Energy Consumption Per Capita — Part 4

Geopolitics Explained

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9 min readJun 27, 2024

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Is The United States Energy Sector Grid-Locked or Amped-Up?

Contents

Introduction
Exploring Energy Trade
Lessons For India
The Fight For Global Supply Chains
Concluding Remarks

Bitesize Edition

In any country’s energy portfolio, trade is a key aspect to explore. A country exporting more than it imports is usually an indication of an energy-secure nation. We find the United States is in this position for certain commodities in the energy sector.
This came in part due to the US shale revolution which kicked off in 2014. US energy imports dropped sharply in 2014, and exports continue to rise to this day. This paved the way for the United States to achieve a level of energy security that nations could only dream of.
As some sectors have thrived, others like the nuclear sector, have seen adoption stifled by red tape and regulation. Attitudes are changing now under the Biden administration, with many nuclear plants seeing life extensions and restarts. But how secure would the US be now if its nuclear sector had been built out over the last few decades?
What lessons can India learn from the US energy profile? I’d argue India can learn what not to do through the US approach to nuclear. One nation they could look to for how to approach nuclear is the Chinese. Find out more below.

Introduction

There’s more to discuss regarding the energy profile of the United States including energy trade, the role the shale revolution plays in the US, lessons India can learn from these developed countries, and how the world fragmenting is especially relevant to the energy sector. Find out more below.

Exploring Energy Trade

It is prudent to look at how heavily a country relies on imports for energy, especially in a world where self-sufficiency is prioritised. The trade category I’ll explore is mineral fuels, oils and waxes, which includes the following products, among others:

Coal
Lignite
Peat
Coke
Non-Petroleum Gases
Crude Oil
Refined Oil
Petroleum Gases
Electrical Energy

Below are the imports and exports to and from the United States in 2021, by country traded with.

We can see the US exports more than it imports, an initial sign of energy security. We can look deeper at these trade relationships and their changes to see who the United States is increasing and decreasing trade with, but that’s a discussion for another day. For now, let’s look at how this import-export relationship has changed over time, further highlighting the American energy security situation.

Figure 3 — US Imports Of Energy Over Time

The Shale Revolution in 2014 delayed the predicted summit of Hubbert’s Peak and has led to natural gas being a much larger provider of energy security for the United States, as seen by the large drop in energy imports. They currently find themselves in a natural gas glut, as many oil fields produce natural gas and natural gas liquids as a byproduct, hence contributing to lower natural gas prices versus other places around the world.

The role of natural gas in the energy security of the United States was clear at the onset of the Russia-Ukraine War, when EU natural gas prices spiked, and there were worries regarding whether Europe would be able to fill natural gas storage for the winter. They did fill the storage, and a mild winter also helped. However, many of these natural gas contracts were purchased by outbidding nations with less buying power, such as Pakistan and Bangladesh. During the same period, US natural gas prices also spiked, but not nearly as much as those in Europe.

Some suspect the natural gas prices in the US and the EU will converge towards each other over the coming years and decades. However, what if the US just seeks to keep its natural gas to protect its own energy security? Also, there is a lack of export infrastructure on the US East Coast, and the Jones Act, a law requiring goods shipped between two US ports to be on US-built and owned vessels, limits the ease of energy movement by waterways within the United States. If this is to become an eventuality, it will take time.

Another sector where the United States can control its energy security is nuclear.

Photo by Lukáš Lehotský on Unsplash

Uranium producers in a list by volume places Canada 2nd and Australia 4th, both of whom hold close relations with the Americans. In a “slowbalisation” environment, having friends with things you need is helpful.

As I state rather frequently, wind and solar have a place in our diversified energy future, but you can’t control the weather. Energy security comes from controlling what you can control. That comes from rich reserves to manage crises or to hedge against the weaponisation or fracturing of supply chains, both of which will come in a future where the trend is towards a split in the global system. A lack of energy security gives your geopolitical opponents options to use against you, whereas an ample reserve of energy gives them very less to damage you. As I discussed last Monday with the US-China trade war, states want manoeuvrability because with it comes options. The same concept applies to energy.

The US is in a great position. Natural gas will play a huge part in the future of heating buildings and providing electricity, and the Biden administration has seemingly taken a new attitude to uranium and nuclear power. Wind and solar buildout continues, but currently high interest rates on any energy project, even those projects outside renewables, are making it difficult.

