How does the shale oil boom in the US affect geopolitics in the Mid-East?


Shale Gas is a form of natural gas that is trapped within shale (a fine grained sedimentary rock) formations, shale gas is known for more than a century. It was not seen as a viable alternative to petroleum fuels because shale drilling (which is done horizontally) is more expensive than conventional oil drilling. Shale was not worth extracting with conventional technology. Now a new technology, ‘fracking’, plus horizontal drilling, have greatly increased shale gas productivity, so extraction is now viable. Gas can readily substitute fuel oil in industry and power generation, and kerosene in cooking. But the bulk of oil consumption is in transport.

Shale gas has the potential to transform the entire geopolitics of world. It is because

  1. Shale gas can hugely reduce the dependence of most countries (including India) on imported energy.
  2. Second, the geopolitical clout of major gas exporters — Russia, Iran, Algeria, Bolivia — will fall dramatically.
  3. Third, some countries may start converting their transport fleets into gas-based ones, hitting the demand for and prices of petrol and diesel.
  4. Fourth, converting gas into oil will become economic.
  5. Fifth, The major International Shipping transport route is likely to undergo major change. For example, the finding of oil shale in Brazil and Venezuela along with massive deposits of shale oil in Canada has altered the American shipping route by concentrating its movement North South of Americas, rather than the whole of the world.
  6. The American interest in Persian Gulf has seen a major decline.
  7. The concentration of shale oil deposits in Ukraine has allowed Ukraine to bargain with Russia, as it may not be dependent on Russian oil at all. That will allow it to take help of American technology.
  8. The clout of OPEC has decreased and so have been the falling oil prices.

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