The U.S. Energy Information Administration’s 2012 Energy Outlook predicts an increase “in domestic crude oil and natural gas production, largely driven by rising production from tight oil and shale resources.”
Tight oil and shale are part of what author Daniel Yergin calls “the unconventionals,” or oil that is extracted through a means other than an oil well,. Although they differ in the extraction process, tight oil and shale have one thing in common: “their development depends on the advance of technology,” Yergin writes in his 2011 book, The Quest: Energy, Security, and the Remaking of the Modern World.
“The unconventionals are an important part of today’s petroleum supply and will become even more important in the future.”
Some experts argue that the rise in domestic oil production, thanks to these unconventional oil resources, will have a monumental impact on the U.S., our national security policies and the way we interact with the rest of the world by allowing the U.S. to become less reliant on foreign imports, especially those from the often volatile Middle East.
Adam Sieminski, administrator of the Energy Information Administration, said this has the potential to improve the U.S. economy by increasing the GDP, raising employment and strengthening the dollar. “This is a huge potential positive productivity shock to the U.S. economy,” he said on a July 12 New American Foundation panel “Delve into ’12:Running Out or Runneth Over?” about the impact of the domestic oil boom.
Others argue that the rise of oil production in the U.S. will improve not only our economy, but our foreign policy and national security as well.
“We can have a better value based foreign policy,” said Edward Morse, managing director and global head of commodities research at Citigroup, on the panel. “We’re no longer going to be kowtowing to despotic rulers or fuel monarchs, whose oil supply lines are critically important to other aspects of foreign policy.”
If the United States becomes a net exporter of energy, “that’s a huge impact on national security because we are not sending money to people who don’t like us,” said Dr. T.X. Hammes, senior research fellow at the Institute for National Strategic Studies at the National Defense University at a July 19 event at the university.
Others are hesitant to accept the argument that U.S. interests in the Middle East will be drastically transformed by increased domestic production of oil. Perhaps, according to one expert, it will only change the world’s perception of the international oil market, which may in the end have real consequences.
“If you look at the history of oil and international politics, one of the things that you find is that oil influences international politics because people think that oil influences international politics and then they act based on those beliefs and those actions have real world consequences,” said Michael Levi, director of the Program on Energy Security and Climate Change at the Council on Foreign Relations.
But does the unconventional oil revolution really mean the U.S. will no longer be pandering to leaders in the Middle East? Middle Eastern oil will still be a vital resource for the rest of the world and the U.S. economy is intimately connected to the global economy, said Edward Chow, senior fellow for the Energy and National Security program at the Center for Strategic and International Studies.
“That self sufficiency does not insulate us from the global economy, as we are finding out today based on what’s happening in Europe right now,” Chow said. “And so perhaps supply from the Middle East is not so critical for us anymore, but where does this leave the global economy and who is going to secure the supply lines from the Middle East?” The U.S. remains the sole global power able to secure these supply lines, or ensure that the essential oil transport routes—like the Straits of Hormuz—remain open, he said. “Are we therefore going to relinquish that role? I’m not so sure.”
Whether increased domestic production will change the geopolitical dimensions or not, experts are urging U.S. leaders to remain committed to solving the U.S.’s long-term energy security problems.
“We can’t turn our backs on energy and its international implications because of relative success of finding significant deposits here in the United States,” said Dr. Kent Butts, professor of political military strategy at the U.S. Army War College.