US to become the biggest oil producer, says IEA13 November, 2012, 0:29. Posted by Zarathustra
Earlier this year, we mentioned some research which projects that the increase in production of oil thanks to the shale revolution in the United States in the recent years (and decrease in demand) will possibly make the US new Middle East, so to speak.
The International Energy Agency (IEA)’s latest forecast at the World Energy Outlook 2012 points to a similar conclusion, namely, that the US could become the largest oil producer by 2020, and become a net oil exporter around 2030:
Energy developments in the United States are profound and their effect will be felt well beyond North America – and the energy sector. The recent rebound in US oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity – with less expensive gas and electricity prices giving industry a competitive edge – and steadily changing the role of North America in global energy trade. By around 2020, the United States is projected to become the largest global oil producer (overtaking Saudi Arabia until the mid-2020s) and starts to see the impact of new fuel-efficiency measures in transport. The result is a continued fall in US oil imports, to the extent that North America becomes a net oil exporter around 2030.
IEA’s Chief Economist Fatih Birol also told FT:
The US, which imported a substantial chunk of oil from the Middle East, will be importing almost nothing from there in a few years’ time.
The chart below (that we posted before) shows the break-down of the US trade balance over time. We mentioned that excluding petroleum products, trade deficit is now around half the level of the pre-financial crisis peak. That is, we believe, simply part of the consequence of the rebalancing in the global economy, where major exporters like China are having much smaller trade surplus than they used to have. It is very easy to see that if petroleum trade balance continues to fall, the overall trade deficit will be reduced further, all else being equal. That is, of course, only possible if such optimistic energy production projections are realised.