For four decades, U.S. foreign policy has been dictated by the country’s dependence on Middle Eastern oil. What Barack Obama has called an “addiction” to foreign crude is seen as having undermined the ability of the world’s most powerful nation to control its own destiny.
No wonder the suddenly plausible prospect of U.S. energy independence is generating such giddiness. Not only is the boom in domestic oil and gas production boosting an economy in dire need of jobs and investment, it is rekindling Americans’ confidence in their country’s future.
What is more appropriately defined as North American oil independence – since the United States will continue to depend on Canadian and Mexican crude for decades to come – is almost unanimously hailed as a positive development that will enhance American security.
What gets mentioned less are the downsides of energy independence. Rising U.S. and Canadian oil production could well destabilize petro-states in the Middle East, Russia, Africa and beyond, sparking regime changes unfavourable to U.S. interests and creating an even riskier world.
The trauma of the 1973 Arab oil embargo fuelled America’s obsession with energy security. That obsession only intensified with declining domestic production as conventional oil wells dried up. The failure to halt ever-rising dependence on foreign oil became a source of national shame and resentment, humbling successive U.S. presidents into holding hands with Saudi oil sheiks.
In just a few short years, however, the United States has experienced a stunning reversal of its energy fortunes. As recently as 2005, the country was importing an average of 12.5 million barrels of oil every day, which was 60 per cent of domestic consumption. By last year, oil imports were down to 7.4 million barrels per day, 40 per cent of consumption. Next year, imports are expected to average 5.7 million barrels a day, 30 per cent of domestic demand, according to last week’s forecast by the U.S. Energy Information Administration.
A sharp drop in consumption since the recession, along with better fuel efficiency in new cars, partly explains the improving U.S. balance of oil trade. But mostly, it stems from new technology that has freed up previously inaccessible oil reserves, leading to a surge in U.S. production. From barely five million barrels of oil a day in 2008, domestic production will surpass 7.1 million barrels this year and reach 8.5 million barrels by the end of 2014. Some analysts think the U.S. will overtake Saudi Arabia as the world’s biggest oil producer as early as 2017.
The paradox, however, is that both Canada and the U.S. need oil prices to remain high in order to keep production rising. Otherwise, the development of U.S. shale reserves and Canadian oil sands becomes a money-losing proposition and the resource will stay in the ground. So, North American oil independence cannot go hand in hand with a break at the gas pump for North American consumers.
That should provide some comfort to environmentalists who see rising production here as a nightmare scenario. High gasoline prices should continue to discourage consumption and serve as an incentive to attain even higher fuel efficiency standards and develop alternatives to the internal combustion engine.
Declining U.S. imports from the Middle East and Africa could, however, wreak political havoc in those regions. Nigeria and Angola have already seen their oil exports to North America slow to a trickle. They will increasingly compete with Middle Eastern countries to supply Asian markets, a development Citigroup analyst Edward Morse predicts will be “highly disruptive.”
In his new book The Power Surge, Michael Levi of the Council on Foreign Relations warns: “If Middle Eastern oil producers conclude that rising U.S. oil production will weaken U.S. interest in the region, they’ll take steps to build alliances with other world powers. If leaders in Beijing believe that the United States will no longer be as interested in protecting critical sea lanes that link Middle Eastern oil markets to the wider world, they’ll build up their navy more quickly.”
OPEC nations cannot afford to see rising North American production drive down global oil prices, either. Were that to happen, it would sow political unrest in places like Saudi Arabia that have been shamelessly buying off their populations to keep the Arab Spring at bay. The consequences of regime change in Saudi Arabia could be deeply unsettling for global security.
U.S. freedom from Middle Eastern oil cannot, alas, mean freedom from Middle Eastern politics.