Best of the Week
Most Popular
1.Will UK Interest Rate Rises Crash House Prices? - Nadeem_Walayat
2.Full on Crash Alert for Major World Stock Markets... - Clive_Maund
3.Gold And Silver Market Bottoming? Big Rally Imminent? Reality Check Says NO - Michael_Noonan
4.The Coming Silver Price Rally Will Outperform All Previous Ones - Hubert_Moolman
5.The Trigger For The Upcoming Stock Crash - Harry_Dent
6.Imploding Department Store Results - James_Quinn
7.Dr. Copper is Speaking, are you Listening? ... - Rambus_Chartology
8.Pandemonium in the Stock Market, Dow falls 1,000 points in a week - EWI
9.Asia's Whirling Dervish of Devaluations Has Encircled China's Exports - Keith_Hilden
10.China Weakens the Yuan; Rattles Global Stock and Financial Markets - Gary_Dorsch
Last 5 days
The Ultimate Cash-Management Guide - 27th Aug 15
Why a Fed Rate Hike Could Be a Blessing for Gold Prices - 27th Aug 15
Why Devaluing the Yuan Won't Help China's Economy - 27th Aug 15
Stock Market Trend & Trade Signal Of the Decade - 27th Aug 15
Keep Your Eye On the Gold and Silver Bear - 27th Aug 15
Refugees Expose Europe’s Lack Of Decency - 27th Aug 15
How to Profit from China's Currency War - 27th Aug 15
How China's Currency Policies Will Change the World - 27th Aug 15
Chinese Medicine not Impressing Dr Copper - 27th Aug 15
Novel Biotech Novel Technology Platforms with Dramatic Growth Potential - 27th Aug 15
China Stocks Bear Market Crash, Are We Near the Bottom Yet? - 27th Aug 15
Stock Market Crash Black Wednesday Rally Crushes the Bears - 26th Aug 15
VIX Shorts Being Squeezed While SPX Prepares for Another Decline - 26th Aug 15
Why China's Economy is Deteriorating - 26th Aug 15
Citizenship as a Weapon: Travel Controls and What You Can Do About It - 26th Aug 15
Gold and Silver - How To Manipulate a Market - 26th Aug 15
How to Make a Quick 20% When the Stock Market Crashes - 26th Aug 15
Why We Can’t Handle A Stocks Bear Market - State Budgets Will Implode - 26th Aug 15
Stocks Bear Market, Is This 1929 All Over Again? - 26th Aug 15
The One Trading Strategy You Needed for Stock Market Crash - 26th Aug 15
Second Chance To Buy Cheap Gold Mining Stocks - 25th Aug 15
Gold Facts and Gold Speculations - 25th Aug 15
The Stock Market Crash Season is Here… - 25th Aug 15
Liftoff Setback Leads to U.S. Dollar Pullback - 25th Aug 15
The Stock Markets Are Extraordinarily Volatile, Here's What to Do - 25th Aug 15
Israel: The Case Against Attacking Iran - 25th Aug 15
Saudis Could Face An Open Revolt At Next OPEC Oil Meeting - 25th Aug 15
How to Calmly Weather This Stock Market Downturn - 25th Aug 15
Stock Market Sound the Alarm - 25th Aug 15
Stock Market Meltdown - Dow Monday 1000 Point Crash then Rebound, What's Next? - 25th Aug 15
El-Erian: Stock Market Sell off Is Not 1998 or 2008 - 25th Aug 15
Gold the Ultimate Financial Crisis Insurance - 25th Aug 15
Stock Market Black Monday Crash Fizzles Out, Next Black Tuesday? - 25th Aug 15
Black Monday - Rolling A Wheelbarrow Of Dynamite Into A Crowd Of Fire Jugglers - 24th Aug 15
Playing the Chinese Trump Card - 24th Aug 15
Gold and Silver: Heading for a “Blue Screen of Death” Event? - 24th Aug 15
Japan Economy Clear Conclusions Concerning QE - 24th Aug 15
Stock Market Blockbuster Right From the Open... - 24th Aug 15
Silver And The Petrodollar - 24th Aug 15
Why the Stock Market Sell-Off Happened – and How to Make Money on It - 24th Aug 15
Stocks Correct, Panic Ensues. The End Of The World? - 24th Aug 15
Stock Market - The Sky IS Falling - 24th Aug 15
SP500, DAX, FTSE - When Stock Markets Talk, Pay Attention - 24th Aug 15
Stock Market Black Monday - Full Crash Alert! - 24th Aug 15
Stock Markets Implode as China Literally Explodes - 23rd Aug 15
Stock Market Bloodbath - The Feds Gonna Need A Bigger Balance Sheet - 23rd Aug 15
Stock Market Due For A Breather (But More To Go) - 23rd Aug 15
Stock Market 20% Bear Market in the Works - 23rd Aug 15
Ankara: the New Capital of Jihad, U.S. Policy for Strengthening ISIS - 23rd Aug 15
Will Rising Interest Rates Crash UK House Prices? - Video - 23rd Aug 15
Stock Market Primary IV Underway? - 22nd Aug 15
Gold And Silver – NWO In Its Element: Problem, Reaction, Solution. Beware - 22nd Aug 15
Stock Market Nirvana Has Been Broken - 22nd Aug 15
Three Ways to Profit from the Stock Market Correction - 22nd Aug 15
S&P 2040 Breaks Down... Stock Market Turns Bearish - 22nd Aug 15
Storm Clouds Are Gathering Around Peer-to-Peer Lending Sector - 22nd Aug 15
Crude Oil Price Crash Continues: West Texas Crude Below $40, Brent Near $45 - 22nd Aug 15
Pandemonium in the Stock Market, Dow falls 1,000 points in a week - 22nd Aug 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Global Stocks Slide

