The world’s reserves of shale gas will frack the Middle East

We’re on the cusp of a geopolitical watershed.

The oil states of the Middle East will lose their guaranteed cash cow as world-wide stocks of shale gas are both plentiful and wide spread

Prince Alwaleed bin Talal, the billionaire Saudi investor, made a telling intervention in his country’s domestic politics last week, with an open letter arguing the U.S. shale gas revolution threatened its economy.

His point was a simple one, and well made. If America needs less Saudi oil, that can only be bad news for the nation exporting the stuff. It better start diversifying into other industries — and fast.



But the same point can surely be made about a lot of other countries. It is not just the U.S. that happens to have a lot of shale gas; it is just the first country to start exploiting it on a large scale. And Saudi Arabia is far from the only country dependent on energy exports to keep its economy afloat. There are plenty of others.

In truth, shale gas is going to re-arrange the winners and losers in the global economy. And as that happens, investors will need to rearrange their portfolios as well.

Like any major new energy source, shale gas has the ability to confer massive wealth on some countries — and take it away from others. So how will that play out over the next decade?

It is certainly interesting that we have seen a total dominance of the oil-rich states and we are about to see it decline during our life time.

Peak oil wasn’t so much about running out, it’s more about finding new technologies to extract vast new reserves of natural resources.

Countries such as Saudi Arabia can try and diversify into new industries, but in truth, if that were easy they would have done it by now. Iran will be in a lot of trouble, and so will Libya, and Gulf states such as Qatar. You wouldn’t want to bet too much on Dubai prospering if it is not the financial hub of one of the world’s wealthiest regions any more.

Nigeria and Venezuela will be under pressure. Norway is the world’s sixth largest oil exporter: it has sensibly saved a lot of that wealth, but it will be hard to remain one of the world’s richest countries if that industry goes into decline. Russia might have its own shale gas, but it is oil exports that keep it afloat.

Many of those countries have regimes that will collapse if the economy runs into serious trouble. Will the governments of Saudi Arabia, Iran, Russia, Nigeria or Algeria survive a serious economic depression?

Call me a pessimist, but I can see the beginnings of a whole set of fresh armed conflicts there.

It is mostly good news though, as long as you’re not mostly dependent on export earnings from crude oil right now.  The world continues its expansion of technology and industry without the Chicken Little future the Green Taliban would like you to have believed had arrived a decade or two ago.

I think I’ll go for another drive.

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As much at home writing editorials as being the subject of them, Cam has won awards, including the Canon Media Award for his work on the Len Brown/Bevan Chuang story. When he’s not creating the news, he tends to be in it, with protagonists using the courts, media and social media to deliver financial as well as death threats.

They say that news is something that someone, somewhere, wants kept quiet. Cam Slater doesn’t do quiet and, as a result, he is a polarising, controversial but highly effective journalist who takes no prisoners.

He is fearless in his pursuit of a story.

Love him or loathe him, you can’t ignore him.

To read Cam’s previous articles click on his name in blue.