Nice Washington Post piece on Saturday about how the “center of gravity” in global oil exploration and production is shifting to the Western hemisphere. No, the bulk of global conventional oil reserves still sits in the Persian Gulf, but the larger point is worth exploring: we no longer project global futures where East and West logically fight over Middle East energy reserves. Those expected long-term dynamics are collapsing right now before our eyes.
It’s not just the new conventional oil finds in the Americas, but the lifting of unconventional reserves (so-called tight oil). Then there’s the “fracking revolution” in natural gas that favors the Western Hemisphere in a big, big way, because four of the top seven reserves in the world (U.S., Argentina, Mexico, Canada) are found here. The fracking revolution kicks off two additional mini-revolutions in energy: the accelerated shift to natural gas-powered vehicles, reducing the oil demand even further, and the displacement of coal in electricity generation frees up the cleanest and most high-quality coal in the world for export to Asia, where electricity demand is skyrocketing.
So here’s the geo-strategic reality shaping up: the Western Hemisphere doesn’t need the Persian Gulf, which is source #5 to the U.S. market, after the U.S. itself, North America, South America and Africa. But not only is the U.S. increasingly less worried about the Persian Gulf and more willing — logically — to let that become Asia’s problem to manage (it’s their oil after all, as more than half of it heads their way now, and that percentage will only grow), it also becomes a trusted and important energy supplier to Asia (liquid natural gas and coal over time).
Toss in China’s growing food reliance on the Western Hemisphere, which only grows with that nation’s middle class, and the climate change that makes it harder to grow food over there, and we’re looking at a global future in which China and the U.S. are intertwined in basic resource dependencies: they need our food and energy, and we need their savings. Those realities are already firmly in place: the Western hemisphere largely feeds the Eastern one in terms of major grain flows (reflecting underlying water-resource realities), and Asia has been the primary saver in the global financial system for several decades now.
So no, there is no civilizational fight over the Middle East. All that imagined nonsense falls by the wayside.
Likewise, the “strategic pivot” pursued by the U.S. today is a complete whiff in strategic terms. Globalization has already “conquered” East Asia, creating the vast and inescapable interdependencies described here. That “battle,” however you want to describe it, is already over.
Don’t feel bad by any of this. I like my military types to be a bit slower – strategic awareness-wise – than my politicians (just consider the reverse), and I like my politicians to be a good step behind my business types. They’ll all get the message soon enough.
Because this future is staring them in the face.