In the last episode, we were awash in gas: President Barack Obama is using the language of a shale gas enthusiast, crowing this week that the United States has sufficient reserves of the fuel to last 100 years. For that reason, the U.S. ought to push ahead with natural gas development, as long as safety concerns are kept in mind, said Obama (above, pictured this week on the campaign trail). Almost simultaneously, though, large volumes of that gas have vanished. First, the administration's own energy think tank -- the Energy Information Administration -- sharply lowered its estimate of U.S. shale gas reserves: rather than the 827 trillion cubic feet in unproved technically recoverable reserves announced last year, the EIA estimates that the country has 482 trillion cubic feet, or 41 percent less. The drop is understandable -- it has to do with the addition of completed wells, which provides more data points for the EIA to insert into its reserves model. But some serious analysts think even the lowered numbers are soft; Chris Nelder, for instance, writes that all that can be surmised credibly is an 11-year supply of gas at current consumption rates.

Then there is actual production. Chesapeake and ConocoPhillips have both announced the withdrawal of a substantial volume of gas from the market because of firesale prices that prevail, currently $2.77 per 1,000 cubic feet, compared with $13 in 2008. Chesapeake -- the second-largest U.S. gas producer -- said it will sell 8 percent less gas this year than last; Conoco says it will lower production by 4 percent. It is not that the companies are going broke -- as discussed previously, much of the gas is in the same geological formations as highly lucrative oil, so drillers themselves say they earn excellent profit regardless. Yet, they still would like to earn greater profit still by driving gas prices higher through the law of supply and demand -- currently, there is a super-glut of gas; they would like to reduce that to a mere glut. Of course, the drillers in part have themselves to blame for sagging U.S. gas demand: In 2009, the shale gas industry vigorously opposed Obama's push for cap-and-trade legislation, under which power plants would have accelerated their transition from coal- to gas-fired plants. The drillers would be selling much more gas, and prices would thus probably be higher. Alas, those politics were not to be. The Financial Times' Ed Crooks quotes Oppenheimer's Fadel Gheit: "I would expect all large gas producers without exception to scale back production this year."

These developments are important for a single reason: The U.S. is the epicenter of the global shale gas boom. Because of the U.S. bonanza, for example, Russia has been shaken in Europe. China might be next to join the boom. It is importing U.S. technology; if it succeeds in producing substantial shale gas, it could transform its own set of circumstances. But if the numbers are consequentially smaller than supposed, and if the market is slow to absorb the higher volumes, the geopolitical outcomes will be muted.

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In his State of the Union address last night, President Barack Obama spoke of the United States' unaccustomed new impact on global energy -- in addition to its habitual role as a world-class oil glutton, the U.S. is delivering a growing volume of oil and natural gas that has already shaken assumptions, and looks likely to roil geopolitics in a way favorable to Americans.

The speech put a spotlight on a new trend of plenty in the U.S. oil patch: On Monday, the U.S. Energy Information Administration reported that the U.S. is in the midst of a dramatic turnaround -- by the year 2035, U.S. demand for imported oil will have fallen by 18 percent, to some 7.36 million barrels a day, or a respectable 1.6 million barrels a day less than last year's volume.

Obama was citing the shift as a way to outflank Republican opponents and oil industry lobbyists who, as we've discussed, intend to spend outsized sums of campaign dollars on claims that he is choking oil production and jobs creation. Against that, Obama threw the oil and gas bonanza into a package, and said that the U.S. must both drill and spend much on futuristic clean-energy technology. The Republican response, by Indiana Gov. Mitch Daniels, suggested that Obama is an anti-oil ideologue.

That is politics, and we are sure to hear much on this subject from both sides through November.  What is most interesting from my own standpoint is the sober feel of the EIA's findings after the growing accumulation of punch-drunk forecasts from others: From an array of our best energy minds -- at ExxonMobil, BP, Daniel Yergin's CERA and others -- we have heard that, with the help of Canada and Mexico, the U.S. on the verge not only of the bright future described by the EIA, but of achieving the mythical state of energy independence (strike the operatic score.). These Wise Men foresee a doubling of North American production to a whopping 22 million barrels a day.

Among the geopolitical impacts of such a shift would be far more proportional influence from Middle Eastern and other petro-potentates. There would be more political balance.

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U.S. and European lawmakers may give Iran the right to earn some cash from natural gas sales -- as long as Russia might get it in the gizzard as a consequence.

The European Union yesterday voted to ban Iranian oil imports to all member states as of July 1, and to freeze the assets of Iran's Central Bank, reports the Wall Street Journal's Farnaz Fassihi and John Biers. U.S. and Europe also stopped transactions with Bank Tejarat, the last Iranian bank handling large purchases and sales of the nation's oil; the move means that any institution anywhere in the world doing business with the bank could be subject to sanctions of its own, reports Bloomberg's Indira Lakshmanan. The moves are part of a significant financial tightening of Iran's capacity for earning any money that could assist its presumed efforts to build a nuclear weapon (above, Tehran's money bazaar, which had a run on the rial yesterday).

