A steady supply of energy is needed to fuel the countrys economy and military. [sachs] typically, American Foreign policy like British ImperialForeign Policy before it, paid a tremendous amount of attention to securing oil for the economy. That includes who we have befriended, but it has also included us launching wars; stationing military bases; engaging in coups and orienting a massive amount of our Foreign Policy around oil. [mcnally] by world war one, oil was transitioning to becoming the lifeblood of modern civilization. If electricity is literally the circuitry, without which modern life is impossible, oil is the lifeblood. [jacobs] its both vital to our economy and its vital to our military. And that became true once we switched to an oil based military. [narrator] in recent years, the us Energy Revolution has shifted the geopolitical balance. [gordon] this is a new state of affairs. This was not happening a decade ago, but today 80 percent of the oil in america is sourced from north america; from the continent. The vast majority from us itself, and then about 20 percent of oil comes from canada, and the other 15 or so percent comes from mexico. You inject, at very high pressure, water underground, into the rock; into shale. And that fractures it. In that water, you have sand, and a little bit of chemicals in that sand; props open those cracks, and then suddenly youre able to pump that gas. But the next part of the revolution, the one thats really shaken geopolitics; thats shaken up everything and the thing that were watching right now, thats when the oil drillers figure out how to take the next step and extract these much larger molecules; the oil out of the shale. Its really changed the nature of the us relationship with many Oil Producing states. If you look at the libya conflict. The us doesnt have as much of a direct interest in that anymore because were not importing oil from libya. So, its given the us maybe a little more freedom in our Foreign Policy. [narrator] for decades, the organization of the Petroleum Exporting countries, opec has dominated the oil market. [jacobs] opec forms first in 1960 when the arab producers of oil are trying to figure out how can they get more for the oil thats being pumped out if their ground. [cooper] opec is seen as a bad actor and has a Bad Reputation in the United States and in western countries in general because of the 1973 oil embargo and the oil shock that flowed through the 1970s. The entire World Economy was destabilized. And, for the first time, oil was used a weapon by the producers against consumers. [narrator] saudi arabia is a swing producer of oil. Having the excess capacity to balance the market, or manipulate price by increasing or decreasing production. [chanis] saudi arabia is by far the single most important factor in the oil market over any period of time. Their policies today, and how much they invest, will be the single most important factor determining the price of oil in five or ten years. [spindle] its not only the biggest producer within opec by quite a ways, but it is the one country within opec thats consistently been willing to hold back some ability to produce; its what its called its spare capacity. [cooper] theyve been able to come in at pivotal moments to either drain or flood the system at will. That has given them enormous power over all of us; over the World Economy. And in fact, when theyre able to flood the system, as they have done on several occasions over the past forty years; often theres a geopolitical calculation involved. [colgan] opec is very often seen as an economic cartel that controls the price of oil around the world. Thats actually mistaken; its a myth. Opec has not been effective at cooperating within its own membership. [narrator] Global Economic growth has slowed along with world wide demand for oil. And the worlds biggest importer, the United States is importing much less. [moniz] we have produced up to five Million Barrels a day more oil in recent years because of the technologies we described earlier. [levine] we thought that the shale revolution was going to bring kumbaya. The United States was going to put a stop to the narrative of american decline and chinas ascendance all through this oil. Our answered prayers were much more than we had bargained for. And so if were creating, not just a short term, but a long term destabilized middle east, a destabilized russia; thats not something we necessarily want. chanting protest [chanis] when Oil Prices Get very low, it tends to set off huge instability in many parts of the world which, arguably, were seeing today in venezuela or in nigeria. Low oil prices put a lot of governments in a very difficult position because the nature of many of these regimes is such that they use the oil price to essentially placate or almost buy off their populations. And if the price gets too low, then they cant generate the revenue necessary to keep domestic stability. [spindle] all of the gulf countries now have, since 2014 prices have really crashed. Their revenues have crashed. Theyve got a kind of subsidy and welfare state. They simply cant get the same sort of cradle to grave subsidies and support that their parents did. [narrator] Traditional Oil exporters are in a bind. If they increase production, the price of oil drops further. If they cut production they lose market share. So now the saudis say well, were really competing with nonopec countries. And frankly, these other opec countries are not a threat to us anymore. [levine] opec, november 2014, held a biannual meeting in vienna and announced as a group we are changing our policy. Were no longer going to try