Shale development may be the key to the US
remaining the sole superpower for the next two generations.
Energy is one of the keys to global political power.
The US is in a great position with regard to energy. We have shale, we have gas, we
have oil, and more importantly we have competitive markets—anyone can develop them. Around
the world, our rivals are in much worse positions. Everybody knows about Russia’s problems,
Venezuela’s problems, but even China—thought to be an economic powerhouse—is far behind
the United States. The US is the number one producer of energy in the world, and China
is now the number one importer. The reason for that is China doesn’t allow competition.
It doesn’t allow private property rights. As a result, production of coal and crude
oil are down requiring more imports even if economic growth slows. So while US gas production
is soaring, Chinese gas imports are soaring. In 2008 at the height of the financial crisis,
it seemed as if US global was fading away. Now we’re much sought after as an ally,
cooperation in energy, trade, US energy production being shipped overseas.
While the US will remain committed to the Middle East, we don’t need to be dependent
anymore on Middle Eastern energy producers like Saudi Arabia and Iran. In contrast, China
is now the largest importer from the Middle East and could become enmeshed in the same
kind of problems in the Middle East that have plagued the United States for the last forty
years. There are plenty of risks to this. Here in
the United States we could just decide not to produce as much energy as we have been.
We could do that for environmental reasons or just for political reasons. In China, they
could return to a path of market reform making the Chinese economy and energy sector much
stronger. Even if everything works out the way we expect
in the US and China, other developments could occur such as China moving closer to Russia,
threatened by the revitalization of American power.
Seven years ago, Goldman Sachs predicted $200 a barrel oil. That turned out to be completely
wrong. What has also turned out to be completely wrong is the inevitable decline of America
and the rise of China. In fact, the exact opposite is occurring: the US is rising and
China is stagnating.