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The American Energy Boom, Seen From Abroad

by Michael Levi
May 1, 2012

Perhaps my visit to Vienna last week has left me with too much Freud on the mind. But, as I talk to more people about the consequences of the U.S. oil and gas boom, I can’t help but conclude that we don’t need economists or geologists to help us figure what’s going on – we need a team of psychoanalysts.

A few weeks ago I speculated that perceptions would play a big role in determining the impacts of the U.S. oil and gas boom. If U.S. policymakers came to believe that lower imports should make the United States more independent, they’d act as if that was true. Even if economic logic said that energy independence was a myth, the fact that policymakers believed otherwise would have real consequences.

A series of recent conversations with overseas acquaintances has only reinforced my belief that it’s essential to understand what’s going on inside peoples’ heads if you want to anticipate the consequences on what’s happening on the ground.

Take a recent chat with a well-connected Chinese individual. He told me that Beijing is concerned that the United States will start to neglect Middle East security and sea-lane protection if energy self-sufficiency becomes reality. That, of course, would cause problems for China, since it currently enjoys the benefits of those U.S. efforts for free. To the extent that Chinese leaders start taking steps to compensate for expected U.S. disengagement, those will have real consequences on the ground.  The big thing to remember here is that much of this could happen regardless of what U.S. policymakers actually decide to do.

Or, if you want another example, take a conversation I had not long ago with a well-placed individual with stellar oil markets credentials from a Middle Eastern country that I won’t name. He was convinced that the United States wanted high oil prices. Why? High prices, he noted, would spur U.S. supply and hence make the United States self-sufficient. China, however, would suffer high prices without any similar response. That, he explained, would let the United States prevail over China for several decades to come. I assume that any U.S. official reading this will have started to laugh by now. But that’s quite beside the point: so long as others believe that this is what’s going on, they’ll act on that, with independent real world consequences.

I don’t doubt that there are many more examples of how perceptions of what’s going on in the United States vary drastically from place to place and person to person. So a request to the far-flung readers of this blog: send me a short dispatch explaining how experts and policymakers in your country are interpreting the American oil and gas boom. You can do it in the comments or by email (and, in either case, I’m happy to make it anonymous). I’ll pull together some highlights for a future post.

Post a Comment 9 Comments

  • Posted by Richard Seabrease

    If China were forced to take a more active financial role in securing the Middle East and sea lanes it may provoke a change in their mindset concerning dealing with the Middle East. The United States may at some point in the future rely far less on Middle East energy reserves as expansion takes place in other areas.

    China will endeavor to do whatever is necessary to maintain its present rate of economic acceleration but with their population size and the desire to mirror the rest of the world they will find both energy and other natural resources in short supply. The growth could eventually turn against their Communist system when their demand far exceeds their ability to supply. Their own citizens will change the perceptions within the government when it meets with a world reality. I role should be to continuously modify their citizen’s expectations in a way that makes their foreign and internal policies more pliable.

  • Posted by Dan Wilson

    Deregulation of US drilling on federal lands will result in lower oil prices temporarily. Countries dependent on oil exports will suffer.

    More importantly, the US economy will become independent of the world economy as natural gas is substituted for oil in the domestic transportation sector. Oil imports will disappear. The US dollar will rise and GDP will rise. US exports will increase as energy costs decline.

    The world will have to adapt to a US that is more competitive.

  • Posted by markh

    It does not have much to do with the needs of the US but more to do with our need to protect Europe’s and Japan’s supply, the US gets little of its supply from there. If Europe was cut off then the world would see a depression the likes of which we can’t imagine. We also do not want them to reestablish militarism as every time they do it starts a war. That is also why we have troops on the ground there.

  • Posted by john werneken

    From the USA it is considered to be one or more of: (a) more pollution (b) profits for big oil considering gas is still so high (c) a great boon in gas feedstock for us industry (d) jobs (e) proof Obama is wrong (f) proof Obama is right.

    What gets in heads depends on what’s already there, not on events.

  • Posted by Paul L. Pierce

    If the Chinese found themselves being the arbiter of the Persian Gulf in same capacity as USA – with multitude of Carrier Strike Groups bigger than most navies fielding an air arm that could destroy most Air Forces – the Indians would have something to say about that I suspect.

    In some ways it would be ‘better.’ I doubt Iranian leadership wants to tangle with a superpower having ethics low as theirs – but it sure would be funny to watch.

  • Posted by David B. Benson

    Well, so far there are five diverse opinions so mine isn’t needed.

  • Posted by brazilguy

    From Brazil perspective, what you describe is fine. We are open to having oil relationship with Americans and Europeans. We have big oil finds ourselfs – http://www.brazil-economy-and-markets.blogspot.com. I read that there is a kind of switch in world oil markets to a North America and South America alliance. So, here I think everyone is quite happy with USA progress in this field, it will cement ties between two bigest countries in Americas. Excuse my bad English!

  • Posted by james

    china will drive its navy forward with or without the usa stepping back. nations pursue their interests and china’s energy vulnerability is great. the chinese model of economic development in africa is working, thus far, and displacing the western model, and we could see similar changes in the mid-east. forecasting unintended consequences is tough work. but any way you shape the future the usa is far better off grabbing as much energy self sufficiency as it can.

    we’re at an impasse between the competing forces of greater social spending and lower taxation. There is no way forward that doesn’t involve growth, and domestic energy is key. we can’t have huge social spending, growth oriented tax rates, and pristine landscapes at the same time. canada knows this. we’re beginning to figure it out.

  • Posted by Joseph

    If we need a team of psychoanalysts to make sense of what’s going on, we might be doing something that makes no sense. JMO

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