A few years ago, prominent advocates of the peak oil theory warned us that the world was running out of hydrocarbons, especially crude oil, and that an energy crisis of epic proportions loomed that could bring our industrialized, high-tech civilization to a standstill. The peak oil pessimists were well-educated, well-respected, veteran industry analysts - and, boy, were they wrong.

The world wasn't running out of oil. We were running out of cheap, easily recoverable oil. Led by US independents, the petroleum industry discovered a way to produce oil in abundance from shale and tight subterranean formations. Even though the process was costly, it was economic as long as oil and gas prices remained sufficiently high. The break-even point was generally considered to be about $65 per barrel for crude oil - more in some places, less in others.

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Government house in Baku, Azerbaijan

I bring this up because the resilience of the North American petroleum industry to come back seemingly from the edge of the abyss is not merely an accident of geography. While it is accurate to say that the US and Canada have an abundance of hydrocarbon-bearing shale formations, so do other parts of the globe. Not only did it take determined scientists and engineers to make this happen, it took business sense and political will as well. Here in the US, we tend to take this for granted, but we shouldn't. Many countries lack this progressive, entrepreneurial way of thinking. The can-do spirit that helped create the world's strongest economy is not present everywhere.

The International Energy Agency recently released a review of energy policies in 11 countries in Eastern Europe, the Caucasus region, and Central Asia that play a significant role in world energy security. Four of the countries - Kazakhstan, Turkmenistan, Azerbaijan, and Uzbekistan - possess substantial oil and gas resources in the Caspian Sea, which offer game-changing potential for energy consumers in Europe and Asia. Other countries, including Ukraine, Georgia, and Belarus, are important transit countries in the region, and their stability is critical to energy security, according to the report.

The 11 countries - which also include Armenia, Kyrgyzstan, Moldova, and Tajikistan - are diverse politically and economically with distinct energy sector challenges. However, the report says that lack of long-term vision and planning is common across the region, and the countries must prioritize strategic energy policy development in order to build a more secure and sustainable future.

"Isolation and rigid thinking are not in the region's long-term best interest," said IEA Executive Director Maria van der Hoeven. "The key ingredients for a sustainable energy sector in all of these countries are cooperation and evidence-based strategic planning."

Officials with the European Union said that adopting and implementing the IEA report's recommendations would enhance energy security across a wide region. In short, the recommendations for reforming their energy sector are critical to the future of the 11 nations, including raising the standard of living for their citizens.

Among the IEA recommendations:

Reduced investment barriers;
Liberalization of markets;
Increased energy trade and integration with regional markets;
Increased conventional and unconventional fuels production;
Utilizing renewable energy potential;
Maximizing energy efficiency gains;
Diversifying energy supplies;
Stronger rule of law.

Although oil and gas resource-rich countries such as Azerbaijan, Kazakhstan, Turkmenistan, and Uzbekistan have developed their economies through oil and gas exploration and production over the past several decades, the energy sector in those countries tends to be rigid and under tight government control. The report says the countries would benefit greatly from energy reforms that increase market and trade competition, diversify energy sources, and increase regional integration.

The Shale Revolution that has vastly increased oil and gas production in the US and Canada has also benefitted the citizens of both countries by assuring a reliable supply of affordable energy to them. Also, the more domestically-produced energy you use, the less money you send out of the country. Other countries that are fortunate enough to have energy reserves, be they hydrocarbons or hydroelectric, wind or solar, would do well to consider a way to exploit that potential for the long-term benefit of their citizens.

Developing the energy sector

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