Early last year (IC, 29 April 2011), we highlighted that "the prospect of future energy deficits" was spurring global energy heavyweights like
According to the IEA, the US is set to become the top oil-producing country by the end of the decade, while almost half of all new oil production through to 2035 would be attributable to Iraq (including Kurdistan). Surprisingly, the report also states that renewable technologies will be the world's second-largest source of power generation by 2015 and could close the gap on coal as the primary source by as early as 2035. The renewable energy sector attracts criticism from some quarters because of the level of government subsidies it attracts, but the IEA report points out that last year there was a 30 per cent increase in global fossil fuel subsidies to a staggering $523bn (£327bn).
Subsidies aside, the IEA report's prediction that the US oil production will outstrip that of Saudi Arabia's by 4.7 per cent by 2020 attracted most attention. The US should be pumping around 11.1m barrels of oil a day by then, which is equivalent to an eighth of global demand. Assuming no more major oil finds, by 2030 the desert kingdom will probably have regained its primacy. But by then it's likely that the US will have weaned itself off costly oil imports. It's difficult to assess the implications for the US economy, though, presumably, it could lead to a reversal in the country's trade deficit; oil accounts for around 20 per cent of US imports and more than half of the country's deficit. It would also be reasonable to expect that US manufacturing costs will contract, particularly given cheap domestic gas supplies - another benefit that has accrued from the unconventional oil and gas segment.
Probably the best known shale oil deposit in the US is the Bakken Formation that straddles the border with Canada, but here's one to watch - oil companies are now exploring ways in which to unlock the resources of a shale deposit located beneath parts of Utah and Colorado that is so large it could conceivably outstrip the aggregate reserves of the OPEC members. A report published by the US Government Accountability Office estimates that if just half of the shale oil locked in the Green River Formation could be recovered, it would be "equal to the entire world's proven oil reserves".
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