Reviewed by: Rachel Hobbs, Lauren Hawley and Daniel O’Connell, GMU Student Contributors
Executive Summary of Key Points
Meghan O’Sullivan’s book Windfall: How the New Energy Abundance Upends Global Politics and Strengthens America’s Power (2017) discusses how countries around the world are anticipated to change their strategic interests in the new era of energy abundance marked by the boom in oil and gas production from unconventional oil. Primarily written from the perspective of the US, Windfall outlines not just how production has increased in the US, Russia, and Saudi Arabia in particular and outstripped global demand, but how global demand is in the long run stagnant or, by some estimates, in decline. The pressure exerted from both the supply and demand sides has squeezed the oil and gas industry and forced prices downwards.[1]
O’Sullivan dedicates the first three chapters on the historical background and development of oil and natural gas. She gives the audience a common perspective to springboard her discourse in global geopolitics, explaining how the unconventional oil and gas boom in the United States came to pass and conveying in broad strokes the massive impacts of the boom on geopolitical forces. The next three chapters focus on the United States, first evaluating the feasibility and benefits of energy independence in this new era of energy politics, then discussing the (largely positive) ramifications of the new energy order on United States hard and soft power. The following chapter, arguably the weakest in the book, attempts to grapple with the environmental ramifications of energy abundance, with limited success. The remainder of the book discusses the impacts of the unconventional oil and gas “windfall” on Europe, Russia, China, and the Middle East, which are, according to O’Sullivan, primarily beneficial for all parties with the exception of Russia and, to a lesser degree, the Middle East.
Summary of the Book’s Main Themes
O’Sullivan integrates three main themes throughout her work: energy abundance; American national security; and transforming geopolitical relationships and dynamics. On the theme of energy abundance, countries are split into three categories. First are the “losers” in the era of energy abundance, generally oil exporting countries that depended upon traditional fossil fuel exports for a large amount of their revenues, such as Venezuela and Angola (O’Sullivan, 2017, pp. 5). According to O’Sullivan, sustained low oil prices, brought on too quickly to generate new revenue streams, sent these countries immediately into financial crisis. Second, there are countries for whom the new energy abundance is a welcome surprise, spiking positive growth into their economies. These “winners” include China, who is now able to be more broad and flexible in the definition of and pursuit of their foreign policy goals, and Europe, who has enjoyed a consistently growing economy (O’Sullivan, 2017, pp. 5). Winning economies are typically oil and gas importers. Finally, the last category is that of countries that experience the new energy abundance as a “mixed blessing” (O’Sullivan, 2017, pp. 5). Both the United States and Japan reflect mixed blessing economies because consumers in both cases welcomed the relief of lower oil and gas prices, but it also made it challenging for other aspects of the economy. For example, low gas prices have exacerbated problems with deflation of the Japanese yen, which has experienced persistent deflation since the country moved to a floating exchange rate regime in 1973. Meanwhile, though the shale gas boom has of course been a great boon to the United States’ economy and power on the global stage, O’Sullivan recounts the disappointment experienced by regulators as American consumers did not translate the new excess of disposable income into greater aggregate demand, and investment declined with shareholder-owned oil and gas companies reporting their worst indicators since the Global Financial Crisis of 2008. Regionally, many countries in the Middle East experienced this same mixed blessing, although these countries are primarily oil and gas exporters, while some countries have seen decline, large resource stores and continued need for oil and gas have left the Middle East in a relatively secure position.
O’Sullivan predicts, with startling accuracy, that sustained low oil prices will leave Russia with an unhappy populace, which Moscow will seek to soothe via military successes, leaving many allies of the United States at risk.
According to O’Sullivan, American national security – Windfall’s second major theme – is overall in a much stronger position both in terms of hard and soft power as a result of the new energy abundance. The new era of Great Power Competition between the US, China, and Russia has been transformed by the new energy abundance. O’Sullivan predicts, with startling accuracy, that sustained low oil prices will leave Russia with an unhappy populace, which Moscow will seek to soothe via military successes, leaving many allies of the United States at risk. Perhaps even more importantly, China has been freed from the pressure to secure its energy needs, which often placed it in direct opposition with the Western world both due to competition for resources and China’s willingness to finance a “gallery of rogues” (O’Sullivan, 2017, pp. 230) to obtain a steady supply of energy. Since the windfall from the energy abundance, China has been able to pursue a broader set of foreign policy objectives, such as promoting its own variation of the Chinese Dream, that are more popular on the global stage – and less threatening to American national security.
