Blog

U.S. to Overtake Saudi Arabia in Oil Production

Despite our still sagging economy, there are some bright spots out there, one being oil production. A newly released report by the International Energy Agency predicts that the United States will overtake Saudi Arabia in oil production, possibly as soon as 2020:

The United States will become the world’s largest oil producer by around 2020, temporarily overtaking Saudi Arabia, as new exploration technologies help find more resources, the International Energy Agency forecast on Monday.

In its World Energy Outlook, the energy watchdog also predicted that greater oil and natural gas production — thanks partly to a boom in shale gas output — as well as more efficient use of energy will allow the U.S., which now imports some 20 percent of its energy needs, to become nearly self-sufficient around 2035.

That is ‘‘a dramatic reversal of the trend seen in most other energy-importing countries,’’ the Paris-based IEA said in its report. ‘‘Energy developments in the United States are profound and their effect will be felt well beyond North America — and the energy sector.’’

The report also echoes something discussed at Resourceful Earth: energy “independence” is often a confusing term and doesn’t mean much:

No country is an energy “island” and the interactions between different fuels, markets and prices are intensifying. Most oil consumers are used to the effects of worldwide fluctuations in price (reducing its oil imports will not insulate the United States from developments in international markets), but consumers can expect to see growing linkages in other areas. A current example is how low-priced natural gas is reducing coal use in the United States, freeing up coal for export to Europe (where, in turn, it has displaced higherpriced gas). At its lowest level in 2012, natural gas in the United States traded at around one-fifth of import prices in Europe and one-eighth of those in Japan.

Even if the United States produces all of the energy it needs, we are still going to be subjected to global energy prices — at least for the types of energy that can be exported. This is not to say that we shouldn’t care about energy production. It still brings lower global prices, high-paying domestic jobs, government revenue from taxation, etc. But we will still be impacted by the energy demands of the rest of the world.

Comments

Send a Reply