Wednesday, November 28, 2012

Would a US redraw of its energy map truly achieve self-sufficiency?

Global Times

Reducing the US' dependency on energy imports, from the Middle East in particular, has been a major policy issue for decades, and was a recurring theme in this year's US presidential elections.

A report released in the wake of the elections by the Paris-based International Energy Agency (IEA) on November 12 stating that the US could become the world's largest oil producer in a decade and be self-sufficient in energy needs was resultantly warmly welcomed in North America.

Over time, the US would hypothetically be able to finally wipe its hands of the Middle East's problems, and no longer be hand-in-glove with Gulf monarchies in return for regular oil deliveries and petrodollars pumped into the American financial system.

With the world's largest energy consumer not buying from the region anymore, this would free up Middle Eastern exports, with the IEA predicting that more than 90 percent of the region's oil and gas trade would be destined for Asia. The result would be a major shift in global geopolitics.

That is one take, that an energy self-sufficient US would exit the Middle East if energy was removed from the equation. However, there is a lot of hyperbole to this prediction.

Whether the US becomes less import-reliant is largely dependent on domestically extracting more oil and gas from shale - of which there has been a bonanza over the past decade - but the fracking process is facing major opposition due to environmental impacts and high greenhouse gas emissions.

When exports of US-produced energy and forecasts on consumption are also factored in, the indicators suggest the US cannot be independent. The US could only be largely self reliant with the remainder coming from neighboring Canada.

This leads to the myth about the US' over-reliance on Middle Eastern oil. Canada is in fact the US' largest supplier of oil, at 29 percent, while the US' overall oil imports from 2005 to 2011 fell from 60.3 percent of consumption to 47 percent. From the Persian Gulf, imports have dropped from 26.7 percent to 18 percent of total imports, according to Energy Information Administration figures, the lowest it has been in decades. Out of the top 15 countries the US imports crude oil from, Middle Eastern countries account for a third: Saudi Arabia, Iraq, Kuwait, Algeria and Oman.

The US has paid a high price for ensuring oil keeps flowing from the Persian Gulf, with the Strait of Hormuz the conduit for over 20 percent of the world's oil and 40 percent of traded oil. To project military force in the Gulf, the US has spent an estimated $6.8 trillion between 1976 and 2007, according to research by Princeton's Energy Policy department, averaging $492 billion annually between 2003 and 2008. With 6.2 billion barrels of oil transported through the Strait every year, this means Washington is spending $79 a barrel to make sure that the US and everyone else can fill their cars with Gulf oil.

Washington has also spent an estimated $3 trillion on the invasion and occupation of Iraq, which we were told was "not about oil," but tapping Iraq's colossal energy reserves was of course a factor - Iraq is now the US' seventh largest importer.

In essence, the US is acting as the "world's policeman" to make sure that the global economic system keeps operating. The question is if the US is going to give up that role in the Middle East and, if so, who would step in to fill the vacuum? With Asia more reliant on Gulf oil, would India and China do so?

Even if Asia's two major powers could, the US is not likely to give up its current hegemonic role. More is at stake than the Middle East's oil and gas.

Military contracts for one, with Gulf states last year purchasing $66.3 billion of military hardware from the US, and Qatar this month ordering $6.5 billion worth of missile-defense systems. That is just the tip of the financial-military industrial complex iceberg.

Strategically, such arms deals are related to the perceived threat of Iran getting nuclear weapons and to contain Tehran, a common goal of the Gulf states, Israel and its main backer the US. On top of this the Gulf states and the US are trying to steer the outcomes of the Arab uprisings, from Libya to Egypt and Syria.

Ultimately, even if the US could be independent of Middle Eastern oil, it is unlikely to change its foreign policy which has been expansionary for over a century.

And a decade is certainly too short a time for any major shift in policy to occur when the US is operating according to long-term global spectrum dominance.

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