Two timely research studies from think tanks inside the Beltway address energy security with particular focus on America’s new role in rearranging the established global energy order. This order is in flux precisely because of the renaissance in the American energy sector ignited by its shale (tight) oil and gas boom. Over the last decade, US crude oil and natural gas production has risen significantly. According to EIA projections in its AEO2014 Reference case, US natural gas production will continue to grow, increasing by 56% between 2012 and 2040. Similar gains are projected for US oil production.
A new Center for Strategic and International Studies (CSIS) study – titled “New Energy, New Geopolitics: Balancing Stability and Leverage”- examines how much the US shale revolution has already altered America’s geopolitical calculus and how all those increased energy supplies add to America’s ability to lead and exert political as well as economic leverage to advance particular foreign policy goals. According to CSIS, it comes down to assessing the potential strategic impact of shifts in the energy landscape on global trade and geostrategic relations. CSIS notes that to navigate the complexities of energy policy, which is a “mix of complex domestic and international factors,” pales in comparison to managing geopolitics, which is “even more complicated by the larger universe of energy- and non-energy-related elements that influence the relationships among countries.” Due to the fact that energy security is a matter of national security, with complex political, economic, and social implications, foreign policy requires, above all, a strategic approach. In this respect, CSIS suggests US policymakers choose between two paths for managing America’s new energy posture:
“The energy stability pathway suggests the United States’ energy advantage should be used to enhance energy security around the world, on the theory that more stable energy markets will foster strong economies and enhance geopolitical stability.”
The energy leverage pathway views the energy advantages presented by the U.S. oil and gas production as tools that can be employed in the service of broader geopolitical or economic objectives.”
Due to the general uncertainty surrounding energy developments, geopolitical forces, and national security interests it is unlikely – the CSIS study reasons – that the US will pursue either suggested option in its purest form. Nonetheless, CSIS advocates for a comprehensive policy approach, which leans more towards energy stability. Three interesting and sensible recommendations for policymakers reflect this favored approach:
1. Keep up continued US commitment to protect sea lines of communication (SLOCs) in order to reassure allies of both US willingness and capability, thereby maintaining “its role as lead provider of this global common good [for now], while working toward more collective approaches to the greatest possible extent over the longer term.”
2. Make the public appreciate – i.e. do not isolate the US under the false impression of ‘energy independence’ – that “continued reliance, both direct and indirect, on global energy markets is critical if efforts to deter threats to regional stability, or to respond to instability if necessary, are to be successful [in the future].”
3. Put the domestic energy bonanza to good use and “bolster foreign policy ties or geopolitical dynamics where energy has traditionally played a central role.”
Meanwhile, a second study titled “Fueling a New Order? The New Geopolitical and Security Consequences of Energy” and published by the ‘Project on International Order and Strategy’ at Brookings analyses the same phenomenon and declares the US “on track to become the dominant player in global energy markets.” In this context, the most important distinction to grasp is that of ‘absolute energy security’ and ‘relative energy security’. In reality, the former is basically unattainable based on the logic that “none of these changes mean that the United States can insulate itself from global energy markets, nor [will it] supplant Saudi Arabia (…) as the world’s swing producer. What’s more, the U.S. economy is increasingly integrated into the global economy and increasingly trade dependent; this exposes the U.S. to the energy insecurity of its trading partners. If they suffer, it will suffer too,” the Brookings authors explain. That said, the latter is certainly improving in the US case – in particular, vis-a-vis Europe.
Interestingly, the Brookings study points out that “with the shift in energy flows [in Middle Eastern oil, away from the US and towards Asia] has come a shift in risk exposure. The United States has long been exposed to the geopolitical risks associated with energy production and transit, but now, increasingly, so too are the Asian powers.” At this point, two “US strategic temptations” are identified; namely, to use energy as a weapon against strategic competitors or “to disengage from the Middle East during a period of fiscal austerity, leaving Beijing and Delhi to take responsibility for the troubled region.”
The Brookings authors warn against those ‘false choices’, noting that “Asia’s risks are, to a very large degree, global risks” just like the price of oil, thereby leaving no country unscathed due to economic interdependencies. Moreover, they stress that a Middle East without the US is inconceivable given its alliance structure in the region. In short, energy issues – their geopolitics and their governance – have to be at the heart of US foreign policy. With global institutions falling short of an effective system for global energy governance, the Brookings authors make a case for fostering a more stable international order through collective action and cooperation and see the US filling this leadership void: “On the geopolitics, only the United States can lead. Indeed, the changing global energy landscape is a strong net positive for U.S. power (…).”
Unsurprisingly, they identify pathways that are almost identical to the ones outlined in the CSIS study: “Energy has given the United States choices, but they’re not easy ones. [The US] could use its dominant naval position and energy strength [or it] could pursue a “hands off” strategy in which it genuinely decides not to try to respond to instability in oil producing states, or to threats to energy transmission from rogue states or non-state actors.” Finally, the Brookings study comes to a conclusion that is very similar to the one the CSIS study reached: “[It] is hard to see the U.S. permanently retreating to the sidelines on energy, especially when its economy and those of its allies begins to suffer in an inevitable crisis. A more realistic option would mix carrots and sticks.”
In sum, while the CSIS study views US leadership in the energy realm simply emanating from its ‘shale energy advantage’, the Brookings authors – Bruce Jones, David Steven, and Emily O’Brien – additionally point the finger at a global energy governance problem. What the Brookings authors seem to be insinuating without actually writing it, is that when international energy institutions, which can help to avoid competition for leadership and/or domination, are ineffective during a global transition period, the US – having been dealt new strategically-favorable cards in the energy game – can still ill afford to remain on the sidelines in what is arguably a multi-polar world.