Jones, Steven & O'Brien (Brookings): Fueling a New Order? The New Geopolitical and Security Consequences of Energy

From the Introduction:

 

Today, another transformation in the international energy landscape is underway. Now, the United States is poised to overtake Saudi Arabia and Russia as the world’s largest oil producer—a stunning change—and, combined with new developments in natural gas, is on track to become the dominant player in global energy markets.

Meanwhile, in 2013 China surpassed the United States in its scale of oil imports, a dubious honor to say the least. India’s dependence on imports is also growing, while that of U.S. allies Japan and Korea remains high. So while energy has occupied a modest place in U.S. foreign policy debates in recent years, certainly compared to terrorism or the rise of China, the same cannot be said for the evolving powers of Asia, for whom energy is central to their growth strategies.

This energy revolution is rapidly strengthening America’s global hand. Among the consequences is an accelerating shift in Middle Eastern oil, away from the United States and toward Asia. This helps explain the fractures witnessed in late 2013 between the United States and Saudi Arabia. It has never been the easiest of alliances, and is now troubled by many other strains, notably dissatisfaction with each other’s policy toward Egypt and Syria. But under the surface is a more deep-seated anxiety as the Saudi ruling elite worries that the oil-for-security bargain is breaking down just as U.S.-Iran negotiations threaten Saudi’s regional leadership. The royal family is feeling dangerously exposed.  The current risk would likely not be as wide or as public if oil patterns weren’t changing. Saudi Arabia may still be America’s number two source of imports after Canada, but the future direction of Middle East supplies is becoming clear. They’re heading to Asia.

All this results in a “risk pivot.” The “pivot to Asia” is now well established in the rhetoric of U.S. foreign policy, if not yet fully in material and diplomatic commitments. But it’s not only U.S. foreign policy that’s pivoting; with the shift in energy flows has come a shift in risk exposure. The United States has long been exposed to the geopolitical risks associated with energy production and transit, but now, increasingly, so too are the Asian powers. There are price risks, political risks and—not least—significant risks associated with pollution. Chinese and Indian policymakers are scrambling to understand these risks and to work out how to manage them.

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