Lower Energy Prices: How It Changes The World's Situation

Photo purchased by myself for commercial use, 2014.

Earlier this week, the price for a gallon of gasoline fell below $2.00 a gallon in some locations around the San Antonio, TX region. The price of oil closed on Friday below $67 a barrel with Natural Gas NYMEX around $4 with forecasts still predicting a free fall in the price. In a world of chaos where Russia is annexing territory, Iraq and Syria is in shambles without effective governments, the Middle East is still suffering from the Arab Spring, Iran is going to get a nuclear weapon while promising the destruction of Israel, plus the growing energy demand in Asia and across the globe; the market should be freaking out and the price should conceivably be closer to $150 a barrel than $67.

Americans will certainly not complain as this will put extra money into their back pockets and may actually give a mini-stimulus to the economy for the Christmas shopping season. Yet, these latest developments in the energy sector will have massive implications worldwide, especially in the foreign policy arena.

The energy-dependent economies need the price of oil to be much higher. Business Week claims Russia made its 2015 budget on the forecast of oil being around $100 a barrel. With sanctions hurting their economy, the Ruble losing much of its power compared to the U.S. Dollar, along with the price of oil and natural gas well below their forecast, Russia will go into a depression. Putin is the man who is known for rebounding the Russian economy and nationalizing its energy industry in response from the collapse of the Soviet Union. Now he may have to answer for the soon-to-be next depression in Russia. Yet, this also raises another interesting question, why is OPEC refusing to cut production if so many of the countries (as shown in the chart above) need oil to be much higher? Saudi Arabia needs it to be around $100 a barrel because it has been subsidizing its population to prevent the Arab Spring there to preserve the House of Saud, yet they are pushing for the same levels of production. There are two reasons for this, which the second is in response to the first reason.

1) The United States of America is now the number 1 energy superpower

2014 is a historical marker for U.S. energy. It officially surpassed Saudi Arabia as the world's largest producer in oil and earlier surpassed Russia as the world's largest producer of natural gas. Because of laws that are around 40 years old banning exports (with certain and limited exceptions); the U.S. is still way behind in selling the commodities on the international market; much to the chagrin of Europe and parts of Asia. The fracking revolution from North Dakota to Pennsylvania to Texas now has America projected to be energy self-sufficient (with Canada as a partner) by 2020. America not even at its full production potential as federal lands still have bans on drilling (as almost all of this revolution is in the private sector and on private lands) yet has crashed the price in energy. On a recent trip in South Texas with some of the best and brightest minds in the sector to visit multiple fracking sites and all stages of the operation (to the pipelines to the refineries in Houston and Louisiana area), it was clear just how beneficial this is to our economy, in fact it's almost incomprehensible. Hotels and Motels charge by the hour (at rates you'd expect to be for a day), restaurants are packed, vehicles are brand new, repair shops are all over, the only industry hurting is fast-food employees. We met with Halliburton's number one team who are breaking fracking and drilling records right here in the United States. The U.S. can control its own destiny soon in energy.

2) OPEC is freaking out and hopes to crash American energy production industry

The price of oil and natural gas right now leaves very little room for profits because in many shales, America has to drill thousands of feet in order in order to reach the resources. OPEC realizes if America stays in the energy game, it's power and control is doomed. Permit requests have been falling in the U.S. as a response to the now low prices. Saudi Arabia is hoping to take a short term loss for a long term goal of American companies pulling out of the U.S. and going elsewhere (largely back to them) for a long term gain of higher oil prices above $100 a barrel which OPEC and Russia need. It's a gamble, but this is their only move.

What Should We Do?

Believe it or not, this question is more complicated than what it may seem at first. The United States should look after its own needs and become energy sufficient. This is a massive opportunity to secure our needs and also revolutionize our own economy and perhaps be a piece to balancing the budget. The refining (we need much more LNG production, the first LNG train in the U.S. is still in production) and export opportunities to Europe and Asia can make the US a potential power player in the exporting of energy as well. Yet, we will also have to face the global consequences of our action.

1) Russia will align with China and perhaps India

For their own economic needs (particularly energy), Russia will be forced to take its energy resources and instead of mainly sending them to Europe, will make it travel east to China. This will only further the rift between the West and Russia and perhaps could bring about a global conflict along the lines of NATO vs. Russia & China. Putin will also have to escalate conflict around the globe because the only way to potentially raise fuel prices is with conflict. Ukraine now could look minor in comparison to future conflicts perhaps spanning from the Caucasus, Scandinavia, to Moldova.

2) The Middle East could collapse

If the United States no longer needs foreign fuel outside of North America, the economies of OPEC will not be able thrive causing a depression. Authoritarian regimes will collapse. Many may argue this would be a fantastic scenario, and the optimist could say democracies would take over. One should be cautious. Is Libya better off without Gadaffi? Is Iraq better off without Saddam Huessein? Both were brutal dictators that now share a special place in Hell. Yet in both scenarios, radical terrorism has taken over and created a nightmare situation. Imagine what will happen to Saudi Arabia, Qatar, and Bahrain where the U.S. has massive military interests if their regimes fall due to low energy prices. Radicals will takeover and bring a huge security threat to sovereign nations across the globe. The American homeland will thrive, yet this situation with leaders such as Putin and an expanding nationalism attitude in China could then cause a third global conflict. The powder keg was all ready in place for World War I; the spark was the assassination of Archduke Franz Ferdinand. The situation in the Mid East coupled with low energy prices could be the modern powder keg.

