[V]ladimir's Putin's haste to sign a deal that had been in the making for more than a decade confirmed his country's political weakness. Despite being buoyed by high energy prices in the first decade of this century, Russia is in decline. Demographically it is shrinking; it has severe health problems (the average Russian male dies in his early 60s); and it is a "one-crop economy" heavily dependent on energy exports. Russia needs reforms to build a diversified, entrepreneurial economy, but its actions in Ukraine have brought on sanctions that weaken its access to Western ideas and technology. Becoming China's gas station does nothing to reverse this trend.

The real geopolitical shift is the shale-energy revolution that took off in the past decade. While the technologies of horizontal drilling and hydraulic fracturing are not new, their pioneering application to shale rock is largely a product of American entrepreneurship in the past decade.

Ten years ago, many experts were speaking of "peak oil"--the idea that even reserves in Saudi Arabia had topped off. The U.S. was regarded as increasingly dependent on energy imports and was building terminals to import high-priced liquefied natural gas. Instead, North America is now building terminals to export its low-cost LNG, and the continent is expected to be self-sufficient in energy in the 2020s, according to a broad consensus of energy experts. The Energy Department estimates that the country has 25 trillion cubic meters of technically recoverable resources of shale gas, which when combined with other oil-and-gas resources could last for two centuries.