But EU and British officials, along with the London-based oil company BP, think that a gigantic natural gas project in the Caucasus country of Azerbaijan ought to be exempted from the noose. The BP-led Caspian Sea project, known as Shah Deniz, contains the oil equivalent of about 6 billion barrels of natural gas and gas liquids. By 2019, BP plans to hit peak annual exports of about 25 billion cubic meters of gas from Shah Deniz.

The catch is that Iran's state-owned Naftiran Intertrade possesses a 10 percent ownership stake, so stands to earn quite a bit alongside BP and other shareholders. Iran obtained the share in the 1990s, when the local politics favored including as many big neighboring and international players as possible to encourage the stability of the project. But now BP - along with the British government, for whom BP is the country's largest publicly traded company -- fears a serious stumbling block should the international wrangling with Iran drag on through the decade.

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In the new issue of Wired, Julie Eilperin writes that clean-technology investment is in the throes of going bust, at least in the United States. That includes solar, wind and biofuels. A U.S. presidential election year and the continuing Solyndra bankruptcy scandal are combining to seriously undercut federal subsidies, she reports. As usual, China is providing stiff competition (the New York Times' Charles Duhigg and Keith Bradsher produce a long, must-read dive into why China and not the U.S. is likely to continue to dominate manufacturing). But the main culprit is cheap natural gas, Eilperin asserts. The shale gas boom, allowing for electricity prices of 10 cents a kilowatt-hour, has eroded the chances of solar and wind to compete.

As discussed over the weekend, Citi Group analyst Edward Morse concludes that shale gas (pictured above, part of a hydraulic fracturing operation in South Montrose, Pa.) could fuel a U.S. industrial renaissance, specifically in energy-intensive products such as chemicals, plastics and housewares. But to the degree that Morse is right, it is coming at a cost, which is a "clean tech meltdown," according to Eilperin:

Because natural gas has gotten so cheap, there is no longer a financial incentive to go with renewables.

Already, shale gas has seriously undermined Russia's petro-fueled influence in Europe. Now Eilperin suggests some of the most highly promoted technology of recent years is under challenge.

The confluence of reports of turbulence in the energy space is striking. Eilperin's account of a bursting clean-tech bubble coincides with a parade of reports of a fresh surge in South and North American oil production, and animated forecasts of regional fossil fuel self-sufficiency in the coming decade or so.

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The U.S. presidential election, energy and saving America: In the 2008 U.S. presidential campaign, one defining difference in the two major candidates was their approach to energy. Barack Obama promised green jobs and a cleantech-based manufacturing resurgence, and John McCain's supporters retorted "Drill, baby, drill." So far, the signs are that these themes will be reprised just as volubly four years later. For their part, the Republican candidates are pounding the table that, though faced with almost 9 percent unemployment, Obama is failing to tap a fail-safe job creator --the oil patch. So far, the cream of the U.S. energy braintrust is more in line with Republican thinking. This week, BP joined prior forecasts by Goldman Sachs, Edward Morse, Daniel Yergin and others in suggesting that the U.S. is on the cusp of a new industrial revolution based on a shift that, as far as I can tell, none of them was talking about until about four or five months ago.  At once, say these Wise Men, the U.S. along with the whole of the Western Hemisphere is about to be saturated in fresh oil reserves on top of the shale gas already in abundance. This fossil fuel bonanza - in the ultra-deepwater Gulf of Mexico, the shale of North Dakota, the sands of Canada and elsewhere -- will put millions to work, and activate a boom in energy-intensive industries, they say. In Alberta a few days ago, Citibank's Morse, the most formidable intellect in the bunch, described a generations-long, petro-driven economic boom built on petrochemicals, fertilizers, steel, housewares, pantyhose and more. Social thinker Joel Kotkin places these energy developments within a larger narrative that he calls "America's Moment." This group is battling it out for when it all begins, ranging somewhere in the next five to 30 years.

One Republican talking point is to scorn Obama's rejection of the 800,000-barrel-a-day Keystone bitumen pipeline from Canada to Texas. Here is Newt Gingrich, the winner of today's GOP primary in South Carolina (also pictured above):

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Until a few days ago, high gasoline prices threatened to bring down Nigerian President Goodluck Jonathan. A denial of oil markets to Iran is currently raising the specter of deadly brinksmanship in the Strait of Hormuz (pictured above, looking peaceful off the coast of Oman), and potential terrorism in Saudi Arabia. Now, if U.S. President Barack Obama's opponents have their way, his rejection of a new oil pipeline from Canada will help to incite his ouster later this year.

