungible commodity available.
- But in many, many countries, the energy resources in the ground, are viewed as part of the state's assets.
Very, very different from the situation in the United States, for example, where if you own the surface land, roughly speaking, you own the minerals.
It's a very, very different business environment, if you like, right off the bat.
- It is quite ironic that energy abundant countries, some of them would become harmed by that abundance.
- Countries that have lots of fossil fuel reserves often end up being much poorer than you would think.
They tend to be incredibly corrupt.
- Countries that do have oil, tend to do mostly very badly as societies.
It's something called "the resource curse," that if you do have oil in your ground, you have very little incentive to actually develop other productive activities.
- It's not restricted to oil and gas.
That could also be precious stones, precious metals, minerals.
They can fall into the hands of rebel groups during civil wars that will use those resources to finance themselves.
[Reporter] Deep inside the capital of Venezuela, the last two years have been devastating.
- If you are an authoritarian government, and you happen to have lots of oil reserves on your territory, you can extract that, and you don't need to worry about what the people think because the main source of wealth in the whole country is coming from something that you can pull out of the ground yourself, creates so much power in that government.
As a result, they crush openings for entrepreneurship, for innovation, and the country as a whole suffers.
- In the case of countries like the United States, Canada, Norway.
These are countries that are blessed with plentiful energy resources.
They don't suffer from the natural resource curse the way some other countries abundant with energy resources are, and the reason is they had set up the institutions in place at the time that they began to extract these energy resources.
That allowed for competitive markets and effective governance to oversee the processes of converting that energy into energy resources.
[Suzanne] We've had one country in the world whose primary asset has been oil and gas, and that's been Norway.
And the government has played a huge role in developing the industry, and in turning the profits from that industry into resources for social welfare, into saving them for future generations, et cetera.
But in so many countries, the profits from having oil in the ground, have gone to a very top elite group who are able to capture all the gains.
- Non-democratic countries will often use oil and gas revenues as a carrot or a bribe.
It can be used to cut off funds to opponents.
Venezuela and Russia would be in the category of petro states that almost rely entirely for their external economic revenue on the sale of oil and gas, oil prices go up, the economy booms, oil prices go down, and they have wound up in a position of self enforced austerity.
Hoy inicia el período de 72 horas dado por el presidente Nicolás Maduro para que todos los venezolanos cambien los billetes de 100 bolívares que tienen.
- In Venezuela, the combination of oil prices collapsing, and political turmoil, has caused very high inflation, extremely high rates of poverty, and out-migration.
The United States for much of the 20th century, was an oil and gas importer, and so particularly the security aspects of the United States relationships with oil and gas suppliers, actually in the Middle East were a function of that dependency.
[Suzanne] Temporarily, the OPEC regime actually seemed to prove it was possible to extract yourself from globalization.
The OPEC countries basically announced that they were going to ban together, and pursue the interests of their individual countries in a way that would advantage them, and disadvantage the rest of the world.
- Far from being an effort to slow down globalization, it was OPEC taking advantage of the fact that they had a series of countries that had become quite dependent on their oil sales to cut production in order to harm countries for geopolitical reasons.
[Reporter] It was announced today that gasless Sundays will go into effect as of next month.
[Narrator] The price of gas had nearly quadrupled between 1973 and 1974.
Inflation surged across the economies of the world.
Everything was more expensive in part, due to the price of energy.
- That was the first time in the modern, very heavily energy dependent era, that the United States moved into a period of dramatic energy scarcity.
We had lines miles long for gas stations.
- I remember as a kid in the '70s, going to gasoline stations, they'd have a green flag out if they had gasoline, a yellow flag if they were running low, and a red flag if they were out.
And if the line was long and the flag was yellow, you might move on to the next gasoline station, and hope they had more supplies.
- We had spikes in the prices of all kinds of basic commodities.
Jimmy Carter's famous moment on television wearing a sweater, appearing before a fire in sort of a dark room, I think was a record scratch moment for the American people.
- Our program will emphasize conservation.
- Being really encouraged by their president to focus on making due with less, people saw a view of the future that looked like it was worse than the past.
