Linking Energy and U.S. National Security

New oil and gas technologies carry clear benefits for the United States. They have opened up new drilling opportunities across the country, boosting both the energy industry itself and energy-intensive manufacturing sectors, such as steel and aluminum. As a result, these technologies have led to new job creation and lower energy prices for American consumers. The new income from oil and gas offers a straightforward benefit to the United States, and such economic growth benefits U.S. national security for two reasons: first, under traditional definitions, one of the core national interests is in prosperity for Americans, and second, greater national wealth reduces the burden of protecting the nation through defense spending.

Many people also believe the Shale Revolution has increased the United States’ security by insulating it from supply disruptions and price shocks in the global oil market, but because of the manner in which the global oil market works, fluctuations in price and supply still impact the production and price of oil in the United States. Even with increased domestic production, a spike in the global oil price due to a political-military disruption (or a natural disaster) elsewhere in the world would still hurt the American economy.

Moving beyond the economic underpinnings of national security, there are two major avenues through which new oil and gas production technologies could affect U.S. national security interests:

The first is through declining trade relationships, which may lead to less diplomatic and security cooperation between former trade partners. New production technologies have allowed the United States to dramatically increase its own oil production, thus reducing its need for energy imports from other producers. It is possible that as the United States scales back on its energy imports, it could see its diplomatic and security relationships with former energy trade partners weaken, resulting in fewer opportunities for cooperation on matters important to U.S. national security. In the same vein, if the United States’ presence and influence in oil producing countries declines with dropping oil imports, it could make room for other actors such as China to boost their own sway there. This link between oil production and U.S. national security turns out to be easily exaggerated: the empirical record does not suggest that changing patterns of oil trade really cause meaningful changes in diplomatic and security relationships.

The second avenue centers on the negative impact fewer oil and gas revenues could have on the security of some traditional energy producers. As new production technologies have spurred exploration and drilling in some parts of the world, other countries have lost out on foreign investment opportunities they might have otherwise had. Additionally, with new shale plays increasing global production capacity, oil prices have dropped precipitously. It is possible that oil-producing countries whose revenues have been slashed, due to either lower production levels or plunging oil prices, may have difficulty meeting their patronage and social spending obligations. This in turn could lead to unrest and instability in these countries – a problem compounded by the fact that decreased revenue may also prevent governments from maintaining their security and military capabilities. If instability or regime collapse occurs in countries that are important to the United States for economic, diplomatic or military reasons, it could negatively impact U.S. national security. However, again empirical research suggests that the impact of this link between the Shale Revolution and national security is easily exaggerated: most countries that depend on income from oil and gas to maintain political and social stability have ways to insulate themselves from ups and downs in hydrocarbon revenue, and military spending and participation in global security operations is not so fragile as to be easily disrupted by changes in the geography of oil and gas production.

 

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