Could this be the beginning of the end for petro-economic bullying?
Large new, conventional and unconventional reserves in North America, and elsewhere, are questioning the dominant role of OPEC in meeting the global oil thirst. These new developments have also sapped the urgency to develop the [Saudi Arabian] Kingdom’s own reserves — further — at this stage.
The transition has been in air for some time now — yet it has just been officially conceded — from the top. “The abundance of resources and the more ‘balanced’ geographical distribution of unconventionals have reduced the much-hyped concerns over ‘energy security’ which once served as the undercurrent driving energy policies and dominated the global energy debate,” Khalid Al-Falih, the Aramco CEO, said last week at the Energy Dialogue organized by the King Abdullah Petroleum Studies and Research Center.
“Unconventional” refers to fuel from shale, oil sands, etc. — anything other than drilling. Such sources of energy have traditionally been more expensive to extract, and there are serious environmental concerns with some of the processes involved. However, with the rise in the price of OPEC oil (most comes from Muslim nations in the Mideast plus Venezuela) and technological advances, these resources are becoming relatively more attractive.
And then there is natural gas, which in compressed form can be used to power internal-combustion engines in vehicles with little modification, as well as to generate electricity, etc. Large amounts of “unconventional” gas have been discovered in the US and Canada, which — although present extraction methods are controversial for environmental reasons — are already being extracted. There are also newly-discovered large gas reservoirs in the Eastern Mediterranean, including Israel’s territorial waters.
What this means is that the civilized world may be able to get out from under the thumb of the OPEC nations, which have used their economic power since the 1970’s to finance their wars and terrorism against Israel, to buy influence in the West and to pressure Western economies.
Mediterranean gas may also help reduce the dependence of Europe on gas from Russia, which has not hesitated to use it as a political lever in the crudest possible way.
I don’t want to minimize the importance of the environmental issues surrounding shale oil extraction, fracking, etc. But these are problems which have technological solutions.
Even if these new sources of energy do not replace OPEC oil, they will put a ceiling on its price. And with the conversion of more and more applications to natural gas — as well as non-fossil energy sources — they will put even more pressure on the least efficient producers (e.g., Iran).
Maybe when the Arab and Muslim world loses its oil clout, Westerners will be able to view its culture more objectively.