Vast Energy Bonanza Challenges Global Geopolitical Status Quo

The global shale boom is working its way into more and more parts of the world. Very few analysts have given voice to the true seismic threat of the shale revolution -- the earth-shaking effect it will have on global energy markets and the global geopolitical infrastructure once it truly kicks into gear.

Russia...will probably be forced into serious political and economic reforms or face decline. Its government spending is too high, its non-hydrocarbon economy too anemic, and now its oil and gas sectors under challenge.

...We already know, for example, that the heft of the U.S. shale gas boom has challenged Russia's natural gas grip on Europe. Saudi Arabia also fears shale gas, whose abundance could ultimately contribute to the erosion of U.S. oil demand, as Chris Weafer said last week on this blog (also see remarks below by oil scholar Philip Verleger.).

Saudi has valid reasons to worry, as it seems almost-certain that the fresh big oil finds on other continents will whittle away at the centrality of the mighty nations of OPEC, the bain of Western economies for 35 years. OPEC seems far less likely to call the shots in global oil and, according to Citigroup and other analysts, the per-barrel price its members earn could be much-reduced. The wild card will be demand, meaning China's future oil appetite, and the continued progress of energy efficiency. _FP

Not only Russia and KSA have reason to worry. All the corrupt, inefficient oil dictatorships who have come to rely on inflated oil bubble prices to power their economies are going to come under threat.

From the Persian Gulf to Venezuela to the Russian steppe to darkest Africa, oil dictatorships will begin to see their iron-clad grip on customers begin to loosen, one by one, as more and more countries develop their native shale resources, and some of them begin to export product on their own.