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Fracking Revolution Transforming the Global Energy Landscape

The Strategic Consequences of the U.S. Energy Boom

Speakers: Dennis C. Blair, Admiral, U.S. Navy (Retired); Co-Chairman, Commission on Energy and Geopolitics, Securing America's Future Energy; Former Director of National Intelligence; Former Commander in Chief, U.S. Pacific Command
John Browne, Author, Seven Elements That Changed the World: An Adventure of Ingenuity and Discovery; Partner, Riverstone Holdings, LLC; Former Chief Executive Officer, BP
Presider: Robert D. Blackwill, Henry A. Kissinger Senior Fellow for U.S. Foreign Policy, Council on Foreign Relations; Coauthor, “America’s Energy Edge: The Geopolitical Consequences of the Shale Revolution,” Foreign Affairs March/April 2014
March 3, 2014

Event Description

Increased petroleum production in the United States, fueled largely by recent technological advances in hydraulic fracturing and horizontal drilling, has had a profound effect on the U.S. economy and global energy markets. CFR's Robert Blackwill sits down with Admiral Dennis Blair and former BP CEO John Browne to outline both the economic and geopolitcal implications of the current U.S. energy boom.

Event Highlights

Dennis Blair on the impact of the energy boom on the U.S. economy:

"[Additional] GDP is in the 1 to 2 percent. There's a big effect on balance of payments right now. As recently as a couple years ago, half of our overall balance of payments deficit every year was due to payments for petroleum overseas on the order of $300 billion a year. And that comes down rapidly, of course, when you're drilling it here. There are jobs within the industry itself of that scale. And then of course, the availability of cheaper petrochemical feeds into chemical and other industries, lowers prices, adds jobs, makes [them] more competitive. Then there are all of the spinoff jobs from that. So it's really a tremendous benefit to the U.S. economy, which we're seeing more and more every year."

John Browne on the effect that the increase in natural gas supply will have on oil prices:

"There's sort of 3 million barrels [of oil] just shut in because of issues to do with governance, and war and conflict. And there's probably a bit more available, which is managed outside the system. So it looks like there's a lot of oil around. In theory, it should reduce the price. In practice, it hasn't. And then there's a limit to the amount the price might drop, because of the immediate needs of many countries that just produce hydrocarbons as their primary source of economic activity, and the rate of expenditure. So the so-called break-even number is quite high for many countries, including Russia, who spend a lot of the money that they make by exporting hydrocarbons."

Dennis Blair on whether domestic energy supplies will allow the United States to disengage from the Middle East:

"Although greatly-increased U.S. domestic production of oil gives us more options, it doesn't give us that option. The oil market is still an international market. The United States transportation sector is still some 90 percent dependent on that. So if there's a supply interruption and a price spike in oil around the world, it affects the U.S. economy."

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