America’s changing energy landscape and the Middle East

North America is sitting on a huge oil lake. And because of this windfall, American policy makers, oil executives and speculators, geologists, economists and even adventurers seeking fortunes in harsh isolated oil fields, are sitting on top of the world. In the last few years the dramatic changes in the energy landscape in the U.S., Canada and Mexico are writing new energy rules on global scale.

The new energy revolution, brought mainly by innovation and new technologies, has already altered the pessimistic discourse on energy that dominated the U.S. since the Arab oil embargo more than forty years ago. From the beginning of 2009 until the middle of last year U.S. oil production increased from 5.1 million barrels per day (mbd) to 7.3 mbd.

This year, the state of Texas, where oil was first discovered in 1901, is projected to produce in excess of 3 million barrels of oil a day, putting it ahead of such OPEC countries as Kuwait and Iraq. Energy experts believe that this increase in oil production is in part responsible for preventing oil prices from rising further than they would have absent the U.S. and Canadian oil boom. It is expected that Mexico will double its oil output when it opens its energy sector to foreign investment.

The elusive energy independence

The International Energy Agency (IEA) is predicting, that if current trends continue, that the U.S. by the end of the decade will overtake the world’s two biggest oil producers; Saudi Arabia and Russia to become the world’s largest oil producer. The (IEA) has estimated that oil imports to North America will decrease from about 6 million barrels of oil per day in 2012 to some 3.5 million barrels per day in 2018. Advanced drilling technology, and hydraulic fracturing, known as “fracking,” where water and sand are pumped into underground rock formations at high velocity to break these formations and extract pockets of fossil fuel, and improvement in horizontal drilling have revolutionized the production of shale energy.

America’s rise and fall, then rise as a leading energy producer and consumer is nothing short of monumental. America dominated the oil industry in the first half of the 20th century. During the Second World War, six out of seven barrels of oil used in the war efforts by the allies were produced in the U.S.

Behemoth

In subsequent decades, and with the U.S. emerging as an economic behemoth (accounting for more than 45 percent of the world economy in the post-war years) and with the rise of the middle class and America’s love affair with the automobile, it gradually became an oil importer. By the 1970’s the U.S. became vulnerable to the shifting dynamics of oil production and prices.

After the Arab oil embargo of 1973, the U.S. became obsessed with achieving “energy independence.” Every president, since Richard Nixon promised a jittery public opinion in November of that year that the country will achieve energy independence in ten years, it became a political ritual for every new president to renew the pledge.

In the last few years, with the boom in shale energy, the goal of energy independence, while still beyond full realization, is no longer a dream, and the U.S., for the first time in decades is sitting on a huge oil lake and by extension on top of the world. Of course, in a globalized world and economic interdependence there is no such thing as real energy independence, but certainly these new oil and gas discoveries have given the U.S. an energy immune system it has lacked for decades.

Geopolitical earthquake

The geopolitical consequences of this energy revolution will be felt globally, and they explain, in part why a chastened Iran has returned to the negotiating table and sign a provisional deal with the P+1 group to drastically scale down its nuclear program. The more than 3 million of barrels of oil a day that flooded the marked in the last three years prevented a serious tightening of global supplies of oil, and allowed Iran’s traditional costumers to get some of their oil needs from other producers.

This new oil picture prevented Iran, the world’s fourth largest oil producer from selling almost 50 percent of its oil output. In the past, Iranian officials were convinced that if the U.S. and its European allies imposed sanctions on its oil exports, they would be courting disaster and wreaking havoc in the international oil markets and causing global economic dislocations. Not anymore.

Changing landscape

The changing energy landscape, not only in the oil and gas sectors, but in alternative sources of energy, such as wind and solar and new revolutionary batteries which will change how vehicles are made and operated, and decrease their dependence on fossil fuels, could eventually lead to long-term changes in the United States’ commitments to the security of the Middle East, particularly the Gulf region. Already, one could hear calls to scale back U.S. commitments and reducing America’s substantial political, strategic and economic presence in the whole Middle East and North Africa region (MENA).

America’s old friends and allies in this region, from the Arab Gulf states to Egypt are wondering if the U.S. is gradually abandoning the region. Michele Dunn, a noted Egypt expert said recently that the United States “has given up on Egypt.” In late 2011 and early 2012, the Obama Administration began to articulate a new security-economic strategy that became known as the “pivot” or “rebalance” to Asia-Pacific.

