Shale Gas Is America's Geopolitical Trump Card
Russia's $400 billion natural-gas deal with China pales beside the significance of U.S. drilling innovations.
June 8, 2014 6:26 p.m. ET
When Russia and China announced a $400 billion deal last month for Russia to supply China with 38 billion cubic meters of natural gas annually for three decades, some analysts heralded it as a tectonic geopolitical shift.
Instead, Vladimir's Putin's haste to sign a deal that had been in the making for more than a decade confirmed his country's political weakness. Despite being buoyed by high energy prices in the first decade of this century, Russia is in decline. Demographically it is shrinking; it has severe health problems (the average Russian male dies in his early 60s); and it is a 'one-crop economy' heavily dependent on energy exports. Russia needs reforms to build a diversified, entrepreneurial economy, but its actions in Ukraine have brought on sanctions that weaken its access to Western ideas and technology. Becoming China's gas station does nothing to reverse this trend.
The real geopolitical shift is the shale-energy revolution that took off in the past decade. While the technologies of horizontal drilling and hydraulic fracturing are not new, their pioneering application to shale rock is largely a product of American entrepreneurship in the past decade.
Ten years ago, many experts were speaking of 'peak oil'-the idea that even reserves in Saudi Arabia had topped off. The U.S. was regarded as increasingly dependent on energy imports and was building terminals to import high-priced liquefied natural gas. Instead, North America is now building terminals to export its low-cost LNG, and the continent is expected to be self-sufficient in energy in the 2020s, according to a broad consensus of energy experts. The Energy Department estimates that the country has 25 trillion cubic meters of technically recoverable resources of shale gas, which when combined with other oil-and-gas resources could last for two centuries.
The shale revolution has a number of implications for American foreign policy. Shale-energy production boosts the economy and produces more jobs. Reducing imports helps the balance of payments. New tax revenues ease government budgets. Cheaper energy makes industry more competitive internationally, particularly energy-intensive industries like petrochemicals, aluminum, steel and others.
There are also domestic political effects. One is psychological. For some time, many people at home and abroad have bought into the myth of American decline. Increasing dependence on energy imports was often cited as evidence. The shale revolution changes that dependence and demonstrates the combination of entrepreneurship, property rights and capital markets that are this country's underlying strength.
Skeptics have argued that lowered dependence on energy imports will cause the U.S. to disengage from the Middle East. This misreads the economics of energy. A major disruption such as a war or terrorist attack that stopped the flow of oil and gas through the Strait of Hormuz would drive prices to very high levels in America and among our allies in Europe and Japan. Moreover, the U.S. has many interests other than oil in the region, including nonproliferation of nuclear weapons, protection of Israel, human rights and counterterrorism.
As for the costs of maintaining our Fifth Fleet in the region, many bases are paid for by host countries, and the marginal costs of keeping naval resources there instead of elsewhere do not add greatly to the budget. The U.S. may be cautious about overextension in the Middle East, but that is more the product of experience with the costly invasion of Iraq and the general turmoil of the Arab revolutions rather than illusions that shale produces political 'energy independence.' The ability of the U.S. to use oil sanctions to bring Iran to the bargaining table on nuclear issues depended not only on Saudi willingness to make up the million barrels of oil per day that Iran lost, but also on the general expectations that were created by the shale revolution.
Other benefits of the shale revolution for American foreign policy include the diminishing ability of countries like Venezuela to purchase votes in the U.N. and regional organizations of small Caribbean states by shipments of oil, and, if the government will approve more exports of liquefied natural gas, the eventual reduction of Russia's ability to coerce its neighbors by threats to cut off gas supplies. In short, there has been a tectonic shift in the geopolitics of energy, but it was not the Russia-China gas pipeline deal.
Mr. Nye, a professor and former dean at Harvard's Kennedy School of Government, is the author of 'The Future of Power' (PublicAffairs, 2011).
From Wikipedia, the free encyclopedia
|Joseph S. Nye, Jr.|
|Born||January 19, 1937
South Orange, New Jersey
|Alma mater||Princeton University (A.B.)
Oxford University (B.A.)
Harvard University (Ph.D.)
|Known for||Soft power|
The 2011 TRIP survey of over 1700 international relations scholars ranks Joe Nye as the sixth most influential scholar in the field of international relations in the past twenty years.
In 2011, he was named by Foreign Policy magazine to its list of top global thinkers. Magazine's valued reporter Daniel Drezner wrote: "All roads to understanding American foreign policy run through Joe Nye."
Nye has published many works in recent years, the most recent being Presidential Leadership and the Creation of the American Era which examines the relationship between presidencies and the rise of American power. His earlier works include: The Future of Power (2011, ISBN 978-1-58648-891-8), Understanding International Conflicts, 7th ed (2009), The Powers to Lead (2008), The Power Game: A Washington Novel (2004), Soft Power: The Means to Success in World Politics (2004), and The Paradox of American Power (2002). Nye coined the term soft power in the late 1980s and it first came into widespread usage following a piece he wrote in Foreign Policy in 1990. He is the chairman of the North American branch of the Trilateral Commission. Nye has also consistently written for Project Syndicate since 2002
Joseph S. Nye
Harvard University Distinguished Service Professor
Harvard Kennedy School
Harvard Kennedy School
ProfileJoseph S. Nye Jr., University Distinguished Service Professor, and former Dean of the Kennedy School. He received his bachelor's degree summa cum laude from Princeton University, did postgraduate work at Oxford University on a Rhodes Scholarship, and earned a PhD in political science from Harvard. He has served as Assistant Secretary of Defense for International Security Affairs, Chair of the National Intelligence Council, and Deputy Under Secretary of State for Security Assistance, Science and Technology.In 2004, he published Soft Power: The Means to Success in World Politics; Understanding International Conflict (5th edition); and The Power Game: A Washington Novel. In 2008 he published The Powers to Lead and his latest book published in 2011 is The Future of Power.
- IGA-610M Leadership and Ethics in American Foreign Policy
- IGA-130M International Regimes
Media ExpertiseJoseph Nye welcomes media inquiries on the following subjects:
- Foreign Policy
- International Politics
- Nuclear Weapons
- United Nations
ResearchFor a complete list of faculty citations from 2001 - present, please visit the Harvard Kennedy School Research Report Online.
Selected Publication Citations:
- Academic Journal/Scholarly Articles
- Nye, Jr., Joseph S. "The Information Revolution and Power." Current History 113.759 (January 2014): 19-22.
- Nye, Jr., Joseph S. Presidential Leadership and the Creation of the American Era. Princeton University Press, 2013.
- Magazine and Newspaper Articles
- Nye, Jr., Joseph S. "Do Presidents Really Steer Foreign Policy?" Atlantic Monthly. June 2013.