to control supply and demand. Instead, were going for market share. Basically, its each man for himself. But, that is a lot of words of saying were going to war with the United States. [elbadri] why you people are concerned about our production . Why you are concerned . Doesnt that will; if the price will come down, doesnt that will help you to fill your car . [jacobs] their choice is to allow prices to fall. And thats deliberate, because the idea is theyre going to try to undercut american production thats resulted from fracking in an effort to try to regain market share that theyve lost to american production. [narrator] some Oil Producing nations suffer from the resource curse; or the paradox of plenty. [colgan] countries that discover oil dont necessarily get rich from them. They have more corruption. They have higher levels of inequality. And they have political problems. Theyre less likely to democratize, and theyre more likely to have civil wars. The United States and norway were lucky in that we had an established democracy and some Strong Political institutions before the oil was discovered. And that has meant that weve had not only oil development, but also a large diversified economy and the kind of political mechanisms that can withstand some of the bad incentives that come with oil. [levine] nigeria is a poster child for the resource curse. Its brought nothing but misery to the country. The folks in power have taken all of the money, but left twothirds of this oil rich country without electricity. [roth] most governments that have large amounts of oil neglect their people. In a place like venezuela, where there is significant regional pressure to maintain at least the facade of a democracy; it maintains the facade, but undermines the reality. In a place like saudi arabia, where that regional pressure to even maintain the democratic facade isnt there, you have a straight forward dictatorship. You have a monarchy which leaves very little room for any independent civil society; any independent press; and simply rules by fiat because it can. mob yelling gun shot [narrator] low oil prices have created volatility in venezuela. [levine] venezuela, not saudi arabia, has the largest reserves of oil in the world. It doesnt tap those. It doesnt tap because it doesnt know how. And it doesnt have the resources to. Its. Instead treated pdvsa like a piggy bank. Its used it to subsidize the price of everything in the country. [roth] there are horrible shortages in venezuela. The economy has been so mismanaged that you cant even get basic necessities in the grocery store. People have to search to get their days meals. The old american adage no taxation without representation, works in reverse as well. If a government doesnt have to appeal and service its people in order to receive taxes; if it can gain its revenue by just pumping oil out of the ground, it starts ignoring the people. [narrator] analysts suggest the blow to russias oil industry may be encouraging Vladimir Putin to distract russians from their economic woes with a more aggressive Foreign Policy. [johnston] russian Foreign Policy and the oil prices; there is a view that their may be connection there in the sense that, if putin sees the economic picture being bleak for russia, his popularity in large part is being based on strong individual; asserting russian interest in their near abroad, and some would argue that he would be more likely to do that in the context if oil prices were to preserve his popularity. [cooper] in the fall of 2014 when oil prices began to slide, at that critical point the saudis decided to actually increase production. They put their foot to the floor, and they ramped up production and they flooded the market. They talked about the benefits of crashing oil prices as a way of depriving russia and iran of critical oil revenues to lubricate their adventurous foreign policies. [narrator] in saudi arabia, oil represents 80 percent of revenue. Low oil prices are applying renewed pressure on the kingdom to diversify their economy. [colgan] but the truth is that saudi arabia has tried before, notably in the late 1990s, to shift its economy away from oil. And it turns out that this is a really hard thing to do. This is a generational kind of project. Its not gonna happen just over a few years. It also means changing the mindset of a lot of people in saudi arabia who are not used to working and having to work. [cooper] we can say that they have accepted that the age of oil is coming to an end down the road, and that they have to prepare their economy and society. Now, some would say theyve left it too late. Others would say, well at least theyre making a start on it. But this is really at the outer region now, in terms of preparing for the end of the age of oil. [narrator] heavily import dependent nations are reaping benefits from low energy prices, and paying close attention to their Energy Security as the landscape shifts. [colgan] consuming countries have always been concerned in maintaining the naval shipping lanes and the pipelines that provide oil. And so we see some of those tensions happening now in the South China Sea which is of course a huge conduit for middle east oil flowing to china; south korea; japan and other customers as well. [kaplan] the best way to start a discussion with energy is about china; not the middle east. China has a malacca dilemma. Despite all the improvements in technology over hundreds and hundreds of years, the strait of malacca is no wider now than it was in antiquity. So china has been involved, in one way or another, in port building projects all along the indian ocean. In sri lanka; in