Energy, coming in its great majority from oil and gas has become a strategic factor in global geopolitics. It is key to national power and a major requirement for economic growth. Energy consumption has become the most palpable national characteristic that separates rich from poor countries. The United States, the richest nation in the "room" is also the most intense user of energy per capita.

There is a substantial imbalance in the location of energy producers and consumers, an imbalance that has precipitated world conflicts and one that will likely cause future upheavals. There is huge activity by China buying energy resources all around the world. Russia's recent ascendancy in the energy world has been an important counterbalance to the power of OPEC. However, recent events surrounding Russia's energy industry have exposed fissures within the economic and political makeup of the country.

The United States Shale Revolution has, and will, bring market distortions throughout the entire nation and to many others such as the energy-starving, Southeast Asia markets of China and Japan. The recent removal of restrictions on LNG exports by the American government means that new forces will be implemented on both demand and supply of those markets. I believe that the globalization of gas trade will make prices of natural gas to converge and thus we will witness a more "unified" price regime in the not-too-distant future. Predictions of the future supply of petroleum have typically been far less accurate than predictions of demand. Flawed predictions have caused public bewilderment, distrust and, more importantly, government inaction or poorly conceived reactions. The cause of every energy crisis, like oil climbing to $150 per barrel in 2008 before dropping to $40, is above the ground geopolitics and never behind the valve issues.

This paper applies basic economic principles to assess the effects of present-day geopolitical forces on energy markets, particularly those of natural gas, around the globe arriving on a number of interesting conclusions. Topics touched include Chinese urbanization, United States LNG exports, Keystone XL Pipeline, Russian nationalization over its energy industry and its relationship with former Soviet Union countries.

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