Shale Gas Reveals US Leadership
The fall of Lehman Brothers on Wall Street in September 2008 unleashed a global financial crisis, triggering a noticeable decline in American power at the global level. Seventeen years of U.S. hegemony, which had begun with the collapse of the Soviet Union in 1991, came to an end. Today, there are signs that a new cycle of global geopolitics is underway — a cycle in which power is being consolidated ahead of events — such as occurred with the emergence of the new technology revolution around the “cloud” or cloud computing. The current corollary is the new industrial revolution based in the U.S. and Germany.
Both the cloud and the new industrial revolution were born primarily in the U.S. — demonstrating the special capacity of the U.S. to get ahead of the future — by creating it. This phenomenon is happening with American shale gas and shale oil, which did not exist 10 years ago. Suddenly, the innovative technique of combining horizontal drilling with hydraulic fracturing has led to increased production at the Eagle Ford shale field in southeast Texas from 15,000 barrels per day in 2010 to 838,000 barrels per day in the first four months of 2014.
Production of U.S. crude has increased by 60 percent since 2008. Oil imports now meet just 35 percent of U.S. demand, down from 60 percent in 2005. According to predictions, the U.S. will be fully self-sufficient by 2030, which could be fast-forwarded to 2020 if the U.S. and Canada are the frame of reference. The entire net increase in global production of crude between 2005 and 2013 had its source in the Eagle Ford and Bakken formation in Texas and North Dakota, respectively.
The geopolitical impact of North American shale gas has come quickly, and it has changed the global strategic equation.
For this reason, the price of crude has been stable in spite of the collapse of the eastern Mediterranean — Iraq, Syria and Lebanon — which caused an immense geopolitical vacuum in the most strategic region on the planet.
In June, when ISIL — Islamic militants — took control of Mosul in Iraq, Brent crude rose to $115 per barrel. But then, the price fell to $107 per barrel despite Iraq being the fourth largest oil producer in the world and the second largest member of OPEC — at 3.3 million barrels per day — and could be responsible for more than 60 percent of the global oil organization’s growth through 2019.
Despite the strategic nature of Iraq and the eastern Mediterranean, there are no signs of an impending oil shock in the global system in contrast to the situation in 1973, and again in 1979 — when the price of crude quadrupled in 1973 and then rose again fourfold in 1979. As a result, the developed world suffered its most serious economic crisis since the 1930s, with the U.S. gross domestic product falling by 6 percent between 1973 and 1975.
The challenge this new global political cycle faces is not Islamic militants or the clash of civilizations, but rather that 70 percent of the 2 billion people who will be born worldwide in the next 40 years will belong to the new middle class, a group whose numbers will rise to 30 billion by 2030. According to the Organization for Economic Cooperation and Development, this population growth will demand a 300 percent increase in real per capita income worldwide –— and a doubling of consumption.
These figures are not a prediction but the confirmation of a trend — an unstoppable trend. The question is not whether this will occur, but rather whether the planet will be devastated as a result.
What is clear is that the status quo is not sustainable.
It is also certain that during the current global transition, the U.S. is once again leading the charge.
Both the cloud and the new industrial revolution were born primarily in the U.S. — demonstrating the special capacity of the U.S. to get ahead of the future — by creating it. This phenomenon is happening with American shale gas and shale oil, which did not exist 10 years ago. Suddenly, the innovative technique of combining horizontal drilling with hydraulic fracturing has led to increased production at the Eagle Ford shale field in southeast Texas from 15,000 barrels per day in 2010 to 838,000 barrels per day in the first four months of 2014.
Production of U.S. crude has increased by 60 percent since 2008. Oil imports now meet just 35 percent of U.S. demand, down from 60 percent in 2005. According to predictions, the U.S. will be fully self-sufficient by 2030, which could be fast-forwarded to 2020 if the U.S. and Canada are the frame of reference. The entire net increase in global production of crude between 2005 and 2013 had its source in the Eagle Ford and Bakken formation in Texas and North Dakota, respectively.
The geopolitical impact of North American shale gas has come quickly, and it has changed the global strategic equation.
For this reason, the price of crude has been stable in spite of the collapse of the eastern Mediterranean — Iraq, Syria and Lebanon — which caused an immense geopolitical vacuum in the most strategic region on the planet.
In June, when ISIL — Islamic militants — took control of Mosul in Iraq, Brent crude rose to $115 per barrel. But then, the price fell to $107 per barrel despite Iraq being the fourth largest oil producer in the world and the second largest member of OPEC — at 3.3 million barrels per day — and could be responsible for more than 60 percent of the global oil organization’s growth through 2019.
Despite the strategic nature of Iraq and the eastern Mediterranean, there are no signs of an impending oil shock in the global system in contrast to the situation in 1973, and again in 1979 — when the price of crude quadrupled in 1973 and then rose again fourfold in 1979. As a result, the developed world suffered its most serious economic crisis since the 1930s, with the U.S. gross domestic product falling by 6 percent between 1973 and 1975.
The challenge this new global political cycle faces is not Islamic militants or the clash of civilizations, but rather that 70 percent of the 2 billion people who will be born worldwide in the next 40 years will belong to the new middle class, a group whose numbers will rise to 30 billion by 2030. According to the Organization for Economic Cooperation and Development, this population growth will demand a 300 percent increase in real per capita income worldwide –— and a doubling of consumption.
These figures are not a prediction but the confirmation of a trend — an unstoppable trend. The question is not whether this will occur, but rather whether the planet will be devastated as a result.
What is clear is that the status quo is not sustainable.
It is also certain that during the current global transition, the U.S. is once again leading the charge.
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