TO ENTER TAFT, two hours north of Los Angeles, you drive along the “Petroleum Highway”, past miles of billboards advertising Jesus. God’s country is also oil country. Spread over the sagebrush hills surrounding the town are thousands of steel pumpjacks (pictured), contraptions that suck oil out of the ground. They look like a herd of dinosaurs. Some Californians would describe the oil industry in the same way.

The oil produced at Taft is not produced by hydraulic fracturing, or fracking, as much of it is in Texas and North Dakota. It is so heavy it needs to be steamed out of the ground, in a process known locally as “huff and puff”. Yet Kern County, with Taft on its western edge, produces 144m barrels of oil a year, the second highest output of any county in America. Fred Holmes, a third-generation oilman and patron of the West Kern Oil Museum, says he is proud of the heritage, however much it irks local drivers of electric Tesla cars that the Golden State has such a carbon-heavy underbelly. “Oil is renewable energy. It just takes longer to renew,” he quips. He has built a giant wooden derrick at the museum to celebrate it.

In its heyday, oil was prized in southern California. The Lakeview Gusher, which blew on the edge of Taft in 1910, became as emblematic of a boom era as the gold rush farther north. Taft also played a starring role early on in the geopolitics of energy. In 1910 the American navy, worried about its dependence on insecure coal supplies, commissioned its first oil-fired destroyer. Two years later President William Taft created the first naval petroleum reserve in Taft’s Elk Hills to guarantee supplies of oil in the event of an international crisis. It came into its own in the second world war, when production soared. The president gave the town, formerly called Moron, a better name.

Since then the geopolitics of energy—usually defined as the impact of energy flows on the power and influence of nations—has been mostly about the world’s thirst for oil. The efforts to secure it, safeguard its shipment, stop enemies from getting or keeping hold of it, and monopolise it if possible, loomed large in 20th-century history (see chart).

Since oil and gas are exhaustible and not available everywhere, they have often been rationed, to the benefit of an oligopolistic group of producers. Consuming nations have long felt that the scarcity of oil makes them more vulnerable. That is why, since the Arab oil embargo of 1973, every American president has seen the country’s dependence on imported oil as a weakness. Policies like the “Carter Doctrine” proclaimed by the then president in 1980, which asserted the United States’ right to use military force to protect its strategic interests in the Middle East, were aimed at ensuring a stable supply of oil.

This notion of scarcity is coming to an end, thanks to three big developments. The first is America’s shale revolution, which has turned the country into the world’s biggest combined producer of oil and gas (see chart). After decades of declining output since the 1970s, America is now producing as much oil as it has ever done: 10m barrels a day in November last year. It is making the country less reliant on imported oil, which has helped it shed a long-standing paranoia about such dependence. This could reduce the country’s need to expend blood and treasure to protect supply routes from the Middle East. And it has added an abundance of oil and gas to world markets that has benefited energy consumers everywhere.

The second major change is taking place in China as it attempts to move from an energy-intensive economy to a more service-led one. Without choking off economic growth, in the past few years it has made staggering progress in moderating its demand for coal and oil, slowing the rise in electricity consumption, deploying gas and renewable energies and arresting the growth of carbon-dioxide emissions. It remains the world’s biggest importer of fossil fuels, but its experience with filthy air and its concerns about over-dependence on imported oil have made it keener to harvest more of its own wind and sunlight. It also has by far the world’s most ambitious plans for electric vehicles. Subsidies and a streak of energy authoritarianism have played a big role. But in its own way, China’s energy transition has been as remarkable as America’s.

These two developments play into the third, longer-term trend: the need to create a low-carbon energy system to fight climate change. The Paris agreement of 2015, though a milestone, still leaves a huge distance to travel before global warming can be stopped. To achieve that, trillions of dollars will have to be invested in wind and solar energy, batteries, electricity grids and a range of more experimental clean-energy sources.

This so-called energy transition has set off a global race for the best technologies and raised concerns about access to the rare earths and critical minerals needed to make the necessary hardware. As Francis O’Sullivan of MIT Energy Initiative, part of the Massachusetts Institute of Technology, puts it: “We are moving from a world where the value of the energy is embedded in the resource to where technology is the resource.”

