How Shale Is Reshaping The World: Three New Wars

We recently met with geopolitical strategist Peter Zeihan to discuss world events since the American election and his new book, ‘The Absent Superpower: The Shale Revolution and a World without America.’ In the book, Peter credits energy and resource innovations with reshaping the global geopolitical environment.
We covered so much ground in our visit with Peter that we decided to break it into two reports. Last month in part 1, we covered the broad impact of the Shale Revolution, which he calls, ‘the greatest evolution of the American industrial space since 1970,’ and which he expects to accelerate the breakdown of the global order as we know it. Today, in part 2, we examine the major global shifts in geopolitics that will result as the US moves into energy independence. Peter believes this will reshape global geopolitics, leading to three major conflicts – Russia vs. Europe, Iran vs. Saudi Arabia & an Asian Tanker War. It is these conflicts we asked him to discuss in greater detail. We hope you enjoy the discussion.
GAVEKAL CAPITAL: We last left off discussing how the oil export ban could be rescinded if global geopolitical issues flare up. What are you on the lookout for?
PETER ZEIHAN:There are three big conflicts I see that could cause a major schism between what the US pays for oil and what the rest of the world pays for it. I’m talking about a potential global oil price of around $150 per barrel while the US pays only $50 per barrel thanks to shale oil in the US and a resumption of the ban on oil exports. The break-even cost in the United States is around $40. If you put the embargo back in place, you’ve got a functional ceiling on how high the price can be domestically. If shale overproduces and you can’t export the crude, then it’s a question of refining capacity which can’t be built out that quickly.

This post was published at Zero Hedge on Mar 14, 2017.