[Narrator] The second massive oil shock of the 1970s began with the Iranian revolution in 1978.
During the turmoil, Iranian oil output declined by 4.8 million barrels per day, which was 7 percent of the world production at that time.
Due to the instability of the Middle East, in 1979 and 1980, oil prices rose rapidly again.
In Europe, Latin America, and North America, Governments began to hoard oil supplies.
Inflation skyrocketed once again.
The oil shocks of the 1970s, caused many governments to question their own dependence on energy imported from across the world.
This led to a movement towards self-sufficiency, also known as energy independence, which was somewhat at odds with globalization.
- The point of having optionality, flexibility, resilience, played out very, very clearly in that case.
- For at least the foreseeable future, we don't anticipate any major increase in the pipeline quantity of gas available to us.
- The response in the United States to the energy crisis was multi-faceted.
There was the effort to switch from the large American automobiles.
[Reporter] We must end our love affair with the big car.
- There were efforts to reduce gas consumption by lowering the speed limit to 55 miles an hour, campaigns to reduce energy costs by keeping the lights off and keeping air conditioning off.
- We had a serious challenge to the modern American way of life, and just as importantly, it had a huge refocusing of the United States domestically on energy innovation.
We really started to double and triple down on basic investments in advanced fossil energy, and eventually that resulted in the Shell gas revolution, and we found ways to more effectively harvest the energy of the sun, and the energy of the wind.
- It contributed to inflation.
And to fight inflation, the U.S. had to raise interest rates, ultimately.
[dramatic music] [Narrator] Oil prices continued rising.
Both Mexico and Venezuela had vast oil reserves, and felt they would use the hi gh prices to their advantage.
Countries in Latin America began to borrow money from international banks to finance public spending.
And the banks were eager to make those loans, knowing that the countries had oil to sell to pay them back.
But skyrocketing inflation caused the United States to make changes to their monetary policy to fight inflation.
At the same time, a day of reckoning was coming for oil prices.
More efficient use of oil, and hoarding, created what was called an oil glut, and the price of oil crashed.
[dramatic music] - Mexico defaulted in 1982 because its own oil and gas exports were not enough to pay the interest on its debt.
That debt default ended up spreading like wildfire through Latin America, so much so that the 1980s in Latin America sometimes referred to as the lost decade.
[dramatic music] - Iceland is obviously an oil importer, and was heavily hit by the two oil crises in the mid and late '70s.
- If you look at the actual change in the volume of oil that was being exported, it wasn't that much, but the prices rose dramatically because the way in which oil is set in commodities markets.
- The price of oil, you know, increased by a factor of three or four, not once, but twice.
It was a huge blow to the Iceland fishing industry, because they need oil to keep their freight at sea, and all the rest of it.
Long lines at gas stations.
- From an energy perspective, the 1970s made globalization look like a horrible idea.
- What did we collectively do?
Within 10 years, the sources of oil were diversified dramatically.
- The oil crisis had a huge effect in Iceland specifically, and there was an impetus to really go into the investment, the capital investment of building up geothermal district heating with an eye on long-term savings.
These savings on imported oil for fuel heating have been immense in Iceland.
- OPEC is a cartel, and what does a cartel do?
They use their economic power in order to drive prices up.
You know, if that's what they feel like.
Milton Friedman, he said, "Oil cartels will dissolve in the end because of internal strife."
- What the final resolution of that crisis showed, was that it was pretty easy to break apart that kind of coalition, and that one country after another kind of peeled off from that type of agreement.
[upbeat music] [Narrator] Globalization continued, driven by energy.
Nearly all of the growth in energy demand since the second World War period, was supplied by oil from the Middle East.
But by the middle of the 1980s, global inflation had been tamed, and economies expanded again.
Energy was less expensive, manufacturing and global trade grew, trade agreements led to more Japanese cars appearing on the roads of Europe and the United States.
- Japan started rebuilding after World War II, and China did as well, but Japan had a more open market economy, and China had a controlled closed economy.
So Japan entered the global scene, the global market much sooner than China.
Japan entered really prominently in the 1970s, with Japanese cars and toys, eventually high-end electronics.
