Baker Institute experts: Geopolitical risks to US oil supply lowest since the early 1970s

David Ruth
713-348-6327
david@rice.edu

Jeff Falk
713-348-6775
jfalk@rice.edu 

Baker Institute experts: Geopolitical risks to US oil supply lowest since the early 1970s   

HOUSTON – (Jan. 5, 2018) – The geopolitical risks to the United States’ oil supply are the lowest since the early 1970s, due to fracking, climate action and a more diverse global supply, according to a new paper by experts at Rice University’s Baker Institute for Public Policy. America’s energy prosperity contrasts with a more fraught period for energy-exporting countries where geopolitical challenges have been compounded by fiscal stress and rising domestic energy demand, the authors said.

Credit: 123RF.com/Rice University

“Geopolitical Dimensions of U.S. Oil Security,” co-authored by Jim Krane, the Wallace S. Wilson Fellow for Energy Studies at the Baker Institute, and Kenneth Medlock, senior director of the institute’s Center for Energy Studies, was published online this month in the journal Energy Policy.

The authors argue that while U.S. security guarantees for America’s Persian Gulf allies remain important, enhanced U.S. oil security and other factors could allow a downsizing of military commitment. At the same time, the oil-exporting world is turning toward the developing world to find markets for its crude. Someday, conceivably, these countries may participate in ensuring the security of global oil supply, the authors said.

Climate policies also, ironically, enhance oil security due to the greater fuel efficiency and push toward alternative technologies and fuels. “Hence, the more Americans adopt alternate vehicle technologies and fuels, the more they insulate themselves from oil disruptions,” the authors wrote.

Despite these factors, oil stands to remain the world’s primary transportation fuel for decades, ensuring its strategic value and U.S. interest in protecting the trade.

“The security of America’s oil supply and stability in global oil trade remain critical components of U.S. national security,” the authors wrote. “While the potential exists for rapid shifts in energy systems at the regional level, energy transitions tend to occur slowly on a global scale. Geopolitical forces, by contrast, are far more volatile.

“As the Iranian revolution and the fall of the Soviet Union demonstrate, sweeping change can upend longstanding relationships overnight,” they wrote. “Ongoing trends in global oil markets appear to be pointing to continued improvement in the security of U.S. oil supply. U.S. domestic production is increasing, as is the geographic diversity of global oil supply, and environmental pressures are encouraging greater efficiency and adoption of substitute technologies. All of these factors contribute to U.S. oil security.”

However, trends in oil geopolitics point in the opposite direction, the authors said. “The Trump administration’s transactional approach to international relations has intensified the uncertainty of an already volatile period among oil exporting states,” the authors wrote.

“Since the onset of the Arab Spring uprisings in 2010, instability has been exacerbated by fiscal stresses of low oil prices, the rise in tension between Sunni and Shia Muslim-dominated regions and the attendant proxy wars in Syria, Iraq, Yemen and Libya, crumbling stability in Venezuela and a breakdown in relations among Gulf oil sheikhdoms. Most recently, the Trump administration has aggravated regional geopolitical tensions by taking sides in the intra-Gulf dispute. It has also created broad rifts with long-standing allies over its announced intention to withdraw from the 2015 Paris climate agreement,” the authors said.

Improvements to U.S. energy security despite rising tensions in oil-producing regions have prompted questions about whether the United States needs to continue enforcing the provisions of the Carter Doctrine that require Washington to maintain a large and costly military presence in the Persian Gulf. “Despite a strong prima facie case for drawdown, we argue that a continued U.S. presence remains compelling,” the authors wrote.

Looking to the future, U.S. oil security depends on development choices made in China, India and other Asian states where once impoverished masses are rising into the middle class, the authors said. “The oil intensity of China and India, as well as populous ASEAN states like Indonesia, will weigh greatly on future oil security in the United States,” the authors wrote.

The paper was funded by the Baker Institute.

To schedule an interview with Krane or Medlock, contact Jeff Falk, associate director of national media relations at Rice, at jfalk@rice.edu or 713-348-6775. The Baker Institute has a radio and television studio available.

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Related materials:

Paper: www.sciencedirect.com/science/article/pii/S030142151730873X#s0035.

Krane bio: www.bakerinstitute.org/experts/jim-krane.

Medlock bio: http://bakerinstitute.org/experts/kenneth-b-medlock-iii.

Follow the Baker Institute via Twitter @BakerInstitute.

Follow the Center for Energy Studies via Twitter @CES_Baker_Inst.

Follow Rice News and Media Relations via Twitter @RiceUNews.

Founded in 1993, Rice University’s Baker Institute ranks among the top five university-affiliated think tanks in the world. As a premier nonpartisan think tank, the institute conducts research on domestic and foreign policy issues with the goal of bridging the gap between the theory and practice of public policy. The institute’s strong track record of achievement reflects the work of its endowed fellows, Rice University faculty scholars and staff, coupled with its outreach to the Rice student body through fellow-taught classes — including a public policy course — and student leadership and internship programs. Learn more about the institute at www.bakerinstitute.org or on the institute’s blog, http://blogs.chron.com/bakerblog.