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© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021
O. Shokri Kalehsar, US Energy Diplomacy in the Caspian Sea Basin,
https://doi.org/10.1007/978-3-030-66929-4_7
Chapter 7
Conclusion
Abstract Energy will play key role in US foreign policy in the future. Since its
inception in 2008 the US shale oil industry has never been a profitable industry. If it
were judged by the strict commercial criteria by which other successful companies
are judged, it would have been declared bankrupt years ago. US shale drillers have
been encouraged by easy liquidity provided by Wall Street and other investors to
continue production even at a loss to pay some of their debts. In so doing, their
outstanding debts have mushroomed to almost $1 trillion leading to large number of
bankruptcies among them.
Oil demand was corrupted or rather destroyed before novel coronavirus. Oil
demand would have been damaged even without the spread of deadly virus. It was
already fragile and nearly down to its knees. Coronavirus was a deadly blow to oil
demand. It has seen two major oil collapses back in 1985–86 and 2002–03. The two
sharp oil price falls took about two years each to recover. Current market volatility
is uncertain. The two past market collapses were a combination of oil market fundamentals plus geopolitically motivated circumstances. In case current situation
proved worst and US economy entered a depression mode, duration of low oil prices
could be even longer.
US oil exports will always be challenged by the international price climate. The
COVID-19 pandemic could go into history as the largest destructive event that has
hit the global economy since the Great Depression of the 1930s. There are indications that its adverse impact could be even bigger than the Great Depression of the
1930s. Many ideas are being considered for bailing it out including an import tax or
tariff on all foreign oil imports to the US. But this will not work since major crude
oil exporters to the United States will shift their exports to the bigger market of the
Asia-Pacific region rather than pay the tax.
Keywords US Energy Diplomacy · Central Asia · Caspian Sea Region · Pipeline ·
Geopolitics · New Great Game · Biden
© The Author(s), under exclusive license to Springer Nature Switzerland AG 2021
O. Shokri Kalehsar, US Energy Diplomacy in the Caspian Sea Basin,
https://doi.org/10.1007/978-3-030-66929-4_7
Chapter 7
Conclusion
Abstract Energy will play key role in US foreign policy in the future. Since its
inception in 2008 the US shale oil industry has never been a profitable industry. If it
were judged by the strict commercial criteria by which other successful companies
are judged, it would have been declared bankrupt years ago. US shale drillers have
been encouraged by easy liquidity provided by Wall Street and other investors to
continue production even at a loss to pay some of their debts. In so doing, their
outstanding debts have mushroomed to almost $1 trillion leading to large number of
bankruptcies among them.
Oil demand was corrupted or rather destroyed before novel coronavirus. Oil
demand would have been damaged even without the spread of deadly virus. It was
already fragile and nearly down to its knees. Coronavirus was a deadly blow to oil
demand. It has seen two major oil collapses back in 1985–86 and 2002–03. The two
sharp oil price falls took about two years each to recover. Current market volatility
is uncertain. The two past market collapses were a combination of oil market fundamentals plus geopolitically motivated circumstances. In case current situation
proved worst and US economy entered a depression mode, duration of low oil prices
could be even longer.
US oil exports will always be challenged by the international price climate. The
COVID-19 pandemic could go into history as the largest destructive event that has
hit the global economy since the Great Depression of the 1930s. There are indications that its adverse impact could be even bigger than the Great Depression of the
1930s. Many ideas are being considered for bailing it out including an import tax or
tariff on all foreign oil imports to the US. But this will not work since major crude
oil exporters to the United States will shift their exports to the bigger market of the
Asia-Pacific region rather than pay the tax.
Keywords US Energy Diplomacy · Central Asia · Caspian Sea Region · Pipeline ·
Geopolitics · New Great Game · Biden