Of course, these national security concerns, whether alleviated or exacerbated, are inseparable from transformations in geopolitical relationships and dynamics. Just as China’s expanded interests have lessened national security concerns, O’Sullivan claims that the Washington and Beijing have new opportunities to work together on promoting mutual interests and diplomatic cooperation as a result of how the energy abundance has shifted both countries’ strategic priorities, offering policymakers an opportunity to de-escalate the conflict. Meanwhile, the energy abundance has been an important factor in shaping the current alliance between President Xi Jinping and President Vladimir Putin, as Putin faces diminishing markets and constrained policy alternatives, while Xi experiences greater energy security and broadening political options. Finally, the new era of energy abundance has, according to O’Sullivan, essentially defanged the Organization of the Petroleum Exporting Countries (OPEC), leaving markets somewhat more vulnerable to price spikes. O’Sullivan illustrates this point with OPEC’s decision not to intervene during a period of low prices in the mid-2010s, as it had in the past, to curtail oil and gas production and raise the price of oil. This decision, O’Sullivan argues, was driven by a disastrous attempt by OPEC to raise prices by cutting production in 1985 and 1998. Prices remained low while Saudi Arabia was sent into a financial crisis as their current account balance deteriorated. While OPEC did ultimately intervene and found some mixed success in raising oil prices temporarily, it has become increasingly clear that OPEC does not hold the same power it once did over energy markets, leaving the US’s shale oil reserves as the new, and arguably less effective, de facto stabilizer in global energy markets.
Reviewer’s Critique of the Book
Overall, O’Sullivan’s Windfall is an engaging and well-researched book whose strengths lie in its detailed historical account of oil and gas in the 20th and 21st centuries, its accessibility to a non-technical or non-expert audience, and O’Sullivan’s personable and accessible writing style, which focuses on a personalization of current events through her interviews of high-level officials and emphasis on individual rather than institutional factors. However, the book fails to overcome the politicking, eurocentricity, and pro-fossil fuel biases that color O’Sullivan’s past – and current – career interests.
From the get-go, O’Sullivan acknowledges that the book “concentrates primarily… on the impact of energy changes in the oil and gas sector” because “for the time being, global politics are shaped far more by fossil fuels than by any other energy source” (O’Sullivan, 2017, pp. 9). In addition to snubbing renewable energy sources, Windfall is almost criminally limited in its discussion of the environmental consequences of fracking, which can be severe (Saiers, 2020), and human-driven climate change, which is already linked to five million deaths a year (Lombrana, 2021). Of course, no book can be limitless in scope – but a consideration of such human impacts of the current energy mix, at least briefly in the chapter specifically on climate change, would have added balance to what is otherwise a blatantly pro-fracking book. Instead, O’Sullivan uses this chapter to craft strawman arguments against unconventional gas, which she, unsurprisingly, handily dismantles to draw the conclusion she wants. O’Sullivan introduces these “arguments” via the introduction of two fictional “interlocutors” – one who believes the shale gas boom is beneficial to the environment, and one who believes it is detrimental (O’Sullivan, 2017, pp. 147). O’Sullivan first acknowledges that both perspectives are correct, to an extent – and then proceeds to attack the arguments of only the anti-unconventional gas debate. This misstep leaves the entire chapter feeling unbalanced and uncomfortably partisan. While O’Sullivan plays a non-advocate throughout Windfall, the chapter on climate change smacks uncomfortably of bias, leaving it difficult not to feel as though the reader is being sold an agenda – one paid for, at least in part, by O’Sullivan’s contract work with large gas companies (“Meghan O’Sullivan,” 2022).
At the same time, Windfall’s strength is in the level of detail and depth O’Sullivan is able to include about individuals and their perspectives which stems from her background as a diplomat and political appointee. The author can recount first-person diplomatic conversations with foreign ministers and heads of state, weaving together introductions that are engaging and often insightful. Conversations with individuals like Prince Abdul Aziz bin Salman, a member of Saudi Arabia’s royal family, help color the narrative and aid the reader in understanding in detail why particular events unfolded the way that they did. These anecdotes, along with several helpful graphics, support the laudable readability of the book. O’Sullivan expertly condenses mountains of information and pages of geopolitical techspeak into an engaging, digestible narrative that can be picked up without any background in the subject whatsoever. In this way, O’Sullivan unlocks a relatively obfuscated field to analysis and criticism by the wider public.
