I wasn't more than 30 minutes outside of D.C. the other night before my cell phone started ringing.
The calls involved breaking new developments overseas that promise to have a big impact on the global energy markets. They concerned a major global energy situation that is likely to create a domino effect that will have consequences for U.S. domestic policy.
No, this is not a doomsday script or a peak oil scenario.
It concerns what I have often termed the "energy balance." And the problem will hit in other parts of the world first.
And the prospects of keeping the country afloat have now become more problematic…
It will result in supply constrictions and regionally-specific pricing accelerations.
This made my exit from Washington rather interesting. Even though the elected circus had decided to hightail it out of town, there were still plenty of people working inside The Beltway.
In fact, the folks that remained are the ones I prefer to work with.
These are the career specialists, seasoned veterans and experts who remain in the policy trenches-and they know their business.
And despite their differing political opinions, the crew I know has managed to work together quite well. It is what has attracted me to this kind of work from the beginning.
As a pundit noted awhile back, the ship of state is the only one that leaks from the top. But these days the vessel is taking on water on all decks.
I have mentioned this in OEI before. But an essential element in a democracy is compromise. Unfortunately, there is less of that in Washington today than at any time in the four decades I have been making this trek.
What elected officials used to stand for has been replaced by what they now stand against. Legislative skill has been replaced by ideology.
In this political minefield, the middle ground where the compromise used to take place has disappeared.
Teetering Dominoes in the Middle East
From a policy standpoint, the professional crew in Washington (largely the folks, remember, who are staying, not rushing back home) have one overriding priority in the sequence of events that is unfolding. It is the simple fact that American strategic interests are advanced more easily if affordable energy is available worldwide.
The problem is rising energy shortages and costs are now a direct route to instability and radical solutions elsewhere. These limit leverage and realistic policy options while having a rather linear connection to import-export considerations defining U.S. prices at home.
These limits are already apparent in Washington's response to the events unfolding in Egypt. Make no mistake: While the focus has been on counter-demonstrations in and around Cairo's Tahrir Square, there are more pervasive concerns afoot.
One relates to the genuine threat to regional stability should the Egyptian military crackdown of the Muslim Brotherhood force the movement underground. Another involves the splintering of the civilian opposition to deposed President Mohamed Morsi, making a return to democratic decision-making uncertain.
That civilian opposition was a popular uprising in response to deteriorating economic conditions in the most populous MENA (Middle East North Africa) country. Once the dust settles (and that may be some time off), all of those problems will remain for any subsequent government.
Except now they are going to be more serious because of the underlying reason for the collapse.
Here is where the other shoe is falling…
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.