- In the liberal West, people tend to separate economics from geopolitics.
And so something like energy, we view that as an economic resource.
In a country like China.
Economics is directly linked to geopolitics, energy, trade, finance.
These are all elements of what the Chinese call comprehensive national power.
And so it means that if someone tries to interfere with China's energy consumption or production, that can be tantamount to an act of war.
So I think there are clear differences.
I wouldn't want to overstate them.
If you just look at the U.S. presence in the Middle East, for example, the fact that Jimmy Carter, a president not exactly known for being a hawk, issues the Carter doctrine in 1980s, saying if anyone interferes with the flow of oil out of the Persian Gulf, the United States will use military force to back that up.
Even in a liberal western democracy, there's still this idea that energy is just so important for the economy, for the military, for the country's power, that you have to be pretty mercantilist about it.
You have to actually go out and secure those resources.
[Narrator] The Soviet Union, led by Russia, competed for global dominance with Western countries.
Each of these two powers asserted their own vision of how a global, interconnected economy should function, and how energy would be used to connect it.
- The Soviet Union and its satellites did not really participate in the western global economy, Western Europe, Japan, and the United States.
They had their own trade block, their own form of globalization.
- My memories as a child are, the majority of people in the New Jersey town I grew up in, still had manufacturing jobs.
And today, we know that in the United States, only 9% of the workforce has jobs in manufacturing, And that's an enormous change.
[lively music] [Narrator] Competition began to heat up, with manufacturing in Japan, Latin America, and China competing with Europe and the United States.
Cars, appliances, and other goods, could be produced more cheaply in countries with depressed economies.
And less expensive energy made that possible.
- Almost every movie in the '80s was about layoffs and the company towns falling apart.
Movies like "All the Right Moves" or in the early nineties, "Falling Down," these movies are about layoffs and disruption.
That was the feeling in the United States in the '80s.
- Why did we allow this to happen in the era of the Cold War?
We were really worried about Japan, and Hong Kong, and Korea, whether they would be bulwarks against the Soviet Union, bulwarks against communist China.
And so we were willing to leave our markets open, even though the price was being paid at home by people making blouses and shoes, and whatever it was that those countries could make as entry-level products into the world manufacturing system.
Globalization really sped up from the 1980s on.
- China was mostly self-sufficient in not just energy resources, but resources writ large in the 20th century, in part because it was so underdeveloped.
Starting in the 1980s, 1990s, as China runs down its own oil reserves, it starts to have to import massive amounts of oil.
By 1993, it's a net oil importer.
[dramatic music] [Narrator] The Soviet Union dissolved in 1991.
- Time for the end of a state, that in its brief 74 years, had murdered and oppressed its own people, enslaved other countries, and threatened the peace, the very existence of the whole world.
[Narrator] This marked the return of Russia and Eastern European countries like Ukraine, to the rest of the global economy.
The communists block countries, which had previously been intentionally isolated from capitalism, began to integrate into the global market economy.
This event transformed energy markets, and gave Russia a new key role in determining the price of oil on a global stage.
- Russia has always been relatively dependent on the sale of oil and gas.
A lot of former Soviet industries turned out to be somewhat non-competitive globally.
But the markets for oil and gas, of course, were growing, particularly in East Asia as well as other emerging markets.
So they became much more dependent on that for their economy.
[Narrator] From the 1990s to the early 2000s, Russia's energy exports grew.
And Russia's oil production nearly doubled.
Russia also built pipelines, which unlocked the potential for exports to Europe and China.
Saudi Arabia still dominated as the world's largest crude oil producer, but conflict in the Middle East was perceived as a major risk for the security of oil supplies.
As China began opening up to global competition in the 2000s, 75% of China's oil supply came through the narrow shipping lanes of the Malacca Strait.
With the aim of diversifying its oil supply sources, and to mitigate the risk of oil supplies being cut off by war in the Middle East, authorities in China began to consider a strategic energy partnership with Russia.
Energy exports had become the cornerstone of Russia's economy.
By 2009, China became the largest energy consumer in the world as its energy consumption surpassed the United States and the whole of the European Union.
