(Matthew, senior fellow at the Clingendael International Energy Programme, The Hague, Senior Fellow at the Center for Security Studies, ETH Zurich, focusing on international energy security and political risk, “America Will Deeply Regret Its Fixation On Energy Independence,” http://www.forbes.com/sites/matthewhulbert/2012/08/19/why-america-will-deeply-regret-us-energy-independence/2/)
No one should blame, or bemoan the U.S. for doing this. It’s entirely up to the U.S. whichever path they chose to take. You could even argue it’s exactly what Washington should be doing to create serious foreign policy optionality: pick and choose whatever it does where, when, and how for the rest of the world to fall back on. All fair enough, but the downside risk this presents to Washington has already been captured in the ‘Kuwait Question’: Would the U.S. take assertive action to secure some of the key producer states of the world, or would they now turn the cheek? We all know the U.S. is no longer dependent on Middle East supplies; it hasn’t been for a long time given it sources less than 15% of its oil from the sand. But we also know that the decision to underwrite MENA supplies is nothing to do with U.S. consumption – and everything to do with retaining a dominant global geopolitical role. Ensure that hydrocarbons globally flow to the East and West, and much else follows as the geo-economic and geo-political lynchpin of the world. Lose it, and you’ll be geopolitically downgraded quicker than credit analysts can get stuck into Greek debt. That’s before we consider where Gulf States decide to recycle their petrodollars in future. No security, no $? It’s certainly a question for the U.S. to ponder – not only in terms of who they are going to sell their Treasuries to, but what currency oil is priced in. Hence the bottom line for the U.S.; Middle East energy isn’t about oil for America, it’s ultimately about power. If the U.S. wasn’t part of the Gulf energy game, it would hold zero sway with Saudi, no powers of persuasion over Iranian nukes, no say in the Arab Awakening, or how Gulf Monarchies handle critical succession problems in future. Let alone shaping vested interests to promote and extend U.S. influence across the globe. American Credibility Gone? The problem for America is that doubts over U.S. credibility are already creeping in from the energy independence hype. No one expects the US to step back into Iraq to shore up supplies if things take a serious turn for the worse; nobody expects the U.S. to provide any serious state building measures in Sudan. Likewise strategic US interests in Central Asia now have more to do with American concerns over South Asia, rather than hydrocarbon provision. If Russia decided to re-exert its regional dominance over the Caucasus (circa 2008) the U.S. would be highly unlikely to take any assertive measures to the contrary. Such out-posts are seen as ‘nice to have’ assets for US geopolitical standing, not as crucial global oil interests for America to underwrite and secure. Under a ‘business as usual’ scenario, these gaps are only going to get wider from hereon in. Logic therefore dictates that consumers need a U.S. plan B, and fast. The good news is that China already has one. It’s expanding its international energy footprint in the Middle East, Africa, Russia, Central Asia, and Asia-Pacific, reaching as far as the Americas and UK North Sea to secure its energy needs, (and hedge price risk more effectively through equity stakes). As the second largest consumer of oil, and one of the most import dependent states, Beijing is well aware that it has to ensure its own security of supply over the next decade as the US winds down its hydrocarbon presence. China will become the number one geopolitical force in the world over the next twenty years, and will do so for one, very simple reason: securing global hydrocarbon supplies. Europe has been very slow to appreciate this, but is finally cottoning onto the idea that it’s useless merely talking to prospective suppliers adjacent to its borders. It needs to work hand in hand with consumers at the other end of the Eurasian pipeline – namely China – to ensure its own security of supply. As Beijing plays a more prominent energy role, European energy security will depend on its ability to exploit Chinese influence in Central Asia as a mutual ‘Beijing-Brussels’ hedge against Russia, while working towards a consumer driven market to enhance supplies from the Middle East & North Africa. Europe is far better served taking the scraps from China’s energy table rather than wishful thinking that the trans-Atlantic ‘energy relationship’ still holds good. Like it or not, the logical conclusion of U.S. energy independence is fundamental demand side realignment where new players fill new geopolitical gaps. Careful What You Wish For The snag is that while the U.S. is very happy to extol the virtues of energy independence, it hasn’t come close to accepting the downside geopolitical implications that holds. Instead of working out an orderly division of (G2) hydrocarbon labour with China in the Middle East as the key producing region of the world, Washington is doing all it can to contain the rise of China, and doing so in Asia-Pacific. No doubt some of the local markets welcome ongoing US presence (especially around the India Ocean), but ‘hard balancing’ between the U.S. and China in South Asia is a battle that America will only ever lose. Rather than sticking more fingers in the Asia-Pacific dyke, Washington would actually be better served keeping an eye on its own backyard. Argentina, Venezuela, Brazil and most notably Canada are doing all they can to diversify their export mix away from a saturated U.S. market. They all know relying on a single source of supply and single source of demand isn’t smart economics. They’re all looking to load tankers to sell oil and gas onto global markets, and especially in Asia where premium prices rest. If we take forecasts for the Americas seriously, the U.S. will not only lose global sway as the independence bug bites, it might also struggle to retain a dominant role in its own neighbourhood. Brazil could well end up joining OPEC as its production grows, Canada will play hardball with the U.S. over its Arctic assets (not to mention plugging any new tar plays into Asia) and even when Chavez eventually conks out, don’t expect his successor(s) to be any more pro-American than then Kirchner clan in Argentina. New found petro-states will not be traditional U.S. silos. America could very easily slip down the global league of geopolitical energy heavyweights. Some will say humbug. The background pieces are falling into place for a ‘grand bargain’ to be struck between the U.S. and China by trading mutual assets in the East and West. Make things simple and split the world in two, using the mid-Atlantic ridge as a proxy border. Beijing will concede all its assets across the Americas with West Africa put into the mix. In return, the U.S. would cede the Middle East, Caspian, East Africa and Australasia as a pure play Chinese energy concern. Obviously things are never going to be quite that clear cut, but it’s probably a better bet than the current collision course we’re on between the U.S. and China. If the U.S. keeps preaching its energy independence gospel, all while containing the rise of China, the day will eventually come when China presents itself as a geopolitical fait accompli against Washington, not just across Asia-Pacific, but the Middle East as well. Rather than letting things get that far, the US would be far better served by following through on its own energy independence mantra: step back from the geopolitical ‘frontline’, and use its new found resources to let China play a more prominent hydrocarbon role. That’s not just to defuse geopolitical bombs ticking between the U.S. and China, but to make sure China can take up some of the U.S. slack. If those gaps aren’t properly filled, everyone, including the U.S., will suffer. It’s either that, or America knocks the energy independence narrative on the head, assures (and re-assures) other consumers that Washington will not only work to keep energy as a fungible, free flowing commodity, but that it remains the ultimate geopolitical backstop to oil supplies in the most vital producing regions in the world. That would give America ongoing leverage over the international status of the dollar, and indeed geopolitical red lines that emerging markets can and can’t cross. But keep spinning the U.S. energy independence yarn (with associated passive and active political practice), then expect to lose global status as the geopolitical lynchpin of the hydrocarbon world. That would be a crying shame for America, not least because ‘total’ energy independence is a myth, especially in the form U.S. politicians (and over excited analysts) are currently peddling. America will sacrifice its global geopolitical role on a hollow dream; energy independence, far from a dream, will become a living nightmare for America’s role in the world. U.S. politicians should think long and hard about that part of the debate, or spend an eternity regretting their global fall from grace.
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