Photo by KWON JUNHO on Unsplash

The Inflation Reduction Act is aiming to aid this increased speed of energy transition needed, but the aid provided needs to keep energy security, and the quality of the energy it is pursuing in mind. There’s no point committing heavily to renewables unless your environment suits it, otherwise, you’re sat in the cold and the dark. There could be environments within the US suited to either wind or solar, but intermittent sources need backups. Batteries aren’t there yet but could be one day. So we need baseload backups.

Sources that can be held in ample reserve will protect energy security, but red tape and bureaucracy need to be carefully addressed to reduce the barriers to make this happen. Especially within the nuclear sector, regulation has limited, not advanced, the sector that could support this future energy security.

As India finds itself developing, can it learn any lessons from the United States now?

Lessons For India

Big clunky, unoiled systems get slow, lazy, and bureaucratic. This slows them down, stifles innovation, and stagnates productivity.

One such industry where this has occurred is the nuclear industry in the United States. So much so that primary energy consumption by nuclear has been dropping.

To me, India can learn a lot from the developed countries of today, but it’s so they can avoid similar situations that hinder growth and clean transition.

Photo by Max van den Oetelaar on Unsplash

A country India can look to is its often geopolitical rival, China. It is known local governments in China are riddled with high debts. However, if we take debt-to-GDP ratios, the metric often used, we naturally focus less on one aspect of the ratio. We look at the rising percentages as a function of rising debt, without considering the impact gross domestic product has. A debt-to-GDP ratio can also be decreased by increasing economic activity. The infrastructure projects in China are innovative. They have a thorium-fueled molten salt-cooled nuclear reactor in the middle of the Gobi Desert in China’s north. Startup costs are expensive and mining thorium isn’t the cheapest, but innovative projects such as this advance humanity and can produce economic activity to reduce debt-to-GDP through economic growth.

Guess which country houses the largest reserves of thorium in the world? India. They’re in an advantageous position where improvements to quality of life will lead to high GDP growth. This could finance a future where India innovates its energy sector, looking towards those taking the risks such as China, and then laying the groundwork in innovative, exciting industries such as nuclear.

Looking towards the United States, India can learn how to take advantage of and leverage its environment. The shale revolution is doing just that for the United States. Taking a long-term view towards innovation like the world’s biggest rising power in China, and leveraging your environment to achieve energy security like the United States are two key lessons India could gain from these two geopolitical superpowers.

The Fight For Global Supply Chains

Earlier I mentioned the fracturing world. The US is a maritime global superpower. China is a land-based global power. We’ve got Mahan’s Theory of Ocean Power vs Mackinder’s Heartland Theory.

This question is one that is emerging in geopolitics. Control of the world’s oceans has granted us the period of globalisation backed by the US Navy for security. However, barriers to war are falling. Anyone with a drone can stop traffic through the Suez Canal. Anybody can blow up a pipeline or snip a fibre optic cable. The ocean is a dangerous place, and is the US’s role in the protection of the oceans changing? Where are the US’ spheres of influence today? Is there too much on the US plate of interest? So much so that it will have to pick and choose regions of focus?

Photo by Michael Afonso on Unsplash

On land, China is expanding its Belt and Road Initiative, a modern take on the Ancient Silk Road. Where do its spheres of influence fall?

Geography is destiny. Today, the two superpowers are vying for control of key geographic choke points and spheres. In the fast-moving world of geopolitics, this can change in a heartbeat.

If, one day, this world splits in two, the level of resources each side possesses, the military strength, and the energy portfolio of the collective sides will shape the future of geopolitics. Being energy self-sufficient before this point ensures it doesn’t threaten the stability of the world we live in and these countries individually. Energy security is a function of all this.

What if, lo and behold, these nations and their allies aren’t self-sufficient by this time, especially in energy? Just some food for thought.

Concluding Remarks

Energy = life, and so in this clean energy transition, we somehow need to accelerate the pace of it, while still ensuring quality of life doesn’t fall.

This series has been a part of my exploring the metrics of energy efficiency. Next week, I’ll explore the role energy efficiency and energy consumption per capita both play in the cycle of countries’ development, and how technological innovation plays a part.

Thanks for reading! I’d greatly appreciate it if you were to like or share this post with others! If you want more then subscribe on Substack for these posts directly to your email inbox. I research history, geopolitics, and financial markets to understand the world and the people around us. If any of my work helps you be more prepared and ease your mind, that’s great. If you like what you read please share with others.

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Energy Consumption Per Capita — Part 4

Written by Geopolitics Explained