The New Geopolitics of Energy | Global Trade Magazine
International Trade
  September 23rd, 2015 | Written by

The New Geopolitics of Energy

U.S. Emergence As Energy Exporter Doesn’t Mean it Can Isolate Itself From International Energy Markets

Energy and geopolitics have always been closely linked. The twentieth century saw access to energy resources become a major factor in determining the winners of wars, oil producers banding together to create new global alliances, and price swings that spurred or deterred the adventurism of superpowers. The vast and fast-paced changes in the energy sector in the twenty-first century are rewriting the relations between the two fields.

As new resources are made available and create new geopolitical tools and opportunities, and as climate issues move to the fore of the global agenda, too little work has been done to create a clear map that enables policy makers, industry, and the public to navigate the new issues arising at the nexus of energy and geopolitics. This is especially true in the United States, which, due to its emergence over the past decade as a major hydrocarbons producer and exporter, has found itself with powerful new leverage to advance its agenda globally.

Neither energy markets nor foreign policy are static. Thus, to understand how energy markets and foreign affairs intersect, we have to understand the dynamics between the two. Strong national policies require us to understand how nations might influence energy markets and how radical change in energy markets affects the national interests of countries.

While America’s new oil and natural gas abundance may hold the allure of allowing it to adopt a more isolated position in global energy markets, this will ultimately not serve its national security interests. Energy markets are becoming more global, and the United States cannot isolate itself from price movements that have a direct impact on the US economy. From a political and environmental

standpoint, the United States has an interest in seeing investment in sustainable energy solutions. A policy of isolationism would also forgo the drivers—open markets and entrepreneurship—that sparked the American energy revolution to begin with.

The United States, like other major energy producers in the past, has used its newly tapped energy resources to support its international objectives. However, interfering with markets can come with unintended consequences that can ultimately undermine the interests of the United States and its international partners.

U.S. policymakers must have a better understanding of how changes in global energy markets impact the nation’s interests, including the current shifts in global energy demand, the diversification of oil supply sources and the increased competition in global gas markets, the incentives for power investment across nations and the implications for climate change, and the need to increase energy access globally and the repercussions for failing to meet that demand.

If nations see stopping climate change as a key foreign policy and national security concern, then the financial and technical factors driving these investment trends must become a priority at the intersection of energy markets and geopolitical interests. To succeed, the United States and other nations must integrate finance experts, energy developers, engineers, climate scientists, and foreign policy specialists into the debate. At the same time, tackling the challenge of universal access to energy will require leaning heavily on business models in addition to technical solutions.

 

Carlos Pascual, nonresident fellow at the Center on Global Energy Policy at Columbia University, was the founder of the Energy Resources Bureau in the State Department and served as the State Department’s Special Envoy for Energy and Coordinator for International Energy Affairs.

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