How shale gas will massively impact the world of geopolitics
Ever since the end of the Second World War when the United States emerged as the pre-eminent world power, one of the givens of geopolitics has been that the American economy – the world’s largest – was substantially dependent on energy imports, largely from the Middle East. This has required the US to support authoritarian regimes like Saudi Arabia and to intervene physically in places like Iraq. If you’ll forgive the pun, you could say that the Arabs had the Americans over a barrel.
Something similar has been the recent case in relation to Europe’s dependence on Russia for oil and gas. When the Russians have want to put pressure on countries they didn’t like, they just upped the price or squeezed the supply.
But, as explained in this article, all this could be about to change because new sources of energy are coming from shale gas as a result of technological developments in a process known as ‘fracking’. This could make the US the world’s biggest producer of oil and gas by as early as 2017.
What does the mean for America?
“Exploitation of fields in Appalachian states such as West Virginia and Pennsylvania, and further west in North Dakota, have transformed the US’s energy outlook pretty much overnight. Professor Dieter Helm, an energy expert at Oxford University, said: “In the US, shale gas didn’t exist in 2004. Now it represents 30% of the market.”
If all the known shale gas resources were developed to their commercial potential in North America and other new fields, production could more than quadruple over the next two decades, and account for more than half of US natural gas production by the early 2030s, according to recent study by the Harvard Kennedy School Belfer Centre.”
What does it mean for the Russians?
“Russia is the most vulnerable of the current petro-states because of the central role of gas to its international standing. Moscow’s sway over eastern and central Europe is dependent on Gazprom, which has used its dominance to set favourable terms, selling long-term contracts linked to the oil price.
Now, as more and more of the liquefied natural gas (LNG) formerly intended for the US finds its way on to the western market, the spot gas price is coming adrift of the oil price and the Europeans have new options, which will lessen their dependence on a single dominant seller.”
What does it mean for other energy-producing nations?
“Long-term consequences for the rest of the world are hard to predict but it is probably safe to say that many of the regimes whose global role rests on hydrocarbons alone are likely to be significantly weakened, if not swept away.
That includes the monarchies that have thus far withstood the Arab spring. Their persistence has depended on a historically high oil price and unquestioning western backing. Both those conditions are now in question.”
The development of shale gas and oil will hit hard the economics of renewable energy sources like wind and solar and it will have a devastating effect on climate change because it will dramatically increase greenhouse gas emissions. It’s a complicated world ….