Articles

The small open economies of the Gulf and Southeast Asia are pioneers in the establishment of

Sovereign Wealth Funds (SWFs). The SWFs of countries like Qatar and Singapore are among the

world’s largest in terms of total asset size relative to Gross Domestic Product. This article looks

at the different compulsions behind the setting up of SWFs by small open economies.

The world's energy system needs rebuilding. The Paris agreement to keep global warming “well below 2 °C above pre-industrial levels” demands that we replace fossil fuels with solar, wind, geothermal and biomass energy. The price tag is vast: investing US$120 trillion in energy projects between 2016 and 2050, at twice the current annual rate of $1.8 trillion a year, will deliver a 66% chance of achieving the Paris target. We must halve oil production and stop using coal to produce electricity.

Professor Meghan O'Sullivan was interviewed on November 15th, 2015 for a Wall Street Journal special section on energy, discussing the rapid transformation of the American energy sector in light of low fuel prices, new climate policies and other factors.

States have long worried that their dependence on oil gives producers a means of coercion. The oil market, however, is far larger and more integrated than it used to be. The potential for coercion differs across a series of distinct market segments. In this varied market, the United States remains the dominant force.

The upstream renaissance in the United States that has resulted from the successful application of new technologies in the exploration and development of shale gas has generated ripples through the global gas market. The US is soon to become a significant exporter of liquefied natural gas (LNG), which is remarkable given conventional wisdom just a decade ago was that the US would become a substantial importer of LNG.

While the 2014 Ukrainian crisis is far from over, policy debates surrounding the standoff between Russia and the United States and Europe already offer some important lessons on the gap between the policy world and the realities of energy markets. In this communication, we will discuss three policy proposals proposed between February and April 2014 as an illustration of the aforementioned mismatch, and explain their broader implications.

Only five years ago, the world’s supply of oil appeared to be peaking, and as conventional gas production declined in the United States, it seemed that the country would become dependent on costly natural gas imports. But in the years since, those predictions have proved spectacularly wrong.

While the threat of "resource wars" over possession of oil reserves is often exaggerated, between one-quarter and one-half of interstate wars since 1973 have been connected to one or more of eight distinct oil-related causal mechanisms. Understanding these mechanisms can help policymakers design grand strategy and allocate military resources.

U.S. scholars and policymakers commonly worry that a lack of "energy security" hurts U.S. national security, yet few have analyzed the links between states' energy requirements and the probability of military conflict. An investigation of these links identifies threats to U.S. national security flowing from other countries' consumption of oil, rather than just U.S. consumption. Furthermore, while many of the security threats associated with Persian Gulf oil have decreased, new oil-driven dangers are emerging in Northeast Asia.

Energy is important, but energy independence is a dangerous myth. The U.S. National Petroleum Council recently observed: "There can be no U.S. energy security without global energy security." Oil flows in a world market and events anywhere affect the price of oil everywhere. There is no escaping these oil price shocks. Even if the United States were to substantially reduce its own oil consumption, there would be no immunity from the effects of high world oil prices that would determine domestic energy prices and ripple through the world economy. Geology and politics make the world deeply interdependent and policy should be crafted to promote and secure energy interdependence. Real energy security comes from robust energy systems with diversity and flexibility, not through isolation and energy autarky.