The New U.S. Energy Eagle

Certainly the global energy landscape is shifting and presenting new rising actors and players, in the supply and demand side, and when we talk about the supply and exports side, definitely the United States has made a comeback as not just oil producer but now an oil exporter, putting the OPEC and Russia ostensibly on the defensive and prompting them to redefine a joint strategy, unthinkable so far, to try to stop the resilience of shale oil and gas production from the U.S, which has been escalating production to amazing levels. And now, it turns out, they are exporting, with important geopolitical implications.

In this sense, could or would the current Trump administration adopt the same attitude and strategy of that of Russia, by using the energy tool as geopolitical weapon in order to regain some of its lost influence in critical and sensitive areas and regions of the world, where it once was the predominant influencer and key player? It seems that this might be so.

Especially unde the current administration, and based on the heightening tensions with Putin, along with the strong support to the oil, gas and coal industry coupled with the sustained growth of exports of oil and LNG from the U.S to Asia and Europe, especially to the Gulf countries such as the UAE and China, which is the latter a key exports markets for Russia, might reflect that the U.S. would leverage on the use of energy as a geopolitical weapon, now that Russia and OPEC are closer than ever before, forging what many are calling already the R-OPEC organisation.

In this sense, more than current dynamics of the oil and gas in the U.S. especially given the resilience of the shale producers vis a vis OPEC and non OPEC, for Washington to reinforce the geopolitical use of energy, it will be key the sustainability in the long term of oil reserves, natural gas reserves, break-even costs per barrel of oil produced, the dynamics of the use of the Strategic Petroleum Reserve (around 700 millions barrels of oil), as well as global fundamentals of supply and demand and how renewables will be influencing the markets and in the energy mix, all of which will determine not just the long term position and role of the U.S. as an exporter but of Russia and the OPEC with the geopolitical implications it will carry.

With this respect, just taking into consideration the issue of the U.S. already exporting oil and LNG to China and the Gulf countries, reversing the former importer position held by the country consuming much of its oil needs from the Gulf and other middle eastern countries, and also exporting to other asian markets such as those of Japan, South Korea, and all this in less than five years, and considering as well the geopolitically strategic initiative by Washington in the Caribbean region for example, where its rival Venezuela, deployed a once effective energy strategy called PETROCARIBE with geopolitical goals but now in decay, and where the White House has been courting since long these nations heavily in order to reposition itself as the next natural gas supplier and oil to these countries, now shifting gradually from the oil economy to one based on the use of natural gas and other renewables, along with Mexico, the other exporter to the region, with the clear objective to displace Venezuela and diminish the influence of the bolivarianism in the Caribbean.

And its important to stress the fact that this new use of energy as a geopolitical tool by the U.S. comes mainly based on the fact of having as top energy and foreign policy authorities Rick Perry and Rex Tillerson respectively, having been themselves for long time directly related and linked with the oil industry, as governor of Texas and former CEO of global U.S. oil tycoon corporation EXXON, which underscores furthermore the new hawkish oil vision especially in what concerns to the US. foreign policy, deriving from the strong support from the Trump himself to the industry, different than the former Obama administration for example.

Overall, it's still too soon to conclude that the United States will become a full fledge oil exporter (it sill imports a considerable amount for its domestic consumption) and maybe LNG position as top exporter could happen faster or maybe we will or wont see the U.S. becoming a member of the OPEC (future R-OPEC?) of the GECF (although either of this might be interesting to see and analyse in the longer term), definitely one thing is for sure and certain and becoming more and more visible, which is that U.S. is making an ever growing utilisation of its energy resources as a way to regain some of its lost appeal as a global power, but this will depend much on the coming direction of the global energy dynamics of supply and demand and how smart and effective this strategy will be in the coming next years.