The “pivot” as a term, meant or was interpreted by Asians themselves (and by the peoples and governments in the Middle East) as denoting a shift in American priorities from one region into another. Senior U.S. officials said that the “Asia pivot” was imperative to strengthen U.S. relations with old allies such as Japan, South Korea, Philippines, and Australia and others and to pursue a complex strategy towards a rising China that combines economic and political engagement with China and creating a network of allies to check Chinese ambitions.

Although, some Asian allies have been questioning the depth and seriousness of the ‘pivot’ given secretary of state John Kerry’s preoccupation with the problems of the Middle East, still the debate and the assumptions behind the ‘pivot’ have deepened the concerns of Arab states about America’s staying power in the Middle East.

From Carter to Obama

For decades, the U.S. has committed itself to protecting the free flow of oil from the Gulf, and since the late 1940’s it has maintained a naval presence in the waters of the Gulf. In 1980, one year after the Iranian revolution, President Jimmy Carter warned that “An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America”. Carter chose his State of the Union speech to stress the importance of his pledge, adding “such an assault will be repelled by any means necessary, including military force.”

Thus the “Carter Doctrine” came into being. That Doctrine was invoked implicitly and explicitly when the U.S. found itself using military force to prevent anyone from controlling the Gulf, whether against Iran during the Iraq-Iran war or later to evict Iraqi forces from Kuwait.

In the last few years and with the changes in the energy landscape in North America and globally, and the emergence of China, India, South Korea and other Asian powers as major consumers of Gulf oil, some military and economic experts and former government officials have begun to call for “moving beyond the Carter Doctrine” and restructuring U.S. military presence in the Gulf.

Former official and current senior fellow at the Center for American Progress Lawrence Korb has been calling for such rethinking for some years. Korb believes that the time has come to deploy a small number of troops in the Gulf region including some special operations units that could move quickly to deal with military emergencies. Korb does not advocate a ‘withdrawal’ from the region but a return to the pre-1990 Iraqi invasion of Kuwait. Korb told me that the oil boom in the U.S., the mounting calls to trim the defense budget, and the exhaustion from America’s two longest wars in Iraq and Afghanistan “makes it almost impossible for us to deploy ground troops against any country in the region unless it is absolutely necessary..”

Limited needs

In the next couple of decades most of the oil produced in the Gulf region will go to Asia, and the limited oil America still needs, will come from Canada, Mexico or Brazil. Some analysts believe that a world with a surplus of two or even three million barrels of oil in the market could diminish the Middle East in world affairs. People will question why would the U.S. invest militarily and economically to protect the sea-lanes so that China, India and other Asian countries can consume Gulf oil without the burden of protecting the shipping lanes.

Yet, most energy experts do believe, that the Gulf region will maintain its importance as a pivotal energy producing region, and that even if the U.S. produced most of its energy needs, it will not be in its interests to create military vacuum in the region, because any threat to its stability or its hydrocarbon resources, will still constitute a threat to world economy, given that oil prices will still be determined by the global oil markets. A modified “Carter Doctrine” need not be a U.S. withdrawal from the region, but a serious rethinking of security priorities, with the active involvement of the countries of the region in how to protect their interests in a rapidly changing energy environment.

Avoiding the impact

Finally, one would hope that the governments and peoples of those states in the region unable to avoid the impact of the new energy revolution on their economies, that they would see it as a wakeup call to engage in some badly needed introspection and critical thinking.

To continue to foster a culture of complacency, and entitlement premised on the belief that wealth, welfare and various subsidies can be provided by governments indefinitely, is to continue to postpone the day of reckoning. Investment in modern, liberal education and creating the environment for real economic and political empowerment and a realistic assessment of the capabilities and limitations of these societies will be the best response to the most revolutionary transformations in the international energy landscape in the last fifty years.

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Hisham Melhem is the bureau chief of Al Arabiya News Channel in Washington, DC. Melhem has interviewed many American and international public figures, including Presidents Barack Obama and George W. Bush, Secretaries of State Colin Powell and Condoleezza Rice, Secretary of Defense Robert Gates, and Chairman of the Joint Chiefs of Staff Admiral Mike Mullen, among others. Melhem speaks regularly at college campuses, think tanks and interest groups on U.S.-Arab relations, political Islam, intra-Arab relations, Arab-Israeli issues, media in the Arab World, Arab images in American media , U.S. public policies and other related topics. He is also the correspondent for Annahar, the leading Lebanese daily. For four years he hosted "Across the Ocean," a weekly current affairs program on U.S.-Arab relations for Al Arabiya. Follow him on Twitter : @hisham_melhem