Middle East will no longer be the world's gas station.
Paul Miller says the Mideast's oil muscle is getting flabby:
The picture here is stark: when unconventional methods of oil development are taken into account, including development of heavy oil, shale oil and oil sands, the Middle East suddenly becomes a minor player. There may be as many as 7.9 trillion barrels of potentially recoverable oil left in the world from all sources, according to the IEA, with more than 90 percent of it outside the Middle East. The Middle East dominates the currently proven, conventional and commercially viable reserves, but these reserves account for less than 10 percent of the total oil in the world. Once unconventional methods become commercially competitive, the Middle East will be dwarfed by Canada, the United States and Venezuela.Finally, as the massive unconventional oil deposits become commercially viable, the Middle Eastern oil industry will no longer be too big to fail. Middle Eastern oil producers will lose the implicit discount on risk they gain from dominating the current world oil market. They will, in fact, be dispensable, making it much harder for them to get a free ride on the implicit guarantees and subsidies they currently enjoy from their host governments. As they devolve from global politicians into businessmen, governments will rightly ask if these guarantees make good business sense anymore.
Miller then zeros in on the implications:
That means the central goal of U.S. foreign policy in the Middle East will essentially be achieved: no power will be able to threaten the United States with unacceptable leverage over the American economy. That is because oil itself will be less important, and the world oil market will be more diffuse and diverse. The importance of this development cannot be overstated. It is a tectonic shift in the geopolitical balance of power, a strategically pivotal development only slightly less momentous than the fall of the Soviet Union. It is the slow-motion collapse of the Middle Eastern oil empire.
