Energy shift: decline of easy oil and restructuring of geo-politics

Abstract This paper critically assesses the geopolitical

and geo-economic impact of novel fuel resources on both

resource exporters and importers. Presently, very strong

political and economic forces drive the utilisation of

domestic, unconventional oil and gas recovery in the West

as these enhance energy security and ease balance of

payment issues. The additional capacity generated by this

trend has, supported by other effects such as Saudi

Arabia’s decision to maintain current production, triggered

a significant reduction of oil prices. Consequently, it is now

oil exporters that struggle with the balance of payment

issues and often these countries base their fiscal budget

completely on fossil fuel revenues. In fact, these

unconventional resources help turn the tide while oil

exporters are now politically significantly weakened due to

the increased energy sufficiency of the West. The catch is

that the extraction of unconventional types of oil has many

environmental implications. So, internalising the environmental

externalities have to be considered. This paper,

therefore, assesses, next to geopolitics and geo-economics,

the environmental implications of this trend.