Report: Energy boom won’t end US ties to global oil politics

WASHINGTON –  National security leaders are warning that, even as ever more crude flows from American fields, the U.S. still will be tethered to the global politics of oil and involved in unstable regions that supply it.

In a report issued Wednesday, a group of former military brass, presidential advisers, ambassadors and politicians insist that it’s an illusion that surging U.S. oil production could unshackle the nation’s foreign policy decisions from concerns about safeguarding worldwide crude supplies.

“This is an antidote to those who just glibly say more oil production means we’re free of foreign entanglements,” said Adm. Dennis Blair, the former director of national intelligence, and co-chairman of the Commission on Energy and Geopolitics that produced the 108-page analysis.

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“We Americans like to think we can produce our way and work our way out of something,” Blair said in an interview with FuelFix. “Unfortunately, the fact that we are now drilling as much oil as we are is not going to, in and of itself, keep America out of the vulnerable situation and the series of entanglements in places around the world that we have been in the past.”

Still, more U.S. oil — predicted to reach a near-record 9.5 million barrels per day in 2016 — gives American leaders more latitude on the world stage.

The commission — a project of Securing America’s Future Energy, which advocates ending U.S. oil dependence — lays out recommendations for the U.S. to capitalize on its climbing domestic production to safeguard the free flow of crude across the globe and promote stability in producing nations.

Partnering with China

The group urges a return to a diplomacy-led approach in the Middle East, replacing the big military and intelligence presence of the past two decades. And the commission wants the U.S. to coordinate with energy-hungry China to develop shale oil resources, help protect oil shipping routes and jointly respond to crude supply disruptions.

Blair acknowledged there is a big psychological hurdle on China, which is not a member of the 28-member International Energy Agency that works collectively on oil supply issues.

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“There’s so much suspicion in the U.S.-China relationship. We are suspicious they are trying to push us out of East Asia, they’re suspicious that we’re trying to contain their growth,” he said. “But we need to carve out energy security as an area that we both know, at all levels, from the top to the bottom, is in both of our interests.”

The result, he said, could be a powerful alliance.

“Once that’s established, and the world knows the United States and China — the two biggest consumers of oil in the world — are committed to stabilizing and making more resilient the world oil market, then I think things begin to fall into place.”

Oil transit

Maritime security could be one of the earliest, easiest successes. Right now, more than half of the world’s oil supplies must move through one of six maritime chokepoints, such as the Strait of Hormuz.

A 2009 study by the RAND Corp. calculated that Americans spend as much as $83 billion each year patrolling oil transit routes and protecting vulnerable energy infrastructure in hostile areas.

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The commission also recommends the U.S. write new rules governing the American emergency stockpile of crude, known as the Strategic Petroleum Reserve. Formal criteria for tapping the SPR could help leaders use it more effectively “to respond meaningfully to a catastrophic loss of oil” in the world markets. Previous releases sometimes have been criticized as coming too late to make a big impact.

More recommendations

Members of the group include co-commissioner Gen. Michael Hagee, as well as Gen. John Abizaid, Adm. Michael Mullen and former Sen. Bob Kerrey.

The group provide these other recommendations for the U.S.:

  • Support peaceful evolutionary reform in autocratic Middle East oil-producing countries to develop more stable — and eventually more democratic — societies and governments.
  • Continue to promote the use of alternative transportation fuels, particularly electricity and natural gas. Blair stressed that this is action the U.S. can do independently. “It doesn’t depend on our allies or enemies” and instead allows the US to “take our future in our own hands,” Blair said.
  • Work diplomatically with other countries to develop an international consensus on the shared responsibility to combat — and coordinate on — future oil supply interruptions.
  • Strengthen global cooperation to protect key oil shipping routes as well as combat piracy.
  • Broadly help promote the development of oil and gas resources around the globe by advancing the use of hydraulic fracturing technology that has helped unlock crude from dense U.S. rock formations.

Blair said the commissioners will work to promote the ideas in meetings with government leaders and by offering periodic assessments of progress.

Political future

In its report, the group offers sobering reminders of how oil dependence has constrained the United States’ political freedom before. Most notably, the group makes the case that effective sanctions on the Iranian oil industry going back to 2005 were “seriously undermined” by fears about what they would do to global oil prices.

The commission also walks through the implications of four possible scenarios surrounding worldwide oil supply, including one in which oil demand is largely met by low-cost OPEC supplies, resulting in prices that drop to $85 per barrel by 2025.

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But the scenario also could cause tension within OPEC ranks, escalate budget deficits in the Middle East and spur “serious domestic political fractures” and political unrest in countries that use oil revenue to subsidize fuel and social programs.

Four “wildcard” scenarios also game out more devastating geopolitical events, including a succession crisis or broader political unrest in Saudi Arabia. A protracted power struggle could end Saudi Arabia’s historic role as a kind of safety valve or guarantor on OPEC oil production, but violence could completely take some of the country’s oilfields offline.

The commission says that “would be disastrous for the global economy.”


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