Archive for September, 2011


North American energy boom reshapes the world

September 30, 2011

Glenn Reynolds, aka Instapundit, links to NPR story, with additional commentary from Amy Myers Jaffe.

“Wow, I knew it was big, but I had no idea it was that big,” Reynolds notes.

It is immensely big, and I have been hammering on this point for years.  Here is my post from last year, The World is Awash in Oil, that details the vast amount of “unconventional” oil at our potential disposal.  And, that is just oil.  There is also an estimated 750 trillion cubic feet of untapped natural gas in the US.  In the oil and gas industries, there is something called the McKelvey Box, which breaks the carbon resources into different sections – discovered, assumed but undiscovered; economically recoverable, sub-economic, and non-economic.  Vast amounts of carbon resources that were once in the “sub-economic” or “non-economic” boxes have been unlocked by the technological revolution of the last few years.  There are now several centuries worth of fossil fuel resources available to us – I have taken to calling this the Shale Age or, when you consider the near-to-fruition of economically viable coal- and gas-to-liquid fuel, the Second Age of Oil.  And, with the proper set of policies, the US is in position to be – at once – the worlds greatest producer and consumer of fossil fuels – as well as the top and exporter of value-added, finished petroleum based products.   Simply being energy independent would wipe out much of our trade deficit; the exports of fuel and other petroleum products would put us decisively in the black.  And the money flowing into local, state and federal treasuries from taxes, leases and royalty payments would go a long way to solving the debt crisis.

The moment is upon us to save ourselves.  To borrow a phrase – We are the Ones We have been waiting for.

As a word of caution, Reynolds also notes “The implications here are huge. If I were Russia and Saudi Arabia, I’d be subsidizing U.S. environmental groups in an effort to stop, or at least slow, the process.”

The reply to that, of course, is to take those environmental groups seriously ourselves, and forestall that line of attack.   Ours is an open, democratic system, and environmental groups are powerful, well organized and motivated.  We have to be environmentally conscious in crafting our energy policies – even if you disagree with the environmentalists, then work them if for no other reason than to mollify a powerful constituency that could otherwise derail or slow your efforts.  Our system works well when organized groups bargain with each other and work out a synthesis approach.  Any politics that is based on an assumption that you can simply steamroll the opposition is both sophomoric and doomed to failure.   America, and the world, needs access to the bountiful energy resources within our grasp – but we cannot be so environmentally obtuse that we allow the fortune beneath our feet to go unclaimed.


The sometimes crazy energy geopolitics of the Caspian basin

September 29, 2011

Wow, look at the title of this post from The Bug Pit:

Is Russia Training Kazakhstan’s Military To Protect American Oil From Iranian Attack?

The story is neither as straightforward nor as provocative as the headline, but it is still an important read for those interested in the geopolitics of energy – I encourage everyone to go read the whole post.  For those who just want a summary:  most of the nations in the Caspian basin are (at least potentially) energy rich but militarily weak.  There are only two strong militaries in the region – Iran and Russia.  Everyone seems to agree that Iran is a threat, and Russia would prefer to be the guarantor of security in the region, rather than see further encroachment of the US (already in the region through it’s NATO junior partners Georgia and Azerbaijan).


China, India at odds over South China Sea oil

September 29, 2011

India’s state-owned Oil and Natural Gas Company (ONGC) announced yesterday that it has signed a deal with Vietnam to develop off shore sites in the South China Sea.  The announcement was met with an immediate response from the Chinese Foreign Ministry:

As for oil and gas exploration activities, our consistent position is that we are opposed to any country engaged in oil and gas exploration and development activities in waters under China’s jurisdiction. We hope foreign countries do not get involved in the South China Sea dispute.

China makes vast claims to sovereignty over most of the South China Sea, based on what they term as “ancient” rights.   As the map below demonstrates, the Chinese claims overlap those of every other nation bordering the oil-rich sea (Vietnam, Philippines, Brunei, and Malaysia).  Vietnam makes the next largest claim in the region, claiming an area extending out 200 miles from their coastline based on the 1982 UN Convention on the Law of the Seas.

This is not the first run-in between China and India over the South China Sea – last summer, a Chinese naval vessel confronted an Indian navy ship in Vietnamese waters, and just two weeks ago, China issued a formal warning to all nations that it considered the SCS its “indisputable” property.   China also had brief naval run-ins with both Vietnam and Philippines this summer.

China also sees an American hand behind India’s push into the SCS.  “As a South Asian country, India actively takes part in East Asian issues through the support of the US, which has been advocating for Asian countries to counter China. The US takes every opportunity to counter China, and its joint military maneuvers with Japan and other regional countries have been more frequent in recent years,” Chinese think-tanker Wu Xinbo told the Global Times.

Personally, I don’t believe the US is “pushing” India at all.  India’s natural growth and needs – and wariness of China – provide all the necessary impetus.  Although, as I have written before, the United States should seek to encourage and foster India’s growth as a world power, as we have much in common as the world’s two largest democracies and as flowers from the same tree of British liberal tradition.  While it is in no one’s interest to see a war break out in the vital sea lanes of the SCS, and the US should thus seek to soothe both sides rather than inflame them, it is certainly in the long term interest of the US to ally with a growing Indian maritime presence.