The Mysterious Case of Bowe Bergdahl

Source: AP/U.S. Army

This past week it was announced that the United States agreed to a Prisoner of War swap for America's only POW in either the Iraq or Afghanistan War, Sgt. Bower Bergdahl, in exchange for five senior Taliban leaders that were detained in Guantanamo Bay. It's great news that we were able to secure one of our captured soldiers who is actually coming to San Antonio (presumably Lackland Air Force Base in the southwestern part of the town) to begin recovering from being held captive by the enemies for approximately five years. One of our armed forces motto is "never leave a man behind" and it is clear we have never forgotten Sgt. Bowe Bergdahl.

With Bergdahl coming home, some serious questions must be answered about this entire case. The first question is what events caused Bergdahl to be captured? The first allegation is that he actually deserted his post to actually search/possibly join the Taliban. One of his last emails home was "I am ashamed to be an American. And the title of US soldier is just the lie of fools...I am sorry for everything. The horror that is America is disgusting.” After that email, apparently all he took with him as he left his base was a knife, camera, a journal, and a compass. This could very possibly be a terrible case of PTSD, however, unconfirmed reports from other soldiers who served with Bergdahl indicate something much more nefarious.

The timeline of @CodyFNfootball on twitter (who served with Bergdahl) even if only partially true is very disturbing. He is convinced Bergdahl deserted because one of his comments was he was going to go into the mountains to get to the Chinese border and all of his military equipment went missing. Prior to deployment, Cody claims Bergdahl always wanted to train with an AK-47 instead of the US military issued M-16 (or civilian version AR-15). Once they noticed Bergdahl went missing, they immediately began a search and rescue operation and local kids reported "an American crawling in bushes" as they were looking for him. Once they got to the next town, people reported an American "wanted to meet with the Taliban" and later radio traffic indicates terrorists finally picked up Bergdahl. As the rescue mission lasted for weeks, many Americans died trying to find Bergdahl as ambushes and IED attacks skyrocketed.

In one of the videos after Bergdahl's capture, he claims he got lost from his patrol and hence became a POW once the terrorists found him. This story is quite the opposite of Cody's account. Another soldier, Nathan Bradley Bethea gave his account which is very similar to Cody's timeline. An investigation must happen in order to finally determine if Bergdahl did desert his post.

What is even more disturbing is the twitter timeline of Sgt. Bergdahl's father. Bob Bergdahl made this (and later deleted) tweet:



Other tweets are just as disturbing as well such as:

@daqeqa Agree! "Democracy" is a cult in the West. I think most of afgs see law in terms of sharia not secular democracy, man centric laws
— Robert Bergdahl (@bobbergdahl) March 29, 2014

Glancing at @daqeqa's timeline clearly shows he is not a friend of the west. Now, I cannot imagine what the past five years have been for the Bergdahl family, however, these trends are clearly disturbing.

The next few questions pertain to the release of Bergdahl. Why are five senior and notorious Taliban leaders being released from Guantanamo Bay and have all ready been sent to Qatar when it was the Haqqani Network who always held Sgt. Bergdahl? While the Haqqani Network may be similar to the Taliban or Al Qaida, these are different organizations and we have Haqqani members at Guantanamo Bay.

My next questions are why was the law broken in this swap and did President Obama's recent trip to Afghanistan finalize this swap? Congress must be notified at least thirty days in advance before any detainees leave Guantanamo Bay. Congress was never notified about the "Taliban Five" being transferred to Qatar in advance for the trade to receive Bergdahl. Once again, the Obama Administration selectively chooses which laws it will follow. Negotiations should be held in secrecy instead of being open to the public, yet the law is the law and the administration could have told Congress about this deal and waited thirty days before sending these terrorists to Qatar.

My last question is as a nation, should we negotiate with terrorists? One popular misconception is America began fighting the War on Terror in the late 20th or 21st century when this statement is inaccurate. The first abroad conflict the United States was ever involved in was against Islamic terrorists known as the Barbary Wars in the early 1800s. The conflict helped build our navy and is referenced in the Marine hymn "From the halls of Montezuma to the shores of Tripoli." The United States refused to negotiate with terrorists over American merchants and that has been our policy for the past 200+ years. The reason is simple. It gives terrorist more leverage in the future. Now American soldiers and civilians abroad are potentially in more danger as their capture can be used as bargaining chips to release even more terrorists. Bergdahl's swap undermines a once firm policy by western governments.

I am glad Sgt. Bergdahl is coming home. Serious questions remain though and they must be answered. This could be a terrible case of PTSD which caused him to leave his base (and Stockholm Syndrome for his father), but it could also be a case as to where he is sympathetic toward the enemy's side of this battle. Five years is a long time and if they kept him alive, he must  have at least appeared to convince the Haqqani Network that he was sympathetic toward their viewpoints. And if that is true, the television show Homeland on Showtime just became a reality.