US to Become the World’s Largest Oil Producer by 2017, IEA Says
On 12 November 2012, the International Energy Agency (IEA) said that the United States was set to overtake Saudi Arabia as the world’s top oil producer by 2017, with the extraordinary growth in oil and natural gas output in the US bringing a shift in global energy balance.
**US Oil Output to Overtake Saudi Arabia’s**
In its yearly publication “World Energy Outlook”, the IEA, which advises large industrialised nations on energy policy, noted that the US, the world’s biggest fuel consumer, was on track to become a net exporter. “The United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in energy, in net terms, by 2035,” the Agency said in a press release, announcing the WEO publication.
“Around 2017, the U.S. will be the largest oil producer of the world, overtaking Saudi Arabia,” IEA Chief Economist Fatih Birol pointed out at a press conference, as quoted by Bloomberg. Reuters reports that the IEA’s forecast is in sharp contrast with previous projections, which saw Saudi Arabia remaining the world’s top producer until 2035.
The Financial Times, however, notes that other analysts have warned that the US oil boom was still in its early stages, meaning that continued growth to the levels predicted by the IEA could not be guaranteed.
Bloomberg in turn quotes Gareth Lewis-Davies, an analyst at BNP Paribas SA (EPA:BNP), as saying that the IEA energy outlook “feeds into the idea of a shift in the centre of influence in the world oil market.” Mr Lewis-Davis, however, added that Saudi Arabia would retain a large degree of influence and remain a significant “price-influencer”.
**Unlocking “Tight” Resources**
!m[Global Energy Map Changing Dramatically ](/uploads/story/772/thumbs/pic1_inline.png)The IEA outlook highlights the dramatic growth in shale oil production in recent years, and the use of techniques such as hydraulic fracturing, popularly known as “fracking”, and horizontal drilling. “The recent rebound in U.S. 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,” the IEA notes in its report, as quoted by Reuters. The IEA also points out that by 2030, gas will overtake oil to become the largest fuel in the US energy mix.
**Spike in Global Oil Demand**
Bloomberg quotes data by the US Energy Department indicating that the US, whose imports of crude oil have decreased by 11 percent in 2012, is on track to produce the most oil since 1991. The IEA, however, warns that despite the positive prospects for US oil and gas output, the country will not be insulated from developments in international markets. The FT quotes the agency as saying that no country is an “energy island”.
Reuters reports that the Agency also noted that the projected rise in world population to 8.6 billion would lead to a spike in global oil demand by more than a 10th by 2035, keeping pressure on oil prices. China, India and the Middle East are projected to account for the 60 percent of the increase, whereas demand in the leading industrialised nations would “barely rise”.
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