We are witnessing an energy revolution, Walter Russell Mead, professor at Bard College and editor-at-large of The American Interest, recently proclaimed in a series of blog posts (parts one, two, three, and four); a revolution “much bigger, and more consequential than the Arab Spring;” a revolution, moreover, that will result in “a powerful boost to American power.” Mead sees a “new age of abundance for fossil fuels” in the making which proves peak-oil theories wrong and renders chatter about American decline irrelevant. Due to now extractable resources in tar sands oil in Canada and shale oil & gas in the U.S. the “center of gravity of the global energy picture is shifting from the Middle East to … North America.” This energy revolution will consequentially bring about a new American century.
That, in a nutshell, is Mead’s bold thesis at which I will have a closer look in this first installment of my e-Ideas series. And just to state the obvious: the series is going to evolve around discourses, books, and studies, i.e. the impact of energy trends and innovations on society and politics adn vice versa, rather than technological innovations of which I would only have very limited understanding.
Mead’s energy revolution is driven by unconventional oil and gas resources that recently have become technically and economically extractable and/or have been discovered. These resources make Canada and the U.S. “each richer in oil than Iraq, Iran and Saudi Arabia combined.” Israel and China also have such resources and will profit accordingly.
According to Mead this new fossil fuel reality has four major consequences:
1. New Geopolitical Fundamentals
The energy revolution will substantially shift the fundamentals of geopolitics by creating “winners and losers”; namely the U.S., Canada, Israel, and China as winners, and Russia, the Middle East, and petro states such as Venezuela as losers. The economically most advanced countries of the West will become less dependent on energy imports from autocratic regimes and unstable regions such as the Middle East, Mead argues, and can shift political attention and military resources to other areas. Shale oil will also make China more independent from imports and therefore less aggressive in its drive to secure energy resources overseas. Russia, on the other hand, will lose leverage because Europe will have alternative sources of supply. The Middle East will lose its prominence on the world stage, because its resources are not as relevant any more.
2. A New American Century
This geopolitical shift will stabilize the liberal global order, stimulate global economic growth, and allow the potential rivalry between the U.S. and China to become ever more cooperative. Because energy was critical to the first American century, Mead continues, and since the energy abundance that propelled the U.S. to global leadership is back, a new American century is in the making. A less Middle East-centric foreign policy will allow the U.S. to become more of the benevolent hegemon it has been after World War II, securing the liberal capitalist global order, rather than fighting wars in the sands Iraq.
3. The Reincarnation of the American Dream
The new fossil fuel resources in the U.S. will dramatically alter the domestic situation as well, Mead claims. For the first time in decades, new well-paying blue-collar jobs are created, a second coming of the American Dream. Demand for skilled labor will change the immigration debate. Manufacturing may return to the U.S. because cheap energy will be a major competitive advantage. A new geography of power will alter politics: A shift to the Mississippi-Ohio-Missouri river system and the Midwest, where most of the new resources are located, will strengthen a pragmatic moderately conservative ideology and weaken liberals and ultraconservatives. And more of American prosperity will actually remain in the U.S., because less energy imports will significantly cut the trade deficit.
4. A Cleaner Planet
Somewhat counter-intuitive, Mead claims that the new abundance of fossil fuels will also help protect the climate and strengthen environmentalism. In his final, and most polemic, blog post he argues that cheap shale gas will accelerate the switch from coal to gas, resulting in less carbon emissions. The newly accumulated wealth will help fund more environmental initiatives. And until these resources are dried up later in the twenty-first century, the wind and solar industries can mature, become more competitive and more reliable. This will all help the transition to a cleaner, low-carbon economy.
Mead’s argument is conclusive and well thought through, even if his polemic against green energy seems widely overstated. He somewhat underestimates, however, the political risks that come with the production of unconventional oil & gas. Hydraulic fracturing increasingly becomes a major concern not only for environmentalists in the U.S., while in Europe this extraction technology is stigmatizing as dirty and risky. The same is true for Canadian oil sands. Consequentially, American pundits such as Thomas Friedman, the NY Times columnist, are much more skeptical of a golden age of gas in the U.S. While its economic and geopolitical benefits are obvious in the short term, Friedman states in an opinion piece, the shale gas boom may delay renewable energy production. “That would be reckless,” he writes because in light of recent droughts in the U.S., climate change becomes ever more apparent, and dangerous. A warning, Fatih Birol, chief economist of the International Energy Agency, already voiced earlier this year, reacting to the EU’s labeling of natural gas as “green energy”.
But Friedman pushes further and specifically targets unconventional gas. “Extracting it can be very dirty,” he writes, essentially demanding a life cycle analysis of all energy sources. While he concludes with proposing a carbon tax, which in his eyes will level the playing field for renewables and also allow raising more taxes to tackle the U.S. federal budget deficit, his article that has been duly refuted from conservative side, shows that unconventional gas is highly politicized.
Politics may thus derail Mead’s energy revolution, if not managed professionally. A good start would be sound energy policies. As The Economist recently noted, neither presidential candidate appears to have, however, “the vision now required in energy policy.”