Introduction
Since the beginning of the industrial revolution in the 18th century, fossil fuels-first coal, and then oil and gas-have become the world's principal energy source, the engine of economic activity, and a pillar of global growth. Gaining access to and controlling energy sources has become an indispensable necessity in the race for survival and progress; thus, the production of energy has become one of the most important human activities in the modern world. It is now a commonplace idea that energy, and the control of energy-producing technologies, has been the key to civilizational advancement. The historical development of energy sources and technologies has passed from animal and human muscle power, to natural sources, such as water and wind, to coal and coal-powered steam, and, finally, to oil in the early 20th century. In less than three decades, the global energy regime switched to using oil as the world's main energy source, primarily because of its low production cost and its liquid nature, which facilitates its production and transport, making it a vital commodity.
Prior to the introduction of oil into the global energy system, humanity was not concerned whether or not sufficient energy 
reserves were available to support global demand. Such concerns have risen sharply since the appearance of new emerging economies, such as China and India; additionally, oil has finite reserves, is a non-renewable energy source, and has an extremely elevated rate of consumption that vastly exceeds nature's rate of oil production.
The oil industry's early history was marked by the discovery of the largest reserves of crude oil in specific geographic locations-primarily, the Middle East and Latin America-by Western companies based in Western Europe and the US. Given the present role of oil in the world economy, the question of access to energy sources and establishing control over them is a strategic matter for all countries, strongly influencing their economic and international policies.
Currently, and for many years to come, there is no objective reason to fear for the availability of energy sources to satisfy global demand. This was reconfirmed by the 2012 annual International Energy Association (IEA) report on the future of energy in the world. The report stated that there are sufficient energy reserves to satisfy the projected global demand for energy until 2035 and beyond. However, these conclusions are dependent upon the truth of the report's assumptions regarding the future price of energy and developments in extraction technologies.[1] Fossil fuel reserves, including oil, gas, and coal, are available in quantities capable of fulfilling the global demand for energy for decades to come. This is especially true regarding coal. Proven coal reserves exceed the combined global reserves of oil and gas, with the ability to power the international economy for 132 years-based on 2011 production levels.[2] On the other hand, global proven natural gas reserves-half of which are concentrated in just three countries: Russia, Iran, and Qatar-are capable of fulfilling the projected global gas demand, with combined proven reserves of over 232 billion square feet of natural gas.[3]
Globally, oil reserves should be able to supply global demand for 55 years based on 2011 production rates. Importantly, OPEC producers alone represent 71 percent of the proven oil reserves around the world.[4] All available data on proven conventional oil reserves show that there are no objective reasons to worry about potential supply shortages. In addition, more than 70 percent of the increases in the proven global oil reserves since the year 2000 have originated from revisions of data on existing oil fields, a process known as "reserves growth".[5] A mere 30 percent of new oil reserves is attributed to new discoveries.[6]
Moreover, the global oil sector has witnessed an unprecedented level of investment in the domain of oil exploration and production since 2003, reaching USD 1.5 trillion between 2010 and 2012 alone. These investments are capable of increasing the production capacity in most oil-producing countries in the coming years.[7] Notably, in the medium and long term, recoverable fossil fuel resources are much larger than proven reserves, and with the changing conditions of the global energy market and advancement in exploration and production technologies, a large share of these resources have been included in the "proven reserves" category.[8]
Though the production costs of these new forms of oil and gas deposits will doubtlessly be higher than those of conventional resources, the exhaustion of conventional reserves will likely force energy companies to seek new sources that require a more complex process of exploration and production. However, this cost will decrease over time and with the expansion of energy projects, as is the case with all investments in new domains and technologies, bearing a high cost initially before gradually decreasing. Even so, the cost of producing high-quality oil and gas from unconventional sources will never be as low as that of conventional oil and gas.
In developing its productive capacity of shale oil and gas, the US, offers a unique experience that might redraw the global energy map, especially if it is reproduced in other parts of the world. These developments are attributed to technological breakthroughs in the production of new types of oil and gas that are considered unconventional, such as shale gas; these breakthroughs may constitute a qualitative leap in the long-run production capacity of shale oil and oil sands in the US.
