MANDEL NGAN/AFP/Getty ImagesYou think George Bush would kiss a Saudi king if he didn't need the oil?
Take one of the most intractable problems in global politics — one that has been a key driver of political events around the world for decades — and eliminate it. Presto, a wave of the hand and it’s gone, just like that. What happens then?
It’s obviously a big question, but it’s the one you’re left with from the conclusions of a report released Monday by the International Energy Agency. The central finding is that, by 2020, the U.S. will lose its dependence on Saudi Arabian oil and become self-sufficient in energy. Within another 15 years North America will become a net exporter of oil, and 90% of Middle East exports will begin flowing to China, India and fast-growing Asian economies. Chief among rising Middle East energy exporters will be Iraq, which the IEA sees accounting for 45% of the growth in global oil production after 2020, overtaking Russia to become the second-largest global oil exporter.
It would be a breathtaking re-making of the international power structure, and only eight years into the future, according to the agency. Whoever replaces Barack Obama as the next president could preside over the biggest change in political dynamics since the U.S. emergence as a superpower. The forecast could also be totally wrong – sweeping visions of future developments often are. But the agency is not alone in supposing profound results will follow from the rapid changes that have overtaken U.S. energy reserves with the development of technologies that give access to previously locked-in supplies of oil and natural gas. Rice University’s Baker Institute reports that U.S. import terminals for liquified natural gas are already barely used and adds that “developments in Canada, Brazil and the Americas more generally have tilted the center of gravity in energy markets toward the Western Hemisphere” for the first time in decades.
The obvious first reaction would be an immense wave of relief. No more dependence on the Middle East? Great. No more wars over oil; no more catering to unstable autocracies run by corrupt sheiks with their army of princes and princelings. No more need to wonder what happens if some insurgent group of religious fanatics gains control over vital shipping lanes and shuts off the energy flow. No more oil wells blazing in the desert because one murderous dictator or another doesn’t want to give up his job.
True. So what’s it all mean? The fall of the Berlin Wall and the collapse of Soviet communism produced prophecies of halcyon days, as the world’s sole remaining superpower, the U.S., held sway over a suddenly less-threatening world. Except it didn’t quite work out like that.
Given the degree of concern already focused ont the rise of China as a political and economic power, imagine what happens when Beijing replaces Washington as chief customer, and thus chief defender, of Middle East oil exporters. Chinese refusal to “interfere” in domestic affairs is already one reason so little progress has been made in halting Iran’s nuclear ambitions or halting the slaughter in Syria. Imagine what happens when its investment in the region is multiplied several-fold.
Washington’s depth of involvement in the region is one of the few reassurances Israel has against a regional onslaught with it as the target. But once the U.S. is freed of dependence on Middle East oil, the willingness to shed blood presumably also wanes, no matter the depth of the emotional commitment. Add to that China’s status as a major U.S. creditor, with debt holdings worth $1 trillion, and it’s not hard to see American interest in Middle Eastern affairs shifting. Isolationism has run through U.S. politics since George Washington urged the country to stay out of Europe’s wars; the response for half a century has been that it couldn’t afford to withdraw from a region that supplied the fuel needed to keep America running. But what happens when that ceases to be the case?
The IEA report is more bad news for the renewable energy industry, which received just $88 billion in subsidies in 2011, compared to $523 billion for fossil fuels, an increase of 30% despite the best efforts of green groups to shift priorities from fossil fuel to renewables. If anything, the end of U.S. dependence on foreign oil is likely to worsen greenhouse gas emissions by further curbing enthusiasm for alternatives. Damian Carrington, an environmental blogger for the leftwing British newspaper, The Guardian,laments:
“The truly global implications of the International Energy Agency’s flagship report for 2012 lie … in the quietly devastating statement that no more than one-third of already proven reserves of fossil fuels can be burned by 2050 if the world is to prevent global warming exceeding the danger point of 2C. This means nothing less than leaving most of the world’s coal, oil and gas in the ground or facing a destabilized climate, with its supercharged heatwaves, floods and storms.
What follows from this is that the idea of peak oil has gone up in flames. We do not have too little fossil fuel, we have far too much. It also follows directly that the world’s stock markets are sitting on toxic levels of subprime coal and gas, a giant carbon bubble ready to explode.”
Even if you believe the climate change argument has been overstated, it’s difficult to get enthused about an escalation in emissions in place of a decrease. Yet the IEA report suggests the only way to avoid that is by some gigantic display of global willpower to avoid the easy route – i.e. extracting and burning all that newfound oil and gas – even though the record to date has been marked by the very absence of that will. Public pressure for green causes has waned with the struggles of the economy, because doing the right thing is always easier when the cost is low.
Shifting direction away from fossil fuels once Americans learn they can jettison the Saudis will be that much harder. Don’t expect Americans to willingly paid $4 a gallon for gas just to subsidize more windmills and solar panels when they know they could be paying significantly less, and that it’s American oil to begin with. During the presidential race there was much more pressure on Barack Obama over high gasoline costs and subsidies for failed green corporations than there was over his failure to push harder for a carbon-pricing scheme. The IEA suggests that boosting renewable energy as a challenge to oil and gas by 2035 would require subsidies of $4.8 trillion, or more than 50 times last year’s level. When you can get all the cheap gas you want out of the ground? Good luck with that.