There is a fascinating theory doing the rounds recently in the political and commodities world of oil. Recent data shows that US is no longer dependent on Middle Eastern oil. The latest edition of the International Energy Agency's World Energy Outlook says the US will surpass Saudi Arabia as the biggest oil producer in 2020 and become self-sufficient in energy by 2030 as new drilling technologies, alternative fuels and declining consumption reduce the need to import oil.
The US may continue to use oil from Canada, Venezuela and other nearby countries if prices are competitive, but the IEA predicts Asian nations will end up consuming 90% of the oil produced in the Persian Gulf. The IEA said also said that the shift in the oil trade could redefine military alliances.
Based on this prophetic prediction it is believed that the US will gradually pull out of the Middle East and allow the totally chaotic region to fend for itself or handover security to the Chinese who depend on this as their source of oil.
The Carter Doctrine has guided US policy.
"An attempt by any outside force to gain control of the Persian Gulf region will be regarded as an assault on the vital interests of the United States of America," Carter declared in his 1980 State of the Union address. "Such an assault," Carter said, "will be repelled by any means necessary, including military force."
The sharply reduced dependence on Persian Gulf oil is raising questions about whether the Carter Doctrine should still apply.
Many of the recent wars in the Middle East have been linked to oil. When Iraq invaded Kuwait in 1990, threatening the Gulf oil supply, the United States and its allies intervened. The public aim was to help Kuwait restore its sovereignty and restore its oil.
There will clearly be to a shift in the political nature of US involvement in the Middle East as US foreign policy and military commitments in the Middle East have long been tied to US dependence on oil from the region. However, there is a massive Global security rationale for US power projection that is not entirely dependent on oil.
On the military front the US has massive commitments to its allies in the Persian Gulf and will need to keep a watchful eye on events in Iran, Afghanistan, Pakistan, and Israel's borders.
The economic cost has been huge as the US has constantly posted men and material in the region and fought 2 large wars to secure Iraq and is fighting another in Afghanistan. Furthermore, the US has consistently said it is willing to go to war to keep the oil flowing. The Pentagon's new defense strategy, released last January, said the United States should "rebalance" toward the Asia-Pacific region. But it did not call for a downgrading of the US role in the Middle East.
On the political front, things may change a bit. The need to keep the oil flowing has meant US administrations have consistently supported the unsavoury leaders of the oil nations in the Middle East. The Shah of Iran and the current Saudi regime are good examples of totalitarian states that have escaped criticism. The Arab Spring proved that the US is in part willing to allow regime change in its client states in the Middle East, even with the potential disruption to oil flows.
The old myth that the high price of oil will lead to an economic collapse has been well and truly disproved. At one stage commentators thought oil at 50 dollars would be a disaster for the global economy. This price has been consistently surpassed for a long time and the world has still survived.
So the US is quite happy tinkering with the political merry-go-round in the Middle East and replacing one regime with another. It can even unilaterally decide who can do deals with Iran and sway Saudi Arabia's hand to pump more oil. Have you noticed that OPEC meeting are no longer important as the organisation has been conveniently neutralised on the global stage.
Currently the largest clients of Middle Eastern oil are China, Japan and Korea. Persian Gulf oil will remain important, and somebody will need to secure those Gulf shipping lanes. These countries are benefiting from the huge US security presence in the region, and yet does little to assure that flow is not disrupted by local tensions.
If the US pulls out of the Persian Gulf, the nations of East Asia will either have to play a bigger military role in the Middle East, or find other sources of oil. America might have sufficient new-found reserves of fossil fuel to supply Japan and South Korea in an emergency, but concern about access to Persian Gulf oil would undoubtedly exacerbate tensions over who owns contested oil reserves in the South China Sea and elsewhere.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.