US to become less dependent on foreign oil—how does it affect Azerbaijan?

Photo: US to become less dependent on foreign oil—how does it affect Azerbaijan?  / Oil&Gas

By Claude Salhani - Trend:

The U.S. Energy Information Administration released on Tuesday an early version of its Annual Energy Outlook for 2014 and the news is good and bad. It's good news for the United States that projects continue development of U.S. oil, while at the same time the federal government is pressing car manufacturers to produce more fuel-efficient vehicles.

The leading article covered in the EIA report gives importance to the fact that the U.S. will raise its production level by 800,000 barrels per day for the next two years. By 2016 it hopes to reach about 9.5 million bpd. The previous high was attained in 1970 when production had reached 9.6 million bpd.

Many analysts predict that the oil boom in the United States is temporary and is expected to level off around 2020, but by then there should be a lot more fuel efficient cars on the roads that the drop in production will not be felt.

On top of that the U.S. government expects that as oil production begins to decrease, demand for natural gas will rise according to the EIA by as much as 56 percent by 2040 reaching 37.6 trillion cubic feet per year.

Additionally reduction in consumption of oil products will come about as a result of greater focus on energy efficiency in every aspect of our lives; from automobiles to buildings that require less heating and lighting, to more practical street lighting.

But while this is good news for both the environmentalists as well as politicians who want to see the United States turn away from the Middle East, its oil and its problems, what effect would it have on Azerbaijan? In the more good news department, there might be no immediate negative effect on this Caspian Sea nation.

The U.S. imports on average 25 million barrels per annum from Azerbaijan, according to data from the U.S. Energy Information Administration. That's a drop in the (Caspian) sea and the increase in U.S. production may never be felt here. However, the good news for the U.S. should be accompanied with a warning to U.S. lawmakers who would be tempted to quickly remove all U.S. forces from the ground and retrench in Fortress America.

The fact that the United States will become less dependent on Middle Eastern oil does not mean the United States should become a political recluse and ignore the rest of the world's problems and leave the geopolitical playing field to the other powers.

If that were to happen it would set back U.S. and Western-based foreign policy drastically and would upset the current balance of power. In the Gulf, for example, where most of the Arab oil producing states are dependent on the U.S. for their national defense, many fear that a U.S. withdrawal would encourage Iran to become more active.

But with recent events, such as the cooling of relations between the U.S. and Saudi, doubts are cast in the minds of the oil rich sheiks of the Gulf who are now questioning America's resolve in the region.

-- Claude Salhani is a political analyst and senior editor at Trend Agency in Baku, Azerbaijan.

You can follow him on Twitter @claudesalhani.com.

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