The increased pull of resource nationalism in Asia

September 28, 2011

In current research, the terms “Resource Nationalism” and “Resource Cartelization” are most frequently used in the context of oil and gas production. Both fields began to emerge in the 1970s as the result of several oil crises and the perception that resource nationalism and resource cartelization posed a significant economic and political threat to Western countries that heavily depended on oil and gas imports. Although both terms describe different political and economic practices, they are in many cases closely related. Roughly, resource nationalism denotes the perception that the natural resources of a country are the exclusive property of that country and should therefore be exploited through national, rather than free-market companies. In many cases, such as Venezuela, Kuwait, or Russia, resource nationalism is actively used to make political as well as economic gains and these countries are, as is the case with OPEC, willing to join intergovernmental organizations to coordinate output and price (cartelization).  Resource nationalization/cartelization is the Russian-led version of the three competing visions of energy geopolitics in the early 21st century.

The National Bureau of Asian Research has a substantial new report on the rise of resource nationalism throughout Asia.  This is a must read for anyone interested in the geopolitics of energy.


Has the US been defeated in Afghanistan by Pakistan?

September 27, 2011

Rajeev Srinivasan presents in this article a very harsh and stinging analysis of the US adventure in Afghanistan from an Indian point of view.  The author claims that the Pakistani intelligence service, ISI, has mastered “the fine art of running with the hares while hunting with the hounds” and has twisted the US to its own strategic goals (while bamboozling successive US administrations into paying for its own defeat).  Srinivasan writes:

In effect, the only ones who have benefited from the collapse of American clout are the Arabs, the Pakistanis and the Chinese. The Arabs, especially the oil-exporting dictatorships (with the sole exception of Libya) have managed to maintain their status quo ante, and they have parlayed the billions from an oil-addicted world into radicalised millions everywhere through insistent propaganda.

The Pakistanis have achieved their coveted ‘strategic depth’ in Afghanistan which is, in effect, their colony. True, there has been some cost to them in civilian casualties and the Frankenstein monster of internal terrorism, but that is collateral damage the Army is willing to accept in the pursuit of their strategic goals.

The unkindest cut is perhaps that China has won against the Americans. Again. This is the third military conflict where China has had the better of the Americans. In Korea, they fought to a standstill. In Vietnam, a then-Chinese ally defeated the Americans. In Afghanistan, Chinese ally Pakistan is doing this. This must be China’s dream come true: they are beating the Americans militarily and economically.

Srinivasan, again, is writing from the Indian point of view and ponders the question of what India should do going forward.   If I might interject my American point of view, I believe that India and the US have deeply shared interests not only in Central, South and Southwest Asia, but globally as well.  I believe that India, because of its democratic heritage, relatively open society, and latent power (both hard and soft) is destined to succeed the US as global hegemon, if not at the end of the current cycle, then certainly by the end of this century when the sixth cycle closes.   Just as the British handed off hegemony to the US during the last century, the United States should build deep ties with India, begin a strategy of “graceful decline,” and prepare to hand off global leadership to India.  The US can play a supporting role to Indian hegemony not unlike the one that Great Britain played for the US.  It is the current world system of open markets and democratic nations that best provides security and prosperity, and this is the best means of maintaining that system.


More on GOP ties to Solyndra

September 27, 2011

I noted two weeks ago that the GOP bears a share of the blame for the taxpayer losses in the Solyndra bankruptcy, as the loan guarantees were made possible because of a bill passed by the GOP-controlled Congress and signed into law by President GW Bush.  Over at Reason, Ira Stoll notes that origin of the legal authority and also expands on the breadth and depth of Republican connections to Solyndra.

To repeat from my original post on the topic:  Solyndra is not the scandal.  The scandal is the culture of crony capitalism in Washington – aided and abetted by both parties.  The only difference is in which particular businesses (or business sectors) that each side throws its weight behind.  I have great hopes that the Tea Party revolt maintains its ideals and changes this culture.  That is why I agree with Lexington Green over at the Chicago Boyz blog, who writes today:

I am thinking more and more that the GOP presidential candidate is a distraction.

Whoever it is will be better much than Mr. Obama, so don’t worry about it. Mr. Obama makes Mitt Romney look like George Washington.

So, what does matter?

Making sure we have a Tea Party Congress in 2012 is the most important thing.

Then the 2013-15 political era will be a conflict between a corporatist Republican in the White House and a populist Congress down the street.

Some good could come of that.

Read the whole thing


New CNA report: China’s emergence as a maritime power

September 26, 2011

CNA’s China Studies division has issued a new report examining various aspects of China’s drive to build a more robust naval presence in the Western Pacific.  From the abstract:

China is an emerging maritime actor with expanding interests in security at sea. As a consequence, the capabilities of Chinese maritime security forces are improving, missions for the People’s Liberation Army Navy (PLAN) are expanding, new actors and bureaucratic interests are emerging, and some observers feel that China is now more willing to challenge the interests of others in the maritime domain. CNA has undertaken this study to provide strategic-level context in order to foster discussion and debate about China’s maritime rise and its implications.

The United States has not faced a near-peer competitor, neither globally nor in local strategic regions, since the fall of the Soviet Union (and, arguably, not since the defeat of Imperial Japan over six decades ago).  The rise of China represents a new challenge for both nations – for China, the challenge of building and mastering a naval warfare presence; for the US, the challenge of competing in a vital strategic region without clear and unquestioned naval dominance.   This includes the need for a geo-strategic pivot of the US order of battle in the Western Pacific region.