How cheap energy from shale will reshape America’s role in the world

Posted on November 16, 2012 by Trey Garrison

After the fall of the Berlin Wall, the rise of China and the Arab spring, American energy independence looks likely to trigger the next great geopolitical shift in the modern world.

US reliance on the Gulf for its oil – and its consequent need to maintain a dominant presence in the Middle East to keep the oil flowing – has been one of the constants of the post-1945 status quo.

That could be turned on its head. It’s been dubbed “the homecoming”. After decades in which the hollowing out of American manufacturing has been chronicled in Bruce Springsteen’s blue-collar laments, cheap energy is being seen as the dawn of a new golden age for the world’s biggest economy.

The reason is simple. The US is the home to vast shale oil and gas deposits made commercially viable by improvements to a 200-year-old technique called fracking and by the relentlessly high cost of crude.

Exploitation of fields in Appalachian states such as West Virginia and Pennsylvania, and further west in North Dakota, have transformed the US’s energy outlook pretty much overnight. Professor Dieter Helm, an energy expert at Oxford University, said: “In the US, shale gas didn’t exist in 2004. Now it represents 30% of the market.”

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