DeM Banter: as mentioned in Wondering Where the Lions Are and Quantum Look…energy independence is huge! Granted…there are issues to face…but are they worthy of not pursuing it? China will need energy for a long time to come….what do you think? Stay dependent on the mid-east?
New York Times
April 28, 2013
JUST as the world was writing off America as a declining power, the country now finds itself on the cusp of realizing one of its longstanding goals: energy independence.
A wave of new technologies has made it possible to extract oil and gas from shale rock formations, and the results have been astonishing. By some estimates, the United States is on track to overtake Saudi Arabia as the world’s largest oil producer as early as 2017, start exporting more oil and gas than it imports by 2025, and achieve full energy self-sufficiency by 2030.
American politicians in both parties have long dreamed of energy independence — not only for its potential economic benefits, but also because it could free the United States from the vicissitudes of the outside world.
Last March, President Obama said that new energy sources and technologies would make America “less dependent on what’s going on in the Middle East.” The Romney campaign, meanwhile, argued that energy independence would mean that “the nation’s security is no longer beholden to unstable but oil-rich regions halfway around the world.”
But that is a fantasy. While the latest energy revolution will be a boon to America’s economy, it will in no way allow the United States to turn its back on the rest of the world.
That’s because America’s oil and gas bonanza will drive down global energy prices, undercutting the foundations of petrostates everywhere. According to Francisco Blanch, the head of commodities research at Bank of America Merrill Lynch, oil could fall to just $50 a barrel within the next two years, which could unleash unrest in regions crucial to American interests. Far from releasing the United States from the burden of global leadership, this process would force Washington to assume an even greater international role than it currently plays.
If there’s one part of the world that America would like to be less encumbered by, it’s the volatile and oil-rich Middle East. But energy independence will not spell the end of American engagement in that region. On the contrary, lower energy prices will undermine the stability of the Persian Gulf monarchies, whose hefty oil revenues have allowed them to win their populations’ loyalties through patronage and a lack of taxation. These countries do not always share American values or help advance American interests, but anything that destabilizes them would create problems that Washington could not afford to ignore.
Consider Bahrain, which earns 70 percent of its revenues through petroleum production and refining. The small island monarchy has undergone deeply destabilizing protests since the start of the Arab Spring. A drop in global energy prices would hurt the already weak government, breathing new life into opposition forces. A populist revolution in Bahrain could empower the country’s long-repressed Shiite majority, who already resent Washington’s support for the ruling Sunni al-Khalifa family. A new regime in Bahrain might even seek to expel the Navy’s Fifth Fleet, complicating America’s efforts to protect international shipping lanes, fight piracy and check Iran’s regional ambitions.
Even more alarming is the prospect of instability in Saudi Arabia. In 2011, the Saudi royal family was able to head off an Arab Spring-style revolution because of its enormous oil revenues, doling out $130 billion in benefits to pacify the country’s younger and poorer inhabitants. Should lower oil prices make such patronage impossible in the future, the kingdom could face domestic unrest — making the country a far less reliable partner for America in fighting terrorism and countering Iran. Moreover, if Saudi Arabia has less of its own money to spend on regional security, Washington will have to make up for the shortfall.
Outside the Middle East, declining global energy prices could have equally destabilizing effects. Russia rode its way out of the post-Soviet doldrums on a wave of rising revenues from oil and natural gas sales. Today, roughly half the country’s 83 regions could not stay afloat without federal aid, which President Vladimir V. Putin has been able to supply generously thanks to huge oil profits.
As in the gulf monarchies, such transfers have allowed the government to neutralize political opposition. But discontent is still on the rise, as evidenced by the occasional protests that have shaken Moscow since 2011. Even a temporary drop in oil prices would constrain Mr. Putin’s ability to pay off his enemies: experts at the Russian School of Economics predict that the country’s oil wealth fund, a stash of petrodollars reserved for times of need, would be depleted if prices fell to $60 a barrel for just one year.
If he’s unable to buy loyalty through patronage, Mr. Putin could turn to more pernicious methods like bullying neighbors and fanning the flames of nationalism. With outstanding border disputes and age-old rivals circling Russian territory, another conflict along the lines of the 2008 war against Georgia is not out of the question.
In the long run, of course, America would welcome a Russia that is more beholden to its people’s wishes than to fluctuations in energy markets. Washington should be under no illusions, however, that the transition to that point will be either smooth or linear, and it should prepare for turbulence along the way.
Many will argue that an energy-independent America could simply retreat into isolationism during such a period of turbulence. But American engagement abroad has never been purely about securing access to energy. The United States has benefited as much as any other country from the free exchange of goods, the safety of global sea lanes, the spread of democracy and the great-power stability that have characterized the entire post-World War II era. None of this could exist without the steadying hand of American power. Washington must make abundantly clear that it will continue to uphold this world order — irrespective of its own energy fortunes.
Americans should cheer the energy revolution. It will do wonders for the American economy, and the democratic politics it could encourage in the Middle East and Russia may ultimately serve American interests. But in the meantime, Washington should expect a world far less stable than the one it is used to — and, in turn, prepare to adopt an even more outward-looking foreign policy.
Benjamin Alter is a staff editor, and Edward Fishman is an assistant editor, at Foreign Affairs.