Windfall

August 15, 2017
Remember when the world was running out of oil? The good news is that energy is abundant, at least for the time being. As for the bad news....The era of peak oil has peaked. In just the last decade, writes O'Sullivan (Practice of International Affairs/Kennedy School of Government, Harvard Univ.; Shrewd Sanctions: Statecraft and State Sponsors of Terrorism, 2003, etc.), "developments in the world of energy have unfolded at breakneck speed," such that fracking, digitally wrought efficiencies, and other advances, combined with reductions in demand, have changed the political stage. For one thing, writes the author, the Arab oil-producing nations have lost some of their hold as the U.S. has emerged as an energy exporter--though, as she adds, that picture is complicated by the fact that the U.S. also imports fossil fuels. Its supremacy as a producer also puts Russia in a leading role, especially in any European scenario. For its part, Europe's conventional oil production is projected to fall, while shale gas extraction is forbidden in many places, so that net imports will almost certainly rise within the next two decades. O'Sullivan's projections largely hinge on the fossil fuel economy, and though she does figure renewables into the mix, there are times when she seems to give too little attention to externalities--the effects, say, of that shale extraction on water, forcing competition for resources in other directions. Even so, her argument offers intriguing possibilities. "The new energy abundance," she writes, "provides grounds for recasting ties between the United States and China," increasing energy trading while easing the conflict narrative that has been dominant recently, changing it to "one of potential and actual cooperation around energy." How all this will play out in the current political setting, given the threat of trade and other wars, remains to be seen, but O'Sullivan's generally optimistic view of "energy realities" merits attention. A lucid and provocative look at the geopolitics of energy and the shifts and dislocations it is likely to produce.

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