Why the US will still need the Gulf


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In his acceptance speech after winning the US presidential election, Barack Obama made no reference at all to foreign policy. That shouldn’t come as too much of a surprise, given that the 2012 contest was largely fought on domestic policy and how to create more jobs for the American people.

But Obama made one telling remark when he listed the challenges that the US will face in the next few years. “Freeing ourselves from foreign oil” was ranked alongside “reducing our deficit” and “fixing our immigration system”. Granted, that speech was naturally meant primarily for a domestic audience, but the move towards American energy self-sufficiency will be causing a few murmurs of concerns in the corridors of regional governments.

But US energy self-sufficiency may not be the game changer that many fear. According to the Energy Information Administration, the lion’s share of American oil (38.8 percent) is sourced internally, with a further 19.6 percent coming from Latin America and 15.1 percent piped in from Canada. The Arabian Gulf countries only provide 12.9 percent of America’s oil, with Saudi Arabia producing the majority of that figure (8.1 percent of overall energy needs). Saudi Arabia, on its own, produces roughly half that provided by Canada.

America’s shale oil and gas revolution will change this dynamic. By 2017, the Paris-based International Energy Agency says that the US will be the world’s biggest oil producer. That means that the US won’t have to source its oil from geopolitically tough areas, particularly Nigeria and Venezuela.

But that, of course, doesn’t mean that the Gulf will be left high and dry; one of the reasons that the oil price is currently sitting comfortably above $100 is due to high demand from China and the rest of Asia, demand which the region will now be able to provide. And more oil sloshing around global markets would also help to push the price down near to the $80 mark, where extracting shale energy deposits only starts to be become economically viable.

Leaving aside the question of where America’s oil is sourced, the big question is whether self-sufficiency will force the US to beat a retreat from the Gulf, where it spends billions of dollars a year policing the Strait of Hormuz and supporting local military forces.

In reality, there’s no need to worry about a strategic withdrawal; the price of a barrel of oil will still be largely set in the Gulf (still the biggest exporter, as opposed to the biggest producer), and instability at any point along the energy supply chain means that the oil price will rise just as surely in Houston as it will in Shanghai.

A couple of weeks ago, I spoke with William Cohen — the former US Secretary of Defence under Bill Clinton — and asked him what he thought the ramifications of American self-suffiency would be. In an interview that is published in this week’s issue, he disagreed with the notion that energy was the be-all-and-end-all for US policy in the Gulf.

“It’s a trade relationship; there’s a synergy here that for the moment may be focused on oil and gas, but I think there is a pivot taking place here,” he told me. “The pivot is east. If you look at the amount of trade taking place between the UAE, India, China and Africa — this is a trading hub which has spokes going into the whole Asia Pacific part of the world.”

Other than trade, of course, geopolitical tensions will keep the US closely wedded to its allies in the Gulf. Worries over Iran don’t look like vanishing overnight, and many of America’s most implacable enemies are either based in or near the Middle East. Don’t expect a retreat any time too soon.

Ed Attwood is the Editor of Arabian Business.

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Posted by: Arabian Man

It has now dawned on Russia that it was "fooled big-time" into agreeing to the Nato-imposed no-fly zone over Libya. The initial goal was to protect civilians from Qaddafi-regime raids, yet NATO operations turned into a tacit mission for regime change in the North African country. So Russia knows well that if it gives in to US hegemony plans, its interests will crumble in the world's richest region.
Having said this all, the people of M.E and where ever home to US bases will be more than happy to see the back of US from their soil. Believe me there will be no tears shed or roses handed to their soldiers when they finally decide to leave these countries. These countries are capable to handle and solve their problems without the intervention of US. After all what has US done to these countries, apart from pushing them back to the brink of economic and political collapse.

Posted by: Arabian Man

Yes US is in M.E more so for geo political reasons than for the easy oil and energy of M.E. It needs to outdo and keep ahead of its cold war opponent Russia and now its new found aggressor china in losing out any old allies in M.E.
Russia?s allies in ME were Iraq, Libya, Iran and Syria.
Washington toppled the Libyan and Iraqi regimes because they once offered their oil and trade contracts to Russian, Indian and Chinese corporations.
Russia lost these very regimes and 2 strong Arab allies with the overthrow of the Saddam Hussein and Muamar Qaddafi regime. Having taken stock of such a major loss, Russia is now determined to counter forcefully any US attempts to topple the Syrian and Iranian regimes. Russia won't let Syria or Iran down, as it doesn't want to lose allies in a region important to it.
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Posted by: Arabian Man

Yes William Cohen ? sums it all ,that US is not in Gulf for oil alone. Having permanent bases in ME, before Russia could wins them over and to shore up support for its ally Israel is another prime reason for US presence in M.E. In politics there are no permanent friends, only permanent interests. If your interests are served, even a dictator, tyrant or despot is welcomed, if your interests are in danger then even Mandela, Mahathir Mohammed & Ahmadinejad are your enemies. This has been the swansong of the US & Europe. P.Musharaf, S.Hussein, H. Mubarak & many such rulers were welcomed & supported by west. These players were not the true representatives of the masses, yet west stuck with them for vested interests while a legally elected govt in Gaza (Hamas) & Iran is disowned & blacklisted. Hypocritical is it not? As long as the west's line is not towed, you are not one among them. Bush's infamous line during US war on terror (sic). "You are either with us or with them, says it all.

Posted by: khalid Ahmed

USA looking for their interst only so we dont need USA anymore until we be able to cahlaing thim

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