I have read an article on Bloomberg.com and I found it very interesting and important.
It was about the US Gas and Oil Supply by shales.
Daniel Yergin was at the St. Petersburg International Economic Forum in 2013 when he got a daunting request: Could he pose the first question from the audience to Vladimir Putin?
Yergin, the vice-chairman of S&P Global, discussed the incident on the latest episode of the “What Goes Up” podcast, along with other insights from his book “The New Map: Energy, Climate, and the Clash of Nations.” US shale oil and gas have had a much bigger impact on geopolitics than people recognize, Yergin says. It has posed a threat to Putin in multiple ways, especially as US natural gas would compete with Russia’s in Europe.
Below are lightly edited and condensed highlights of the conversation. Click here to listen to the whole podcast, and subscribe on Apple Podcasts or wherever you listen.
Q: How did the US become a big oil and gas producer?
A: It was a revolution. We had eight presidents in a row, starting with Richard Nixon right up through Barack Obama, saying ‘We want to become energy independent.’ And it seemed a joke, it was never going to happen. But there was this technology called shale, which really involves hydraulic fracturing, as it’s called, combined with horizontal drilling. And there was one really obsessed individual — it’s so interesting, the role of obsessed individuals in economic change — named George P. Mitchell, who was convinced if you just worked somehow, even though the textbooks said it was impossible, you could make it work. And for 20 years, 25 years people scoffed, but then it did work. And even his own company, people were telling him not to spend money on it. But if he hadn’t spent that money, I’m not sure that we would’ve been where we were.
And then in the early 2000s, you started to see wildcatters — independents, as they’re called — small companies starting to adapt that technology. And then people said, ‘Oh, US natural gas supply, instead of going down is going up. And then they said, well, if it works for gas, maybe it works for oil too — in about 2008, 2009. So this all really happened in that period from about 2008, that’s when it all really began, the shale revolution. And it just took the US from an entirely different position. And if you had told people in 2002 that the US was going to be the world’s largest oil producer, larger than Russia, larger than Saudi Arabia, the world’s largest producer of natural gas, and this year, the world’s largest exporter of LNG, they would’ve said you’re living in a fantasy world.
Q: It occurred to me as I was reading your book that the US going from being renowned as the biggest consumer of energy in the world to now a major producer almost escalates the geopolitical tensions. Does it make America’s influence different in this environment?
A: That’s absolutely right. I deal with a lot of things from Ukraine to climate in the book, but I start with shale because shale’s really had a much bigger impact on geopolitics that people recognize. The story I tell in the book is when I was in St. Petersburg at a conference where Putin was speaking — 3,000 people there — I was told to ask the first question. I started to ask a question, I mentioned the word ‘shale.’ And he started shouting at me saying shale’s barbaric. He knew that US shale was a threat to him in two ways. One, because it meant that US natural gas would compete with his natural gas in Europe, and that’s what we’re seeing today. And secondly, this would really augment America’s position in the world and give it a kind of flexibility it didn’t have when it was importing 60% of its oil.
The question started off innocuously. I was going to ask him a normal question about diversifying your economy. And I said ‘shale,’ and to be shouted at by him in front of 3,000 people, a really unpleasant experience. The other person on the stage was chancellor Merkel, who was chancellor of Germany for 16 years. And you can see the enmity between the two. But Merkel’s now being criticized for policies like shutting down nuclear that led to Germany being more dependent on Russian gas. And the judgment of history is shifting a little bit.
Q: How did everyone get Russia so wrong?
A: Now there’s a kind of revisionism that the world shouldn’t have traded with Russia, shouldn’t have tried to integrate Russia into the world economy, particularly as Putin got more and more authoritarian. But, you say, well, what was the alternative? To leave it festering there? The best thing was to get it anchored in the world. Putin, he’s been in power now almost as long as Joseph Stalin. And I think he was becoming more and more authoritarian and people who have known him over the years said that Covid changed him. He was isolated for two years. He wasn’t meeting Western business people. He wasn’t meeting Western government officials and so forth. So I don’t think there was an alternative to not trying to integrate Russia into the world, but obviously what’s happening now is the world, at least the Western world, is slamming the door on Russia.
You can read the full article on Bloomberg.com via https://www.bloomberg.com/news/articles/2022-05-21/how-an-energy-expert-triggered-vladimir-putin-with-one-word