The democratisation of energy

This special report will look at the energy transition from the perspective of America, the EU and China as well as petrostates such as Russia and Saudi Arabia. It will pinpoint winners and losers. It will argue that America is at risk of squandering an early lead, obtained by using natural gas and renewables to slash emissions, promoting clean technology and helping pioneer the Paris agreement. China is catching up fast. Saudi Arabia and Russia are in most obvious peril.

The past few years of growing American self-reliance and Chinese self-restraint have offered a glimpse of the foreign-policy implications of a new energy order. For America, some see it as a windfall, the title of a recent book by Meghan O’Sullivan of Harvard University. She says the shale revolution has helped temper predictions of American decline, made it easier to impose sanctions on adversaries, helped create a global gas market to ease Russia’s stranglehold over Ukraine, and reduced tensions over China’s pursuit of energy resources. She describes it as “a boon to American power—and a bane to Russian brawn”.

That may be over-optimistic. Russia and the OPEC oil cartel have been surprisingly successful at cutting production to counter the shale glut. They have also turned towards China, which is pouring money into their energy infrastructure. Most important, American shale risks entrenching reliance on oil even more deeply in the global economy, with potentially perilous consequences for the climate. If America focuses too much on producing fossil fuels, it may lose sight of the need to develop cleaner energy for the future.

The geopolitical implications of the broader energy transition will be even more complex. When in January a global commission to study the geopolitics of clean energy was launched under the auspices of the Abu Dhabi-based International Renewable Energy Agency, the underlying hope was that such a development would make the world “more peaceful, stable—and boring”. Champions of clean energy believe that boring is good. Unlike hydrocarbons, renewable energy is potentially available almost anywhere. Collaborative efforts to halt global warming could lead to open-source development and the sharing of technology. As power generation becomes more dispersed (examples include Germany, China and California), regions may become more self-sufficient in energy, a process labelled “energy democratisation”. In Africa and elsewhere, enhanced access to energy, via mini-grids and rooftop solar panels, could reduce energy poverty even as the global population is soaring.

The beauty of the energy transition, enthusiasts believe, will be to give communities “super powers” over their energy, not turn countries into energy superpowers

David Criekemans of the University of Antwerp points out that from the Industrial Revolution onwards, energy transitions such as that to coal and then to oil have changed the world. This latest one could have equally far-reaching effects. “The [nation] state and central power supply go hand in hand. They need one another,” he writes. He expects decentralisation of the energy supply to boost the power of regions in relation to central authorities. The beauty of the energy transition, enthusiasts believe, will be to give communities “super powers” over their energy, rather than turn countries into energy superpowers.

Yet the transition has plenty of potential to cause geopolitical friction, too. The most obvious example is the challenge it will pose to economies that depend on petroleum. A new book, “The Geopolitics of Renewables”, edited by Daniel Scholten of Delft University of Technology in the Netherlands, argues that the clearest losers will be those blessed with ample fossil-fuel reserves and those who bet on oil for too long without reforming their economies. The book also notes that,whereas in the traditional energy system the main constraint is scarcity, with abundant renewables it is variability. This could be mitigated by cross-border energy trade, but that, too, could cause arguments.

As economies become more electrified, with “supergrids” to handle the additional power demand from urbanisation, electric vehicles and unimaginable quantities of data, the risks could multiply. Grid politics could replace pipeline politics. Ukrainian saboteurs, for instance, reacted to Russia’s annexation of Crimea by cutting off electricity supplies to the peninsula in 2015. Chinese investment in grids in Europe and Australia is also under scrutiny, on national-security grounds. And ever more electrified economies are at ever higher risk from cyber-attacks.

The new power tool

It seems inevitable that the geopolitics of energy will develop into a contest to see which country can produce the most energy of its own, and which has the best technology. Miguel Arias Cañete, the EU’s commissioner for climate and energy, explains that, “We are on an irreversible pathway to renewable energy…those who don’t embrace the clean-energy transition will be losers in the future.”

The EU has set itself a clear goal to decarbonise all energy by 2050, and has appropriate market structures in place. That puts it in a strong position. China, too, is firmly committed to clean energy and boasts some impressive clean-tech entrepreneurs. America, for its part, has invented much of the world’s clean-energy technology; and the shale revolution has opened up vast potential supplies of natural gas that can generate electricity far more cleanly than coal, serving as a bridge to a lower-carbon future. But the country risks losing its focus. It is divided between fossil-fuel fundamentalists, mostly Republicans, and clean-energy enthusiasts, mostly Democrats, who cannot agree on the best way forward for the economy and for the climate.