Today's New York Times had an article about oil discoveries in South America . It will be interesting to see how it affects the Geo-political situation in the Middle East ?
Historically Mexico and Venezuala have been "the two traditional energy power houses" with the latter having more oil reserves than Saudi Arabia. According to the article, recent discoveries and step up in production in Brazil and Colombia has enabled them to surpass Kuwait in terms supplying oil to the United States.
What this means is that over the next couple of decades America's dependency on oil from the Middle East from countries such as Saudi Arabis, Iraq, Kuwait, Algeria, and Libya will gradually start declining. This will accelerate when with the improvement in technology, it starts the exploitation of the huge shale oil reserves in the United States on a large scale as its neighbor Canada which is now the largest oil exporter to the United States followed by Mexico. The cost of recovering shale oil is high, but over a period with improved recovery methods it will come down.
Its impact will likely be two fold. Prices will drop . Yes increased demand from China and India will to some extent offset the decline in supply to the United States. With the pool of global oil reserves having gotten larger and with the costs of shipping oil from Canada and South America going to be cheaper than from the Middle East ,this will take the United States back to the situation prior to sixties as it started becoming more dependent on oil from the Middle East . This does not mean that the prices will go back to the same level. It will not, but certainly be peaking out or stay at this level for some time if not slightly lower.
Also there have been articles about shale oil reserves in China and India along with oil reserves in South China Sea and in Africa. Of course exploitation of these will take decades, but looking at it simplistically from a layman's view of " The Great Game " played among nations, what is the long term future of the Middle East , particularly the oil producing states with modest populations, depleting oil reserves and no other resources? I am sure the governments are already positioning themselves but how many of them can re-invent themselves to be the Singapore or Switzerland of the Middle East ?I would place my bet on Beirut than any of the Kingdoms.
Secondly with the fix for oil from the Middle East becoming less needed,will the United States loose interest in ensuring the status quo in the Middle Eastern kingdoms? Will we see the "Jasmine", "Spring " populists revolution tsunami now rolling into the neighboring countries ? What about Israel ? Will its status revert to being a pariah in the Middle East as it was in the sixties ? Seeing the recent change of behavior among its old friends Egypt and Turkey and with Palestine now lobbying for recognition as a state in the United Nation, will Israel become more amenable towards a settlement ?
It will be fascinating to watch the political clock hand going backward towards the fifties and sixties for the Middle East rather than forward as it will be for Asia , South America and Africa.
Historically Mexico and Venezuala have been "the two traditional energy power houses" with the latter having more oil reserves than Saudi Arabia. According to the article, recent discoveries and step up in production in Brazil and Colombia has enabled them to surpass Kuwait in terms supplying oil to the United States.
What this means is that over the next couple of decades America's dependency on oil from the Middle East from countries such as Saudi Arabis, Iraq, Kuwait, Algeria, and Libya will gradually start declining. This will accelerate when with the improvement in technology, it starts the exploitation of the huge shale oil reserves in the United States on a large scale as its neighbor Canada which is now the largest oil exporter to the United States followed by Mexico. The cost of recovering shale oil is high, but over a period with improved recovery methods it will come down.
Its impact will likely be two fold. Prices will drop . Yes increased demand from China and India will to some extent offset the decline in supply to the United States. With the pool of global oil reserves having gotten larger and with the costs of shipping oil from Canada and South America going to be cheaper than from the Middle East ,this will take the United States back to the situation prior to sixties as it started becoming more dependent on oil from the Middle East . This does not mean that the prices will go back to the same level. It will not, but certainly be peaking out or stay at this level for some time if not slightly lower.
Also there have been articles about shale oil reserves in China and India along with oil reserves in South China Sea and in Africa. Of course exploitation of these will take decades, but looking at it simplistically from a layman's view of " The Great Game " played among nations, what is the long term future of the Middle East , particularly the oil producing states with modest populations, depleting oil reserves and no other resources? I am sure the governments are already positioning themselves but how many of them can re-invent themselves to be the Singapore or Switzerland of the Middle East ?I would place my bet on Beirut than any of the Kingdoms.
Secondly with the fix for oil from the Middle East becoming less needed,will the United States loose interest in ensuring the status quo in the Middle Eastern kingdoms? Will we see the "Jasmine", "Spring " populists revolution tsunami now rolling into the neighboring countries ? What about Israel ? Will its status revert to being a pariah in the Middle East as it was in the sixties ? Seeing the recent change of behavior among its old friends Egypt and Turkey and with Palestine now lobbying for recognition as a state in the United Nation, will Israel become more amenable towards a settlement ?
It will be fascinating to watch the political clock hand going backward towards the fifties and sixties for the Middle East rather than forward as it will be for Asia , South America and Africa.
No comments:
Post a Comment