North America leads shift in global energy balance, IEA says in latest World Energy Outlook
Int’l Energy Agency | Nov 12
The World Energy Outlook finds that the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows. In the New Policies Scenario, the WEO’s central scenario, the United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in energy, in net terms, by 2035. North America emerges as a net oil exporter, accelerating the switch in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to Asia by 2035.
U.S. to become world’s largest oil producer by 2020, report says
The Los Angeles Times | Nov 12
U.S. oil production peaked in 1970 at slightly more than 9.63 million barrels a day. Except for a modest recovery to fewer than 9 million barrels a day in 1985, U.S. crude production had been on a precipitous decline until 2008, when it bottomed out at 5 million barrels a day, seeming to validate the “peak oil” theory that output would continue falling. That was also the year that oil reached a record price of $147.27 a barrel.
But those oil prices spurred important technological developments that enabled those looking for oil to essentially see through the bottom of rock as though it were transparent, said Philip K. Verleger Jr., a visiting fellow at the Peterson Institute for International Economics.
Energy Independence in the United States? Don’t Pop the Cork Yet
The New York Times | Nov 13
Even if the United States were no longer dependent on oil from the tumultuous Middle East and North Africa, vital American trading partners like China, India, Japan and Europe would continue to import increasing amounts of oil from the region. Future price shocks at the pump would still be likely as long as the world depended on unsteady producing nations like Venezuela, Nigeria, Iraq, Libya and Iran, where politics often mixes inharmoniously with crude.
“This isn’t the end of history,” said Michael Makovsky, a Pentagon official in the George W. Bush administration. “If we are going to be a consumer of oil, it’s better that it be our oil rather than from the Middle East. But the oil market is still global, and the North American oil market will still be greatly impacted by developments in the Middle East.”
Despite oil boost, U.S. not in clear yet
The Houston Chronicle | Nov 14
Some energy company executives already are questioning the forecast. David Roberts, the chief executive of Marathon Oil, which has extensive domestic drilling operations, told investors on a webcast Tuesday that IEA’s findings might be too optimistic.
“I don’t see it, in terms of this country matching Saudi Arabia,” he said.
What’s more, being the biggest producer would mean little to U.S. consumers. We won’t be paying less at the pump because, as the IEA notes, “no country is an energy ‘island’ and prices for all fuel sources are increasingly global.”
Newfound U.S. Oil Wealth Won’t Lower Gas Prices
MIT Technology Review | Nov 13
Although the report says the U.S. will be “all but self-sufficient” by 2035, that doesn’t necessarily mean prices will go down. Because oil is easy to ship around the world, the price for oil is set by global demand, and demand in places such as India and China is expected to keep growing. That’s in part because of subsidies for fossil fuels, which rose 30 percent between 2010 and 2011 to reach $523 billion, the report says. (Many governments around the world are likely to reduce fossil fuel subsidies as they become increasingly expensive.)
2012 World Energy Outlook from the International Energy Agency
Econbrowser (Prof. James Hamilton) | Nov 13
None of this is to deny that U.S. production of oil and gas from tight formations is going to bring significant economic benefits to the United States, nor that the geologic potential for a remarkable transformation in Iraq could well be there. But I think anyone who concludes from this report that we are about to return to the kind of world we inhabited in 1970 may be in for an unpleasant surprise.
Historical and projected US Oil & Gas Production
Source: IEA World Energy Outlook 2012