A post-oil world?

The latest issue of The National Interest is out, and hey, what do you know, I have an essay in it! I was asked to speculate on what the world would look like if oil became an irrelevant commodity — i.e., cheaper than it was at any point since 1973. The thesis paragraph: [L]et’s imagine—as ...

By Daniel W. Drezner, a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast.

October 30, 2008, 6:00 PM

The latest issue of The National Interest is out, and hey, what do you know, I have an essay in it! I was asked to speculate on what the world would look like if oil became an irrelevant commodity -- i.e., cheaper than it was at any point since 1973. The thesis paragraph: [L]et’s imagine—as The National Interest asked me to do—that the summer of 2008 turns out to be the all-time peak of oil prices, and that the end of the oil era is imminent. The first instinct is to assume that in this world—a world in which oil would be a minor commodity, irrelevant to both geopolitics and the global economy—America would be much better off. Oil-exporting autocracies would fade into obscurity, and the Middle East would revert to barren sand-strewn lands. This imagined future, after all, is what drives politicians from George W. Bush to Barack Obama to say that ending dependence on foreign oil will liberate America. But would this really be the case? It may be that the assumptions we hold are grounded in a misunderstanding of the global order. Perhaps instead, without oil dominating their economies, the Middle East oil states would be far less dependent on the United States for trade, for security and for dollars. Perhaps the dollar would no longer be the world’s reserve currency, which would severely hinder America’s ability to fund its current-account deficit—and its military superiority. And then, perhaps, the security guarantee the United States provides to the Middle East—and by extension the entire oil-dependent world—would be null and void. In short, a world that doesn’t need oil may also be a world that doesn’t need the United States. But when prices of oil are skyrocketing, people aren’t thinking about the possible long-term implications of energy independence, only the short-term gains. Go read the whole thing. Feedback is very much welcomed -- this was, by definition, a speculative essay. And props to Justine Rosenthal, who was smart enough to push me to write this back when oil was over $140 a barrel.

[L]et’s imagine—as The National Interest asked me to do—that the summer of 2008 turns out to be the all-time peak of oil prices, and that the end of the oil era is imminent. The first instinct is to assume that in this world—a world in which oil would be a minor commodity, irrelevant to both geopolitics and the global economy—America would be much better off. Oil-exporting autocracies would fade into obscurity, and the Middle East would revert to barren sand-strewn lands. This imagined future, after all, is what drives politicians from George W. Bush to Barack Obama to say that ending dependence on foreign oil will liberate America. But would this really be the case? It may be that the assumptions we hold are grounded in a misunderstanding of the global order. Perhaps instead, without oil dominating their economies, the Middle East oil states would be far less dependent on the United States for trade, for security and for dollars. Perhaps the dollar would no longer be the world’s reserve currency, which would severely hinder America’s ability to fund its current-account deficit—and its military superiority. And then, perhaps, the security guarantee the United States provides to the Middle East—and by extension the entire oil-dependent world—would be null and void. In short, a world that doesn’t need oil may also be a world that doesn’t need the United States. But when prices of oil are skyrocketing, people aren’t thinking about the possible long-term implications of energy independence, only the short-term gains.

Go read the whole thing. Feedback is very much welcomed — this was, by definition, a speculative essay. And props to Justine Rosenthal, who was smart enough to push me to write this back when oil was over $140 a barrel.

Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner