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Monday, November 19, 2012
U.S. Redraws World Oil Map
By NCPA @ 3:08 PM :: 7778 Views :: National News, Ethics, World News, Family

U.S. Redraws World Oil Map


The shale-oil boom can help the United States surpass Saudi Arabia as the largest oil supplier by 2020, according to the International Energy Agency (IEA). Such a change could have major ramifications for U.S. politics and diplomacy. In short, the global energy map is being reconfigured due to the resurgence of America as a major gas producer, says the Wall Street Journal.

The IEA is joining other forecasters such as the Organization of the Petroleum Exporting Countries (OPEC) and the U.S. Energy Information Administration in predicting the sharp rise in U.S. oil production in the coming years.

  • U.S. oil production is projected to be at 11.1 million barrels a day in 2020.
  • The IEA says natural gas will displace oil as the largest single fuel in the U.S. energy mix by 2030.

Kevin Book, managing director at Clearview Energy Partners LLC, observes that American energy policy is still influenced by the experiences from the 1970's supply shocks. However, the current reality is the age of energy adequacy.

  • According to an analyst at Raymond James, the question is: will federal regulators allow these exports to materialize?
  • Allowing exports could be politically tricky. The crude export ban was designed to ensure U.S. energy security following the Arab oil embargo in 1973.

The current ban will create limitations.

  • The United States could soon be awash in easier-to-process domestic crude oil -- with no way to get rid of the excess supply, because U.S. law generally bans crude-oil exports.
  • That would force new investment in refining capacity for lighter, sweeter grades of oil.
  • Nonetheless, to realize America's full potential as an energy supplier while boosting the economy, it must commit to global markets.

Regardless of the limitations facing export, there is a strong domestic market.

  • Made-in-USA oil is already displacing imports of similar crude from West Africa, and the market for it could be saturated as early as 2013.
  • Within a decade, the IEA forecasts U.S. oil imports will fall by more than half, to just 4 million barrels a day from 10 million barrels a day currently.

OPEC will continue to be the powerhouse of global production, the agency said, but a growing portion of its output will go to nations like China and India instead of North America.

Source: Benoit Faucon and Keith Johnson, "U.S. Redraws World Oil Map," Wall Street Journal, November 13, 2012.


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