U.S. To Be World’s Top Oil Producer In Five Years, Report Says
The United States will overtake Saudi Arabia as the world’s leading oil producer by about 2017 and will become a net oil exporter by 2030, according to a new report released on November 12 by the International Energy Agency. That increased oil production, combined with new American policies to improve energy efficiency, means that the United States will become "all but self-sufficient" in meeting its energy needs in about two decades — a "dramatic reversal of the trend" in most developed countries, the report says.
"The foundations of the global energy systems are shifting," said Fatih Birol, Chief Economist at the Paris-based organization, which produces the annual World Energy Outlook, in an interview before the release. The agency, which advises industrialized nations on energy issues, had previously predicted that Saudi Arabia would be the leading producer until 2035.
The consequences are "potentially far reaching" for global energy markets and trade, the report said. Birol noted, for example, that Middle Eastern oil once bound for the United States would probably be rerouted to China. American-mined coal, facing declining demand in its home market, is already heading to Europe and China instead.
There are several components of the sudden shift in the world’s energy supply, but the prime mover is a resurgence of oil and gas production in the United States, particularly the unlocking of new reserves of oil and gas found in shale rock. The widespread adoption of techniques such as hydraulic fracturing and horizontal drilling has made those reserves much more accessible, and in the case of natural gas, resulted in a vast glut that has sent prices plunging. The report predicted that the United States would overtake Russia as the leading producer of natural gas in 2015.
The strong statements and specific predictions by the energy agency lend new weight to trends that have become increasingly apparent in the last year.
"This striking conclusion confirms a lot of recent projections," said Michael Levi, Senior Fellow for Energy and Environment at the Council on Foreign Relations.
Formed after the 1974 oil crisis by a group of oil-importing nations, including the United States, the International Energy Agency monitors and analyzes global energy trends to insure safe and sustainable supply.
Levi said that the I.E.A. report was generally "good news" for the United States because it highlights the nation’s new sources of energy. But he cautioned that being self-sufficient did not mean that the country would be insulated from seesawing energy prices, since those oil prices are set by global markets. "You may be somewhat less vulnerable to price shocks and the U.S. may be slightly more protected, but it doesn’t give you the energy independence some people claim," he said.
Also, he noted, the agency’s projection of United States self-sufficiency assumed that the country would push ahead with improving gas mileage in cars and energy efficiency in homes and appliances. "It’s supply and demand together that adds up to this striking conclusion," Levi said.