Energy independence gives US new geopolitical leverage

By Cui Shoujun Source:Global Times Published: 2012-12-26 19:59:04

Illustration: Liu Rui
Illustration: Liu Rui

The energy supply pattern of the US is undergoing a revolution that is also changing the global geopolitical map. Technological breakthroughs in horizontal well drilling and hydrofracturing methods have greatly reduced the costs of exploiting shale gas and tight oil.

The World Energy Outlook issued by the International Energy Agency (IEA) in November forecast that the US will replace Russia as the biggest natural gas producer in 2015 and surpass Saudi Arabia as the biggest oil producer in 2017, bringing the US energy self-sufficiency rate up to as high as 97 percent by 2035. If true, this means the Obama administration's strategy of "energy independence" will become a reality.

IEA chief economist Fatih Birol said that the shock brought by the revival of the US oil and gas industry is even bigger than nuclear power and is the biggest revolution in the global energy field since World War II.

Energy independence has been repeatedly highlighted by US presidents in the past four decades, but failed to come true. The Obama administration set energy independence as a strategic goal from the very beginning. The development of nonconventional energy now makes it very likely that this strategy will be realized.

It's not hard to imagine how aggressive the already hegemonic US will become on the global stage after it also becomes the biggest energy production power. The development of nonconventional energy will bring a "second spring" to US hegemony.

Oil has strong political attributes, playing a vital role in shaping and evolving global geopolitical patterns. Each shift in world energy focus will lead to changes in the global geopolitical map.

Since the 1960s, the Persian Gulf has been the heartland of global energy, where various powers have competed with each other for oil supplies. However, oil politics seems to have been broken since the start of the 21st century.

With the surge of nonconventional energy represented by the US's shale gas and tight oil, Canada's oil sand and the deep-sea oil and gas in the Gulf of Mexico, North America is rising as a new "Middle East."

A bipolar structure is forming, and the North American countries which master the core technology of nonconventional energy development will directly compete with the Middle East.

Another noticeable change during this process is Russia's influence. As a country rich in natural gas reserves, Russia has long used natural gas exports as a weapon to control the EU market that heavily depends on it. In 2001, The Gas Exporting Countries Forum was established under the promotion of Russian President Vladimir Putin, with the purpose of jointly coordinating the production and price of natural gas, protecting the exporting countries' interests and maintaining a balance in international oil prices.

Russia seeks to build its energy hegemony and increase its discourse power in the global energy field. However, Russia's advantage in natural gas is being challenged by US shale gas.

Due to the shale gas revolution, the US surpassed Russia in natural gas production in 2009. Under US ambitions to speed up shale gas development, the price of US shale gas will be more competitive than Russia's natural gas prices.

Exports of US liquid natural gas will put pressure on Russia. In the future, once the US launches large-scale shale gas exports, the impact on traditional natural gas exporters will be heavy.

The world geopolitical map is being reshaped with the rise of North America. China is, in fact, rich in nonconventional resources. Its shale gas reserve ranks first in the world, and twice as much as that of the US.

As the world's second oil consuming country and importer, China faces a severe challenge amid the energy pattern change. China should prepare itself for these challenges by readjusting its oil and gas strategy as soon as possible.

The author is director of Center for International Energy Studies at Renmin University of China.

Posted in: Viewpoint

blog comments powered by Disqus