myanmar; in bangladesh; in djibouti; in pakistan; in tanzania. And what this is all about is getting oil and gas, from the greater middle east, and transporting it to china via the indian ocean, north through pipelines into china, in order to avoid the strait of malacca. China will be tempted to pay more attention to the persian gulf region, and possibly start deploy military assets into that area if the United States draws down and pulls out. And theres a lot of speculation going on right now that the United States is going to use American Energy independence as a way of, sort of separating itself from the volatility of the region. [narrator] in the United States, the low cost of oil is a mixed blessing. It means cheaper fuel and goods, but can increase consumption and hurt americas oil and gas sector. [colgan] on the aggregate, low oil prices are a boon to the us economy. Theyre great for consumers; great for industry all around, except of course, for the Oil Producing sector. [gerrard] i think low Oil Prices Move jobs around. Low Oil Prices Mean that there is less Oil Production. Theres certainly been a decline in Oil Field Jobs in the United States since the decline in oil. It leads to lower gasoline prices which has the unfortunate effect of inducing people to buy larger cars and to drive more. [narrator] at the geopolitical level, increased american production makes the us less reliant on imports. [colgan] some people talk about Energy Independence, and thats a goal that doesnt necessarily make sense for the United States because it actually helps us to be globally integrated into oil markets. The bill i sign today takes a significant step. It will help us diversify our Energy Supplies and reduce our dependence on oil. [mcnally] when i was working in the white house and we would have to read the president s speeches for president bush; george w. Bush; and i would read, in a speech where he would call for Energy Independence and getting off of oil, which has been enormously popular since president nixon said it; i would always cross it out and say this is neither a practical nor even a desirable goal for policy. I was usually overruled and i wont say by who, but they went back in, he said it, and it was the loudest applause line. So, theres no escaping what were really most terrified of, and that is gasoline price spikes, by becoming selfsufficient. Whats been important about oil policy is control over oil, not access to it. When the us invaded iraq, speaking of brzezinski pointed out that if the us can control Global Oil Supplies it will have greater influence over its allies. [narrator] for decades, the us has been dependent on politically unstable governments; or what some describe as unsavory regimes. Activist charge that Energy Dependency makes washington look the other way when it comes to issues of human rights. [roth] the United States doesnt ignore all human rights abuses by oil rich nations, it just ignores the human rights abuses by oil rich nations that are its allies. scuffle in Foreign Language [roth] if the abuse is by saudi arabia or by the united arab emirates; or bahrain; or kuwait; dont expect a lot of protests out of washington. On the other hand, if its iran or venezuela, the United States will be quite outspoken. [cooper] saudi arabia is the quintessential case study for a country that has an abysmal human rights record and no one likes to talk about it because they are the big oil producer. But thats changing. Saudi arabia had a free ride for along time but its coming to an end. And i think that has created real tension in the relationship. It is the cause of some disorientation in riyadh because its happening very quickly. [narrator] cheap oil reduces incentives to invest in increased efficiency and alternative technology while boosting the consumption of oil and gas. [bordoff] were driving more, and were using more oil, and were buying bigger cars cause we have short memories and forget gasoline prices might go up again. And that makes the economics of buying a hybrid or electric vehicle or an alternative worse. [moniz] we are, with low oil prices, bluntly; we are more challenged in terms of getting cost competitiveness of advanced biofuels and clearly theres an impact in terms of the electric vehicle penetration. Were making great progress; and battery costs for example for vehicles have come down 60, 70 percent in the last five or six years. But theres no doubt that the low oil prices and low fuel prices impact that. [browner] we dont have a system in the United States where we really price in the externalities of burning fossil fuels into the price that we sell the fossil fuels at. We sort of deal with those complications on the back end; those consequences on the back end. [bordoff] us Carbon Emissions are now at the same point they were in 1992. Theyre down about 10 or 12 percent from where they were a decade ago, so thats headed in the right direction. But if you think about what it would mean to actually stabilize Global Warming at around two degrees celsius, we need to reduce emissions not just 10 or 20 percent, but 70, 80, 90 percent; deeply decarbonize the world. [narrator] frackings Geopolitical Impact is profound. In 2016, congress lifted a 40 year ban on the export of us oil. With its own Energy Security more assured, some analysts believe the us could become a swing producer. [spindle] increasingly people are looking at the fracking industry and the us portion of it as a kind of swing producer in the sense that the process is quite different. Its not like saudi arabia. You cant turn it on and turn it off within days or weeks. [mcnally] many people th