Of course, details are lost in translation from expert to layperson, and Windfall is no exception. O’Sullivan sometimes gives the impression that a single factor, or even a single person, is at play in shaping a particular outcome, while the reality is far messier and more challenging to convey and understand. For example, O’Sullivan attributes the financial crises experienced by some countries as being directly attributable to low oil prices. A more complex and realistic chain of causation, perhaps too technical for many audiences, is that oil and gas exports for these countries form a significant part of the current account balance, which is only one-third of a country’s significant accounts (the other two being the capital account and official reserve transactions). These “losing” countries are unable to offset the decline in exports by drawing down their foreign reserves or by attracting foreign savings. Overall, financial crises are not just attributable to a single factor but reflect imbalances in the payments that countries could be unable to overcome for a variety of reasons, before being on the receiving end of an International Monetary Fund care package. Due to O’Sullivan’s more simplified causal chains of analysis, at times, O’Sullivan’s perspective teeters on the edge of coming across as nationalist because the tendency is to paint the picture that being a net energy exporter in the case of the US is somehow inherently better – which is not necessarily true (Shiller, 2016). It does mimic, however, a recent trend among policymakers and politicians to value a trade surplus (exports exceeding imports) over trade deficit (imports exceeding exports) because it is culturally equated with being a stronger and more self-sufficient nation (Shiller, 2016). O’Sullivan flirts with this idea in her discussion of how the surge in oil and gas exports will lead to a boost in both American hard and soft power, and overall does more to engage the idea than she does to dismiss it.
In that same vein, O’Sullivan’s background as an influential American political figure and member of the foreign policy “blob,” as coined by Ben Rhodes, can be a double-edged sword. The scope of countries that she analyzes and the manner in which they are addressed and treated is epistemically grounded in a US-centric framework. This may make the book accessible and relevant for O’Sullivan’s intended audience, but for readers looking for a truly international and unbiased perspective on energy politics, it may be best to look elsewhere. For example, O’Sullivan justifies the US invasion of Iraq and advancing against Saddam Hussein, but there are plenty of ruthless dictators around the world that the US has been more than happy to partner with. While she raised this discussion to clarify an important distinction between strategic and commercial interests, a valuable endeavor, her arguments at times boil down to claims that the US invaded Iraq legitimately because of strategic interests that O’Sullivan deems legitimate. O’Sullivan goes on to insinuate that the US will continue to engage in the Middle East to maintain these interests, a future that O’Sullivan paints in a positive light – an idea that induced a sense of deep discomfort for readers who were uncomfortable with the US invasion of Iraq, the racist nature in which the conflict began and continued to play out, and the humanitarian consequences that endure 20 years later.
O’Sullivan chooses the words “windfall” and “abundance” to represent the shale oil boom, in an effort to distance the phenomenon from the more hard power-focused, divisive rhetoric implied by phrases like “energy dominance.” Meghan O’Sullivan brings this thoughtful, image-conscious approach to bear expertly in Windfall, both to its benefit and detriment. The book is carefully considered, well-researched, and easy to read – however, it is also carefully calculated to support American fossil fuel interests. Such interests are protected in American policy in much the same way they are in this book – with more diplomatic care than blatant corruption. Time will reveal the consequences of this protection, though despite the sunny narrative on display in Windfall, the future looks dim.
Works Cited
Lombrana, L. (2021, July 7). Climate Change Linked to 5 Million Deaths a Year, New Study Shows. Bloomberg. https://www.bloomberg.com/news/articles/2021-07-07/climate-change-linked-to-5-million-deaths-a-year-new-study-shows
Meghan O’Sullivan. (n.d.). Harvard Kennedy School. Retrieved March 29, 2022, from https://www.hks.harvard.edu/faculty/meghan-osullivan
O’Sullivan, M. (2017). Windfall: How the new energy abundance upends global politics and strengthens America’s power. Simon & Schuster.https://www.nytimes.com/2016/10/16/upshot/whats-behind-a-rise-in-ethnic-nationalism-maybe-the-economy.html
Saiers, J. (2020, June 30). Science as a Foundation for Policy: The Case of Fracking. Yale School of the Environment. https://environment.yale.edu/news/article/science-as-a-foundation-for-policy-the-case-of-fracking
Shiller, R. J. (2016, October 14). What’s Behind a Rise in Ethnic Nationalism? Maybe the Economy. The New York Times. https://www.nytimes.com/2016/10/16/upshot/whats-behind-a-rise-in-ethnic-nationalism-maybe-the-economy.html
[1] This paper is in response to an assignment in the course, Introduction to Energy Law, EVPP 505-202/POGO 750-021, taught by Professor Bubbosh.
Image: World Affairs Council