Comments from an oil patch geoscientist

Submitted by Stu Fagin (United States), Sep 23, 2013 at 10:40

As a career geoscientist in the oil patch I have these impressions of Dr Pipes' comments. Taking the main points in reverse order:

1. "Third, they (the oil and gas pashas) will probably experience lowered income" – This is quite true, but we greatly understate this effect if we consider only the US shale gas and shale oil resources, as much of the symposium commentary does. The geologic conditions giving rise to shale oil and shale gas resources are not particularly unique and we would predict their distribution to be worldwide. They indeed are as this link shows (http://www.eia.gov/analysis/studies/worldshalegas/images/fig1map_large.jpg). The map indicates that the contribution to world oil and gas supply will be massive, as will the price point reduction. This is the map that makes OPEC cringe. Moreover, from a world political standpoint, there is some very good news regarding the distribution. (1) The US is blessed with a disproportionate share, to the extent that we may anticipate future energy self sufficiency, (2) as opposed to conventional oil and gas deposits, these resources are not concentrated in states promoting Islamism, (3) There are several significant European resources which portend the end of Russian natural gas influence in Europe.

2. "Second, a loss of control over the price of energy will weaken the perceived strength of the oil-exporting countries" – I have a different view here. OPEC control on gas and oil prices, particularly in recent decades, is greatly overstated. The threat of OPEC greatly diminishing their production never materializes, because the revenues are so vital to the individual members. Indeed, the last instance of OPEC (really the Saudis) meaningfully influencing prices worked in the opposite direction. This was the Reagan era production increase that resulted in loss of revenues to the Soviet Union and ultimately contributed to its disintegration.

3. "First, Washington will be largely freed from having to kow-tow to the oil and gas pashas" – To the extent the kow-towing has been motivated by considerations of oil price control, this behavior on our part is misguided and unnecessary, for the reasons mentioned above. But, Saudi Arabia, Qatar and others will still experience a significant revenue stream from oil and gas in the foreseeable future and we will need to impede them from applying this revenue to the promotion of Islamism. Hopefully, our future behavior in this regard will be better described as bringing pressure to bear, rather than kow-towing.

4. Several of the sympposium respondents to the query suggest that US energy independence will induce and justify an increased isolationism. I hope not. The magnitude of the Islamist threat made apparent by the events of 9-11 still exists and still must be managed.

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