Ever since the mid-to-late 19^th century, when Edwin Drake discovered oil in Pennsylvania and the Czar freed up drilling in Baku, the passions unleashed by energy have played an outsized role in local- and geo-politics. Yet there is something different today in sheer scale -- although wars and brandished fists over oil are not new, we'd need to go back to the Teapot Dome scandal of the 1920s, for instance, to find a pure energy event that so threatened an occupant of the White House.

The storm of energy-driven geopolitical turbulence shows no signs of letting up any time soon. One impact is in the price of oil, which traders are keeping above $100 a barrel mostly over Iran, and the potential loss of some 17 million barrels a day to the market should it mine Hormuz or achieve the same outcome with speedboat harassment of tanker traffic. As precedence, traders are harking back to the nightmarish 1980s "Tanker War" between Iraq and Iran in which some 250 supertankers were sunk, write the Financial Times' Javier Blas and Caroline Binham. If it were not for such tension, traders might bid oil prices below $90-a-barrel, judging by a new International Energy Agency report that absolute global oil demand had a rare overall decline last year, and may fall in 2012 as well.

Oil prices are a prime geopolitical metric given their affect on the economic health of nations, along with their ability to at turns embolden or depress the leaders of nations like Russia, Venezuela and Saudi Arabia. But there are additional measures of energy's intensified geopolitical impact.

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Texas, the deliriously pro-oil birthplace of modern hydraulic fracturing -- the method used to crack open shale and extract its gas and oil -- is about to force all drillers by law to do what many opposed: mandatorily disclose many of the chemicals that they inject into the Earth. As of Feb. 1, drillers must also reveal how much water they use, writes Kate Galbraith in the Texas Tribune. The question is to what degree Texas' move - six other U.S. states also require disclosure, writes NPR's Scott Detrow -- will defuse critics who portray the fracking industry only a bit less demonically than Salem did its witches.

Of all the ways devised to provide energy to the world, none today seems to excite greater passions than hydraulic fracturing, known for short as fracking. The practice has generated a frenzied gas rush in the United States, reports Bloomberg, creating both great wealth and geopolitical turbulence as an unexpected bonanza has shifted the global energy balance. At once, the U.S. has shifted from a gas deficit to a huge surplus, cutting electricity prices last year in half, according to Bloomberg, and China may go the same way. Russia's powerful gas primacy in Europe has been undermined.

Against this, fracking has sparked a robust protest movement that accuses drillers of poisoning drinking water, triggering earthquakes, and ruining roads and landscapes. Bulgaria last week, for instance, issued a moratorium on fracking (Sofia protest pictured above), joining France and Quebec as places stopping the practice. Such resistance has been egged on by intense industry secrecy, along with the traditional fierce independence of the oil patch.

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Role-playing in the Persian Gulf: Iran continues to insist that it is building an innocent nuclear power industry but, as it discovered again this week, a successful serial assassin does not believe it. Mostafa Ahmadi Roshan is the fifth Iranian nuclear scientist to be slain in four years, writes the New York Times' Scott Shane, who reports on a general spate of mayhem rained on Tehran's purported foray into nuclear energy. At New York magazine, Dan Amira regards the predicament of Iranian nuclear scientists as an opportunity for amusement. Certainly there is something darkly satirical about Iran's self-parody. If you really are only developing nuclear power, open the whole thing up like a public swimming pool so any mystery vanishes. If you, conversely, are carrying out as everyone assumes -- that is, developing nuclear arms -- why stir the pot with provocative outbursts all-but certain to lead to attempts to confound your program? Why not wait until your work is complete before throwing sand into others' eyes?

Whatever the case, the U.S., Europe and an important majority of their allies have agreed collectively to stop buying Iran's 2.3 million barrels a day of oil exports. Of Iran's major customers, only China and perhaps Turkey so far refuse to go along. The client for some 540,000 barrels of Iranian crude a day, China will probably continue this trade and store the crude in its strategic petroleum reserve, reports the Financial Times' Javier Blas. As for the rest of Iran's output, those familiar with oil smuggling have assumed that Iran will simply turn to deep discounts in order to unload its crude on the black market, but Blas writes that Tehran may have a difficult time doing so because of a global embrace of the sanctions.

Iran has threatened to block the Strait of Hormuz, but probably won't do so since it would be one of the primary victims of such a blockade, assert Frank Verrastro, David Pumphrey and Guy Caruso at the Center for Strategic and International Studies in Washington. Yet one cannot feel entirely certain about that, they add. "Desperate nations driven to the brink sometimes do desperate and unpredictable things, and even if short lived, disruption to shipping in the Gulf would undoubtedly wreak havoc in oil markets," the trio says.

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