This week, the International Energy Agency (IEA) released a report stating that North American shale and oil sands development is “reaching all recesses of the global oil market” and, most importantly, displacing OPEC supplies. As the report continuously echoes, North America is altering the entire global energy equation and enabling the United States’ highest level of energy security in two decades, all while boosting our economy, creating jobs, and providing a resurgence in domestic manufacturing.
According to IEA’s report, North America will provide 40 percent of new global oil supplies in 2018, while OPEC supplies will decrease to only 30 percent — a development, as Bloomberg describes, that is sending “shockwaves” throughout the global oil trade.
More from the report:
“Incremental North American supply clearly played a critical role in offsetting record supply disruptions in 2012, and is likewise forecast to help offset decline rates elsewhere through the forecast period.”
“…The forecast of non-OPEC supply growth has been adjusted upwards, with North America now forecast to grow by 3.9 mb/d from 2012 to 2018, accounting for more than half of the increase”.
And as the report emphasized, this isn’t occurring in a vacuum. The development of American shale resources is creating a “chain reaction” in the global transportation, processing and storage industry – actions that may escalate as other countries try to replicate the American oil boom. As Bjarne Schieldrop, chief commodity analyst at SEB AB, describes it, this development is “a godsend solution for a market where emerging market demand is continuing to increase, while supply in the Middle East and North Africa won’t increase that much”. He may just be right.
That the global balance of power in energy is being shifted toward North America is, without question, a significant development. For decades, the United States has been conditioned to think of energy in terms of scarcity. “We’re running out of oil,” or “we need to import natural gas.” Thanks in large part to shale, we’re suddenly staring at surpluses of oil and natural gas, enough to make us not only more secure, but also able to spur new economic growth through increased domestic usage – and even exports.
Even more impressive: As America’s – indeed, the entire world’s – energy supply story is revolutionized by the development of our vast shale reserves, that development is also helping to accelerate an industrial renaissance in the United States, which we’ve discussed on several occasions.
Increased energy security. A stronger economy with more jobs. A revitalized manufacturing sector. Can there be any legitimate doubt that shale development in the United States has been an enormously positive story?