America’s New Growing Energy Security

Yes, dear reader, the U.S. holds a new strategic energy weapon.

The U.S. shale gale, or fracking revolution, has begun liberating not only “trapped” hydrocarbons like oil and gas, but also a liberation of U.S. foreign policy.

All of a sudden, the U.S. isn’t so beholden to events in faraway places filled with people we don’t truly understand. In fact, at the rate things are going, the U.S.-Canada-Mexico block is moving toward a version of North American energy independence from the rest of the world.

This is as big a trend as we’ve seen in global economics over the past seven decades, so let’s dive in…

Trade flows are reversing. Oil-exporting countries have to find new markets. Oil and tanker ships that used to sail west to the U.S. Gulf of Mexico and East Coast now are sailing east to India and China. While this happens, we’ve had a period of relative oil price stability, which is good for the Western economies that are still healing from the 2008 recession.

The reversal of decades-old oil trading patterns means a tectonic shift in U.S. strategic outlook, which flows directly into the military requirements for the country. Do we need the same Navy or Air Force or Army?

In essence, the U.S. military can back away from its former reflexive process of planning for intensive, long-term, military-based engagement in the Middle East.

I don’t want to be flip and imply that we don’t “need” the Middle East anymore and can just wash our hands and waltz away. No, that’s bar stool analysis. The U.S. still has serious interests in the Middle East, which require a certain military approach, including weapons, doctrine and training.

But looking ahead, the U.S. can plan and conduct its global affairs without being plugged into an intravenous line for oil from parts of the world where we’ve had all manner of trouble for many decades. That’s quite a burden lifted off the backs of national planning authorities.

From a military aspect, this strategic “energy weapon” has changed the thinking. Looking forward, the U.S. military future belongs to long-range systems like ships, aircraft, drones and space satellites, all packed with communications, surveillance, tracking and targeting capabilities.

To the extent that future U.S. power projection requires people on the ground, the days of Big Army — the Cold War concept of mass engagements in, say, Germany — are over. In the future, “boots on the ground” will be troops in the special operations arena, such as Navy SEALs, Army Green Berets, Marine SOC (special operations-capable) assets and such. And they’ll all be humping lots of tech.

For Pentagon planners, the next really hard questions are along the lines of how to rebuild — and pay for — the Army-Navy-Air Force-Marines (and Coast Guard) in a political-military environment in which our nation is NOT importing vast amounts of oil and is thus NOT beholden to anyone’s petro blackmail. That is, we have strategic breathing room, which is a good thing.

But!!! (And there’s always a “but!”) Future military capabilities must at the same time fit into the U.S. system of alliances. Consider U.S. defense treaties with the (oil-importing) nations of Europe, through NATO. Or with (oil-importing) Japan and South Korea. The U.S. is moving toward its own enhanced energy security, but would it be right if the country just ditched long-term allies? That wouldn’t work at all.

An Unexpected Strategic Gift

So as we look at future of energy and modern geopolitics, we need to understand the new reality for America. The fracking revolution, and its so-called “shale gale,” wasn’t planned by anyone, and certainly not the politicians in Washington — many of whom fought and still fight against fracking, tooth and nail.

For an analogy, though, look back about three generations. In the 1930s, the U.S. was mired in the Great Depression. To relieve joblessness and kick-start the economy, President Herbert Hoover commenced, and President Franklin Roosevelt continued, a massive series of “energy” projects such as the hydro dams on the Colorado and Columbia Rivers, as well as the Tennessee Valley Authority (TVA). (And yes, these were Hoover ideas. You can look it up.)

Then — and NOT by previous design — in the 1940s, during World War II, these power-generating assets were critical to U.S. industry. One of the most famous energy-using projects was the Manhattan Project, which built the atom bomb. But looking back, it’s not as if anyone built the Hoover Dam or Grand Coulee dam, or set up the TVA, anticipating that there would be a global war in a few years and U.S. national defense would require all that electricity.

So today, new energy supply from fracking is remaking the global strategic balance. It affects the strategic balance of the U.S. and its place in the world. Energy controls military planning in a big way. Secure domestic energy is a weapon that works.

It’s fair to say that America’s new growing energy security is the culmination of over a century of research across a spectrum of industries now coming together in the oil biz. The trick is for the nation, the politicians and the generals and admirals to figure out how to use it to good effect.

• Become A Funded Futures Trader