Future Petroleum Geopolitics: Consequences of Climate Policy and Unconventional Oil and Gas

Abstract

This paper provides a comprehensive overview of how climate policy and unconventional oil and gas developments may influence global geopolitics. Advances in unconventional oil and gas production and the adoption of a more effective international climate policy impact on supply–demand balances in the petroleum sector, causing shifts in financial flows and capital accumulation. Such changes may in turn lead to shifts in the power balance between oil and gas exporting and importing countries. Because the relationship between exporting and importing countries in the petroleum sector is asymmetric, with a few exporting countries benefiting from the combined flows of revenue from many importing countries, exporting countries stand to lose more from a change in the status quo. The following interstate relationships may be particularly sensitive: the United States and the Gulf countries, Russia and the EU member states. Unconventional oil and gas may also play a role in the emerging superpower competition between China and the United States. The geopolitical changes one expects from unconventional oil and gas and climate policy depends on how one understands the current geopolitical situation in various parts of the world, and how strong the current geopolitical competition is seen to be.