New numbers predict not only that the U.S. will surpass Russia and Saudi Arabia as the world’s top oil producing nation, but that the U.S. will become nearly energy self-sufficient in the next two decades.
Hydraulic fracturing, or fracking, of shale oil in areas like North Dakota and Texas will boost the U.S. to the top of the oil charts, beating out Russia and Saudi Arabia, according to the International Energy Agency. Production will rise from last year’s 9.2 million barrels a day to 11.6 million barrels of oil a day by 2020.
While U.S. oil production booms, Saudi and Russian production is expected to fall over that same time period. Saudi oil production will fall from 11.7 million barrels per day to 10.6 million per day, while Russia production will slip from 10.7 million barrels per day to 10.4 million per day.
“We do not expect this trend will continue after 2020s,” said Fatih Birol, IEA’s chief economist. “It will come to a plateau and decline as a result of the limited resource base of light tight oil.”
Most of the future growth in oil demand will come from Asia, reports IEA, meaning that Middle Eastern oil will still play a large role in satisfying that demand.
“The Middle East is and will remain the heart of the global oil industry for many years to come,” Birol told Reuters. “Giving the wrong signal to Middle East producers may well delay investment. If we want Middle East oil in 2020, the investments need to be made by now.”
China is expected to overtake the U.S. as the world’s largest oil-consuming nation by 2030 and Middle Eastern oil consumption is expected to outpace Europe’s by that time as well. India is expected to become the world’s largest source of oil demand growth after 2020.
Republicans and Democrats have been championing energy independence since the OPEC oil embargo of the 1970s. Republicans tend to champion increased domestic oil and gas production and more trading with friendly countries like Canada and Mexico.
However, critics argue that even increased domestic production will not insulate the country from global supply shocks.
“As production goes up and imports go down, it does have positive macroeconomic effects for the U.S.,” said Mike Wittner with Societe Generale SA. “It’s good for the balance of payments, good for the dollar, good for jobs, for other heavy industries. But it doesn’t equate to being insulated from world oil markets.”
Democrats tend to push policies to get the country off oil all together, pushing biofuels and renewable energy. However, the recent shale boom has forced more Democrats to champion natural gas and oil drilling.
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