180
aftermath of the Cold War. The Caspian is hard for the Americans to get to. It has no
allies that border the sea, and as a naval power the US has always faced problems
with continental penetration. Being involved in the Caspian should be thought of a
bit of a Hail Mary (to abuse an American sports term)—nothing was ever going to
come out of it without a big dollop of luck. As US power repositions, the Caspian
was always going to be one of the first regions to be abandoned. The kicker is that
as important as America’s geopolitical realignment is to the region, it’s actually the
secondary factor (Author’s interview with Peter Zeuhan 2018).
Shale energy has already turned North America into a net petroleum exporter and
will make the US a net oil exporter by the end of 2020 (not to mention the world’s
largest natural gas exporter shortly thereafter). And since all this new production is
onshore in the US, it is largely immune to global price oscillations. Its stable, reliable, and it means the Americans don’t care much about what happens now in
Venezuela or the Persian Gulf, much less the Caspian. Between the Americans’
general retrenchment from the international system, high production costs in the
Caspian offshore, difficult geographic challenges to getting any energy out, and a
regional geopolitics that is, in a word, messy, the Americans simply no longer have
an interest in the region. That doesn’t mean the Americans are completely done. The
US has yet to figure out what it wants from the world and until it does its actions will
be perceived by others to be particularly erratic. That is problematic for everyone,
but doubly so for regions like the Caspian where US interests were never particularly clear. Because getting petroleum out of the Caspian is so problematic, any
player that actively chooses to throw spanners in the works—especially a country
with as many strategic options as the US but as few strategic vulnerabilities—can
cause no end of havoc. The US has now shifted position to one that is more likely to
cause problems for Caspian energy than to try and solve them” (Author’s interview
with Peter Zeuhan 2018).
Shale Gas, the US, and the Middle East
On the other hand, given the increasing acceleration of shale gas development in the
US, LNG import terminals in the United States are almost inactive and are shifting
to LNG export terminals. This has led, for example, to diverting Qatar’s gas pipelines to the United States into Europe, which has resulted in an increase in European
import options and a reduction in Russian gas dependence. This will in turn weaken
the competitiveness of Iran’s target markets. With the independence of America’s
energy and even the entry of this country into a group of gas exporters, we will see
a heavy competition in gas exporting cartels, which will increase the supply, in the
face of falling prices and approaching regional gas prices. This decline in revenues
for energy exporters, most of the revenues from governments, will be a huge challenge. For example, according to a report by the accredited SCP, in the worst predictions of Gulf countries, gas prices will fall by between 15% and 20% of global
5 US Energy Diplomacy Under the Obama Administration
aftermath of the Cold War. The Caspian is hard for the Americans to get to. It has no
allies that border the sea, and as a naval power the US has always faced problems
with continental penetration. Being involved in the Caspian should be thought of a
bit of a Hail Mary (to abuse an American sports term)—nothing was ever going to
come out of it without a big dollop of luck. As US power repositions, the Caspian
was always going to be one of the first regions to be abandoned. The kicker is that
as important as America’s geopolitical realignment is to the region, it’s actually the
secondary factor (Author’s interview with Peter Zeuhan 2018).
Shale energy has already turned North America into a net petroleum exporter and
will make the US a net oil exporter by the end of 2020 (not to mention the world’s
largest natural gas exporter shortly thereafter). And since all this new production is
onshore in the US, it is largely immune to global price oscillations. Its stable, reliable, and it means the Americans don’t care much about what happens now in
Venezuela or the Persian Gulf, much less the Caspian. Between the Americans’
general retrenchment from the international system, high production costs in the
Caspian offshore, difficult geographic challenges to getting any energy out, and a
regional geopolitics that is, in a word, messy, the Americans simply no longer have
an interest in the region. That doesn’t mean the Americans are completely done. The
US has yet to figure out what it wants from the world and until it does its actions will
be perceived by others to be particularly erratic. That is problematic for everyone,
but doubly so for regions like the Caspian where US interests were never particularly clear. Because getting petroleum out of the Caspian is so problematic, any
player that actively chooses to throw spanners in the works—especially a country
with as many strategic options as the US but as few strategic vulnerabilities—can
cause no end of havoc. The US has now shifted position to one that is more likely to
cause problems for Caspian energy than to try and solve them” (Author’s interview
with Peter Zeuhan 2018).
Shale Gas, the US, and the Middle East
On the other hand, given the increasing acceleration of shale gas development in the
US, LNG import terminals in the United States are almost inactive and are shifting
to LNG export terminals. This has led, for example, to diverting Qatar’s gas pipelines to the United States into Europe, which has resulted in an increase in European
import options and a reduction in Russian gas dependence. This will in turn weaken
the competitiveness of Iran’s target markets. With the independence of America’s
energy and even the entry of this country into a group of gas exporters, we will see
a heavy competition in gas exporting cartels, which will increase the supply, in the
face of falling prices and approaching regional gas prices. This decline in revenues
for energy exporters, most of the revenues from governments, will be a huge challenge. For example, according to a report by the accredited SCP, in the worst predictions of Gulf countries, gas prices will fall by between 15% and 20% of global
5 US Energy Diplomacy Under the Obama Administration