A decade ago, there were fears the United States would be increasingly dependent on an unstable Middle East and a hostile Venezuela for oil imports. There were worries that US liquid natural gas prices would be determined by the price of imported LNG. Today, the United States stands poised to pump unprecedented quantities of liquefied natural gas into the world market as early as this year, a move that would overturn the geo-politics of global energy.

The shift occurred because of the US surge in production from gas fracking, especially as Saudi Arabia did not reduce its oil production to stabilise prices at a higher level.

This development, coupled with renewed supply from Iraq and Libya as well as reduced demand arising from the economic slowdown in China and the recession in Europe and the US, resulted in a sharp fall in the oil price. Earlier projections of continued increases in demand were based on continued healthy economic growth and tighter supply. The assumption was that a lack of new sources of production would lead to rising prices for oil and natural gas and a growing emphasis on energy security as consumers tried to lock-in supplies even as alternative sources of energy were promoted. It is now recognised that the majority of these alternative sources are not commercially viable unless subsidies are provided.

… Barry Desker is distinguished fellow and Bakrie Professor of Southeast Asia Policy, S. Rajaratnam School of International Studies (RSIS), Nanyang Technological University, Singapore.