This oil had become the lifeblood of 21st century globalization.
- If we look at globalization, some people say it really started in earnest when China entered the World Trading Organization.
[Suzanne] Chinese industry could sell things without quotas, and largely without tariffs in the United States.
- By adding China to the WTO, we strengthened the organization.
[Suzanne] The cost of transportation had also fallen.
So certain industries like apparel, like metal working industries, became much cheaper to have some of these jobs carried out in China.
- In the decade after that, it becomes one of the largest net oil importers in the world.
Even though China has large reserves of coal, China's now an importer of coal as well.
In some years, China consumes more coal than the rest of the world combined.
[dramatic music] - In the '70s, the view is really about scarcity.
Could we get the oil or not?
But our viewpoint changed on that in the 2000s after the terrorist attacks of September 11th, 2001.
[Reporter] Oh, there's another one.
Another plane just hit.
[gasping] - We started to think not only about could we get the oil, but who are we buying the oil from, and are our oil purchases funding people who will then attack us?
There are producers of oil all around the world, and there are buyers of oil all around the world.
- That world was brought into being, both by the financial markets, by energy trading, by huge ships that transport, by the transport through pipes.
- Europe depending on Russia for gas was more like a bilateral agreement, so they would import oil, or gasoline or diesel from Russia, and they would also import natural gas for heating buildings during the cold northern European winters.
And this created a dependence from Europe on Russian gas.
But because of concerns about Russia, we're starting to see more liquefied natural gas import terminals pop up in Europe, that's helping to globalize gas as a commodity.
[Narrator] In the 21st century, wars in Eastern Europe and the Middle East have shown us that as long as energy is a foundation for conflict, globalization is fragile.
- The balance of power between China and the United States is partly based on energy.
Eighty percent of China's oil imports go through the Strait of Malacca, which is this narrow choke point that passes by Singapore, which hosts U.S. naval ships.
And so in a wartime scenario, China has to worry that other countries will squeeze its energy supply lines as a pulse point in order to gain leverage over it, to blockade it, and ultimately bring economic catastrophe down on China.
If there's a war over Taiwan, and the United States and its allies blockade China's oil supply, that would cause at least tremendous short-term damage to the Chinese economy, it would probably sew chaos within China, and could threaten the CCPs hold on power.
- As we look today, at the relationship between China and the United States, we see a growth of tensions that are deeply worrying.
Here are two countries, which are tightly linked through their production relations, through their financial markets.
Globalization is reversible.
It is not an irreversible economic process.
[dramatic music] - The benefits of a globalizing world are that small economies particularly, can take advantage of the transfer of goods and services, and money across borders, to move from raw material processing, and perhaps raw commodity exports, to more finished goods, and take advantage of global linkages to do that.
- Japan, Hong Kong, Korea, China, millions of human beings have been able to raise their standard of living, and really transform the life chances of a significant part of their population, because those countries were able to export to the rich countries of the world.
Without open markets, they never would've been able to do that.
- Chile was a middle income, low income country for much of the 20th century.
After a series of reforms, they reduced their dependence on the export of copper.
They began to broaden and diversify their economy.
- Globalization has been a key ingredient of Iceland's transformation in economic terms, since the second World War.
- Around 1940, only 10% of all primary energy used in Iceland was renewables.
Ninety percent was fossil fuels, and the bulk of that was imported coal and oil.
- This changed dramatically with the war.
And that is because the influx of ideas and technology, but primarily construction engineering.
- Iceland, as a major energy importer, still depends on other places for its oil, but over time, has moved to use the domestic resources, which are both cleaner and cheaper, and more secure.
- The vulcanism and the earthquake activity is what is underlying for our geothermal uses.
The raging glacial river, the glaciers covering about 10% of the country, are the basis for hydropower.
[Narrator] To overcome the resource curse, countries diversify.
Aluminum is lightweight and bends easily, which makes it one of the most sought after metals in the world.
But aluminum production requires vast amounts of electricity.
Iceland is now one of the top producers of aluminum in the world.
The reason for Iceland's huge exports to the global markets, is that electricity is cheaper and cleaner there, since Iceland uses dams that harness glacial melted water to generate power.
