Jeffrey A. James, Ph.D.
Professor, National Security Studies
The annual meeting of the Center for New American Security held recently in Washington, D.C., included numerous presentations by luminaries in the national security arena. My earlier involvement in the energy world caused me to take special note of a presentation by Dr. Andrew Erdmann of McKinsey and Company. In place of the normal staid formality of some of the speakers, Erdmann was literally bouncing around the stage with enthusiasm for his topic, which was the “revolution” in the United States energy picture. The word revolution among scholars is used cautiously, for what it suggests. In this case, Erdmann, a historian by training, is correct: there is a surprising explosion of new energy resources within the lower 48 states and in Canada that will revolutionize the role energy plays in our national security thinking. According to Erdman, new finds of light tight oil (LTO), otherwise known as shale oil, extracted via new technology has increased the production of this attractive, easy-to refine oil from 100,000 barrels a day in 2005 to 1,800,000 barrels a day today. Production continues to grow by 50,000 additional barrels a month each month! This comes on the heels of national concern about running out of oil during the last decade.
Further, production of natural gas has exploded, as it were, from 54 trillion cu. ft. of domestic annual production in 2006 to 367.2 trillion annually, a 680 percent increase in seven years. Production is expected to increase50 percent annually, with more than 100 years of reserves. Erdmann reports a friend in Texas saying that there is so much gas available, producers are not even looking for more.
Bounding from point to point in his presentation, Erdmann enthused that this energy boom will create 1.7 million new high-paying blue collar jobs, and most importantly, add 2.5-4.0 percent growth annually to our GDP, currently limping along at about 2 percent. Such growth will add about $700 billion to our economy annually and reduce foreign imports by half, thus halving our trade imbalance by 50 percent! Taxes will further reduce the deficit, even without tax reform.
These are all exciting realities. Amidst all of these data, let’s consider a few of the geopolitical implications. Some of these were also included in the Erdmann presentation.
First, our economy will be stronger, more robust, and production in core industries will be less expensive and more competitive vis-à-vis other economies.
American interests in the Middle East will change from our current pragmatism toward various oil-producing monarchies to a more nuanced, flexible stance in the region, allowing us more degrees of freedom and greater policy independence. Of course this also means our leverage with traditional energy partners will lessen, allowing expanded influence from China and other oil customers. Nigeria, Venezuela, Angola, and Canada, will all have new suitors and need the U.S. less.
From a policy perspective, the U.S. will have more independence to proceed unilaterally in areas where we may have been more constrained in the past. Despite the lack of UN support and that of several of our key allies, we pursued Iraq on the mistaken premise that it had weapons of mass destruction, which were not found. Given the resulting debacle of Iraq, which is now roiled with sectarian violence and Iranian influence, such independence has shown itself to not always be a good thing. We will have to learn to show some new maturity as a global player, and heightened independence of movement could be risky.
There are more implications. For example, the climatic impact of carbon-based fuels could be very negative. New supplies of cheap carbon fuels will reduce further any interest in renewable energy and green technologies, and possibly hasten global warming.
In sum, we need first to be aware that this incredible new energy capability in the United States has given us a short-term advantage over others that will transform our economy and our strength as a nation. At the same time, it will certainly alter our relations with some long-standing allies, risking our reputation as a reliable partner unless we proceed carefully. Lastly, our national security establishment needs to become fully conversant with all of these implications and cool-headedly integrate them with other future strategic scenarios in order to maximize our interests in a stable global setting.
About the Author:
Dr. James, a political scientist with strong international interests, has served in several departments within APUS. His graduate training included foci on China and Africa, the latter in which he worked for five years in Southern, Eastern, Western and North Africa. He resides in Central Virginia.
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