The Geopolitics of Shale Oil and Gas

Politics / GeoPolitics Dec 19, 2012 - 11:18 AM GMT

By: STRATFOR

Politics

Robert D. Kaplan writes: According to the elite newspapers and journals of opinion, the future of foreign affairs mainly rests on ideas: the moral impetus for humanitarian intervention, the various theories governing exchange rates and debt rebalancing necessary to fix Europe, the rise of cosmopolitanism alongside the stubborn vibrancy of nationalism in East Asia and so on. In other words, the world of the future can be engineered and defined based on doctoral theses. And to a certain extent this may be true. As the 20th century showed us, ideologies -- whether communism, fascism or humanism -- matter and matter greatly.


But there is another truth: The reality of large, impersonal forces like geography and the environment that also help to determine the future of human events. Africa has historically been poor largely because of few good natural harbors and few navigable rivers from the interior to the coast. Russia is paranoid because its land mass is exposed to invasion with few natural barriers. The Persian Gulf sheikhdoms are fabulously wealthy not because of ideas but because of large energy deposits underground. You get the point. Intellectuals concentrate on what they can change, but we are helpless to change much of what happens.

Enter shale, a sedimentary rock within which natural gas can be trapped. Shale gas constitutes a new source of extractable energy for the post-industrial world. Countries that have considerable shale deposits will be better placed in the 21st century competition between states, and those without such deposits will be worse off. Ideas will matter little in this regard.

Stratfor, as it happens, has studied the issue in depth. Herein is my own analysis, influenced in part by Stratfor's research.

So let's look at who has shale and how that may change geopolitics. For the future will be heavily influenced by what lies underground.

The United States, it turns out, has vast deposits of shale gas: in Texas, Louisiana, North Dakota, Pennsylvania, Ohio, New York and elsewhere. America, regardless of many of the political choices it makes, is poised to be an energy giant of the 21st century. In particular, the Gulf Coast, centered on Texas and Louisiana, has embarked upon a shale gas and tight oil boom. That development will make the Caribbean an economic focal point of the Western Hemisphere, encouraged further by the 2014 widening of the Panama Canal. At the same time, cooperation between Texas and adjacent Mexico will intensify, as Mexico increasingly becomes a market for shale gas, with its own exploited shale basins near its northern border.

This is, in part, troubling news for Russia. Russia is currently the energy giant of Europe, exporting natural gas westward in great quantities, providing Moscow with political leverage all over Central and particularly Eastern Europe. However, Russia's reserves are often in parts of Siberia that are hard and expensive to exploit -- though Russia's extraction technology, once old, has been considerably modernized. And Russia for the moment may face relatively little competition in Europe. But what if in the future the United States were able to export shale gas to Europe at a competitive price?