Iceland also has become an appealing site for data centers and cryptocurrency mining centers.
- You can argue that a lot of the backlash of globalization, is a result of the perception that borders are weakening, that migrants are pouring across borders, that imported goods are driving away jobs, and that is one of the reasons we see movements aiming to strengthen borders, strengthen the identity of nations.
- There's a lot of disparity between the energy poor and the energy rich in the world.
Access to energy and freedom go hand-in-hand.
If you look from the sky with a NASA satellite, you can see where there are electric lights, and there are places where there's no electric lighting because there's no people, say the jungles of the Amazon.
But then there are places where there are people, but they don't have access to electricity, like North Korea.
And the contrast between North Korea and South Korea is really clear.
A lot of lights in South Korea, and no lights in North Korea.
I just can't help but come away from the feeling that access to energy and access to freedom are one in the same.
And so if we can use globalization to increase energy access around the world, then maybe that means we're increasing access to freedom and democracy too.
- The backlash against globalization is understandable.
Globalization was allowed to be instrumental in creating conditions for self-dealing among corporations, or government leaders and so on.
It was allowed to be conducive to extreme increases in inequality, and there seems to be an understanding now in the international community that this must stop.
- Today, the son of a blue collar worker at age 30, is earning less in real dollars than his father earned.
Could we have done it differently?
[horn blowing] It actually turns out that producing in China is not so cheap.
In fact, trying to control quality, restocking of products.
It turns out that those actually are very, very costly.
- As globalization has proceeded, we are trading much more than just energy.
We are trading sophisticated goods and services.
- Innovation is really critical here.
- What I think we need is globalization with risk management.
In talking about energy, there's a tendency to focus on making a solar panel, or making a hundred-meter wind blade.
But what we forget is that education is at the foundation of just about everything we do in our society, including continuous education, on-the-job education, and then when called for, retraining.
- If we're just dealing in commodities, even with valuable commodities, we're never gonna be able to provide really good jobs for people, we're never gonna have really innovative firms.
We need to be able to do things that others cannot easily do.
- We need new fuels and technologies to replace the dirtier fossil fuels that emit so much CO2.
So just as globalization was enabled by carbon intensive fuels, and therefore contributed to climate change, globalization is also a solution to climate change in every solution we can find.
- When a ship docks, it still has to run its auxiliary engines for what they call hoteling functions while the ship is being unloaded and loaded.
And there's a lot of emissions.
- You're saying this is the first berth in the world that had the capability for shore power.
[Tony] Correct.
- Which means the ship turns off their diesel engines, and plugs in the shore electricity for their hotel loads.
- Correct.
So you don't have to have any emissions spew out during the berthing operation.
- As this port grows, and one of our key objectives as a port is, you know, not only to move cargo, but to do so in a way that minimizes impacts.
- There are always challenges in anything we do.
And you try to mitigate those.
So yeah, there's a lot of energy used, but less energy than trying to build plants everywhere you need a product, right?
- How long have you worked at the Port of LA?
- Twelve years.
- And in those 12 years, how much better is the water quality today than when you started?
- It gets better every year.
[gentle music] [Narrator] Despite world wars, financial meltdowns and pandemics, globalization has not died.
This is because energy is woven deeply into the fabric of our global economy.
The question for humanity is how to get everyone the benefits of a wealthy existence, comfortable homes, freedom of movement, access to information, liberty from the toil of manual labor, without over consuming energy or damaging the earth.
This is the great challenge that lies before us, as we write new chapters in the story of energy.
[gentle music] [dramatic music] ♪ ♪ ♪ ♪ ♪ ♪
Video has Closed Captions
Clip: S2 Ep6 | 2m 47s | U.S. Secretary of Energy Ernest Moniz and others on the 1970s energy crisis. (2m 47s)
Video has Closed Captions
Preview: S2 Ep6 | 30s | Learn how energy enabled rapid globalization. (30s)
Video has Closed Captions
Clip: S2 Ep6 | 2m 11s | Energy is critical to the Port of Los Angeles. (2m 11s)
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