Strategic effects of Increase in US Oil Production and its decreasing dependence on Gulf Oil
Wed Mar 06 2013
In what could turn out to be a tectonic shift in global
energy markets, China has overtaken the United States as the world's largest
importer of oil.
According to preliminary data on world petroleum trade in
December 2012, China's net oil imports surged to 6.12 million barrels per day
(Mbd) while America's net imports declined to 5.98 Mbd, the lowest figure since
1992.
Although these numbers could flip back in favour of the US
during the winter months, there is no mistaking the trend line. China is all
set to replace the US as the world's largest importer of oil either this year
or the next.
As America's domestic oil production grows amidst the
shale-gas boom, the US is closer than ever before to reducing its massive
dependence on energy imports from the OPEC countries.
The use of new technologies — most notably hydraulic
fracturing or fracking, and horizontal drilling — have opened up massive
hydrocarbon resources in America.
The US oil production has surged by more than 8,00,000
barrels per day in 2012. It is said to be the biggest annual increase in oil
production since the hydrocarbon era began in the US in the late 19th
century.
According to the International Energy Agency's latest
report, America will overtake Saudi Arabia as the leading oil producer by about
2017 and will become a net oil exporter by 2030.
Energy independence is a popular political goal in the US
and the White House recently claimed that America's dependence on foreign oil
has gone down every single year since President Obama took office. As part of
his strategy to increase safe, responsible oil production in the US, Obama has
freed millions of new acres for oil and gas exploration.
TRADING PLACES
As China replaces the US as the largest importer of oil,
might Beijing step into American shoes as the principal security guarantor of
the oil-rich Persian Gulf?
Beijing is unlikely to become the gendarme of the Gulf in
the near future. But the logic of its growing dependence on the region's
resources is bound to compel China to seek a more decisive role in shaping
Persian Gulf security.
Meanwhile, Washington might want to reconsider its
longstanding role as the guarantor of regional security. If greater oil
production at home and more imports from the Western hemisphere reduce the
incentive for a strong American role in the Gulf, the pressures on the US
defence budget have begun to constrain its military presence in the
region.
The Pentagon has been operating two aircraft carriers for
many years in the Persian Gulf for many years. The current squeeze on spending
in Washington has meant cuts of nearly $85 billion in the US defence budget.
This has forced the Pentagon to cancel the deployment of one carrier to the
region this year.
EAST OF SUEZ
The British Raj policed the Gulf for nearly two centuries,
thanks to the massive resource base of the undivided subcontinent and its
unrivalled naval primacy in the Indian Ocean.
With its power ebbing rapidly after World War II, Great
Britain announced in 1968 the withdrawal of its military presence "East of
Suez". Since then, it has been the burden of the US to police the waters
of the oil-rich Persian Gulf. Is the US on the verge of an East of Suez moment
of its own? Not really; for it is rather easy to overstate the nature of
America's relative decline.
Yet, at a time of fiscal austerity, there will be much
political questioning in Washington of the logic of a significant American
military presence in the Gulf.
There are many in Washington who are asking why China,
Japan, India and other big oil importers should have a free ride at the expense
of America, which pays for the securing of the critical sea lines of
communication between the Persian Gulf and the rest of Asia.
This US domestic debate will take a while to sort itself
out. It might be sensible, however, for New Delhi to focus its attention on the
potential consequences of a reduced American military presence in the Arabian
Sea and a Chinese pivot to the Persian Gulf.
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