This paper focuses on this new trend in global energy, and examines its influence on oil prices in the international markets, as well as its long-run economic, political, and geostrategic implications for the Gulf Cooperation Council (GCC) states. This is the first academic study that examines the potential repercussions of the shale oil revolution on the economies of oil-exporting Arab countries, with a special focus on the GCC countries. The paper also presents a price-collapse scenario that will occur as a result of the US' shale oil revolution and the increasing global role of unconventional energy sources. This scenario is inspired by the "oil bust" model that took place during the mid-1980s because the causes for both are arguably the same, demonstrating that a new collapse in oil prices is probable.
The objective behind this paper is not to predict the future, but to attempt to shed light on it based on a "scenario methodology"-a general scenario method has been adopted by examining the main factors affecting the energy system and oil prices in the future. In this regard, there have been several consistent attempts by private and state owned companies to predict the future of the energy market using minute and complex economic models. However, international energy expert Jean-Marie Chevalier asserts that despite the existence of these sophisticated analytic tools, predicting the behavior of the oil markets remains an impossible task. All of the predictive models that have been formulated have mistaken the size of the oil and gas reserves, the cost of their extraction, the evolution of pricing, and the global levels of energy demand, as well as other factors affecting the energy markets in general and the oil and gas market in particular.[9] Consequently, a tendency has developed to rely on a "scenario methodology," which has been successfully applied in the energy domain by Shell since the early 1970s.[10] This method is one of the main tools used to conduct predictive studies of the medium and long term, which is particularly important for the purposes of strategic planning by companies, both public and private. The scenario method considers different visions of potential situations, seeking to objectively focus on the dynamics and the indices that can shape the critical junctures in the evolution of the energy system. The objective is less about predicting the future than it is about clarifying the prospective characteristics of the energy market and preparing for the unexpected. In other words, this is a tool composed of a mix between predictable and deterministic elements that cannot be accurately predicted. Herein lies the importance of the scenario method-its capability to surpass mental, cultural, political, and organizational limitations that restrict creative thought. In this way, this method is a suitable tool for uncovering the early signs of shifts and changes and their repercussions on the energy system, as well as permitting scientists to elaborate on precautionary measures and adopt changes before it is too late. The formulation of scenarios relies on a collective effort to identify the issues that may raise concerns or risks and the potential opportunities that may present themselves to an institution, state, or group of countries. Governmental and non-governmental organizations, such as the International Energy Agency, which issues an annual report on the future of global energy, often utilize the scenario method in planning their future.
All scenarios involve a significant margin of error because they are based on a complex sample of factors that are considered most influential, such as the technical data on reserves, production levels, technology, the scale and quality of the infrastructure, and the cost, addition to political, security, and economic factors. Nevertheless, no matter how comprehensive the list of factors, there is always the possibility that other factors may emerge that had not been taken into account.
[1] IEA,
World
Energy
Outlook, 63.
[2] Ibid.
[3] Ibid.
[4] Ibid.
[5] Reserves growth is defined as the estimated increases in crude oil, natural gas, and natural gas liquids that can be added to existing reserves through expansion, revision, and recovery enhancement technologies, in addition to discovering new oil layers and oil-bearing formations connected to main oil reservoirs. This refers to a revision of the size of previously discovered reservoirs, rather than new discoveries. For further information, see Maugeri,
Oil: The
Next
Revolution, iii.
[6] IEA,
World
Energy
Outlook, 98.
[7] Maugeri,
Oil: The Next Revolution, 2.
[8] This specifically refers to large quantities of unconventional oil and gas reserves that are available in many parts of the world, as evidenced by the American experience with shale gas.
[9] Chevalier,
Les Grandes Batailles de l'Energie, 25.
[10]Ibid.
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**This study was translated by the ACRPS Translation and English Editing Department. The original Arabic version can be found
here.