The United States still has few capabilities to export shale gas to Europe. It would have to build new liquefaction facilities to do that; in other words, it would have to erect plants on the Gulf of Mexico that convert the gas into liquid so that it could be transported by ship across the Atlantic, where regasification facilities there would reconvert it back into gas. This is doable with capital investment, expertise and favorable legislation. Countries that build such facilities will have more energy options, to export or import, whatever the case may be. So imagine a future in which the United States exports liquefied shale gas to Europe, reducing the dependence that European countries have on Russian energy. The geopolitics of Europe could shift somewhat. Natural gas might become less of a political tool for Russia and more of a purely economic one (though even such a not-so-subtle shift would require significant exports of shale gas from North America to Europe).

Less dependence on Russia would allow the vision of a truly independent, culturally vibrant Central and Eastern Europe to fully prosper -- an ideal of the region's intellectuals for centuries, even as ideas in this case would have little to do with it.

This might especially be relevant to Poland. For Poland may have significant deposits of shale gas. Were Polish shale deposits to prove the largest in Europe (a very big "if"), Poland could become more of an energy producer in its own right, turning this flat country with no natural defenses to the east and west -- annihilated by both Germany and the Soviet Union in the 20th century -- into a pivot state or midlevel power in the 21st. The United States, in turn, somewhat liberated from Middle East oil because of its own energy sources (including natural gas finds), could focus on building up Poland as a friendly power, even as it loses substantial interest in Saudi Arabia. To be sure, the immense deposits of oil and natural gas in the Arabian Peninsula, Iraq and Iran will keep the Middle East a major energy exporter for decades. But the shale gas revolution will complicate the world's hydrocarbon supply and allocation, so that the Middle East may lose some of its primacy.

It turns out that Australia also has large new natural gas deposits that, with liquefaction facilities, could turn it into a principal energy exporter to East Asia, assuming Australia significantly lowers its cost of production (which may prove very hard to do). Because Australia is already starting to emerge as the most dependable military ally of the United States in the Anglosphere, the alliance of these two great energy producers of the future could further cement Western influence in Asia. The United States and Australia would divide up the world: after a fashion, of course. Indeed, if unconventional natural gas exploitation has anything to do with it, the so-called post-American world would be anything but.

The geopolitical emergence of Canada -- again, the result of natural gas and oil -- could amplify this trend. Canada has immense natural gas deposits in Alberta, which could possibly be transported by future pipelines to British Columbia, where, with liquefaction facilities, it could then be exported to East Asia. Meanwhile, eastern Canada could be the beneficiary of new shale gas deposits that reach across the border into the northeastern United States. Thus, new energy discoveries would bind the two North American countries closer, even as North America and Australia become more powerful on the world scene.

China also has significant deposits of shale gas in its interior provinces. Because Beijing is burdened by relatively few regulations, the regime could acquire the land and build the infrastructure necessary for its exploitation. This would ease somewhat China's energy crunch and aid Beijing's strategy to compensate for the decline of its coastal-oriented economic model by spurring development inland.

The countries that might conceivably suffer on account of a shale gas revolution would be landlocked, politically unstable oil producers such as Chad, Sudan and South Sudan, whose hydrocarbons could become relatively less valuable as these other energy sources come online. China, especially, might in the future lose interest in the energy deposits in such low-end, high-risk countries if shale gas became plentiful in its own interior.

In general, the coming of shale gas will magnify the importance of geography. Which countries have shale underground and which don't will help determine power relationships. And because shale gas can be transported across oceans in liquid form, states with coastlines will have the advantage. The world will be smaller because of unconventional gas extraction technology, but that only increases the preciousness of geography, rather than decreases it.

"The Geopolitics of Shale is republished with permission of Stratfor."

This analysis was just a fraction of what our Members enjoy, Click Here to start your Free Membership Trial Today! "This report is republished with permission of STRATFOR"

© Copyright 2012 Stratfor. All rights reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis.

STRATFOR Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Biggest Debt Bomb in History