Will the US Ascend the Oil Throne by 2020?

The International Energy Agency predicts that by 2020, the United States will surpass Saudi Arabia as the world’s largest producer of oil. Furthermore, the agency forecasts that by 2035 the US will achieve energy self-sufficiency. These facts follow a trend of 14% growth in crude oil production as well as a 10% increase in natural gas production between 2008 and 2011.

Behind these developments are increases in private land production and new technological innovations such as hydraulic fracking, a controversial oil extraction method from shale rock formations. In addition to less expensive gas and electricity prices, the American oil and gas industry has a competitive edge against Russia and Saudi Arabia, the current top producers. Though the IEA foresees the US becoming a net exporter, it does not see the US exceeded either country in energy exports due to large domestic demand that will require about 93% of US production. US output is currently at 6.7 million barrels a day and is expected to reach nearly 12 million by 2020. Current import levels of 20% are expected to steadily decrease as the US satisfies its own demand.

The international community is contributing to the overall rise in oil production as well. By 2035, China, India and the Middle East will account for 60% of growth in the industry and help fulfill a world-wide need for almost 100 million barrels per day. Still, the IEA emphasizes that there is more to be done to maximize known reserves across the globe. Exploration must be prioritized to leave no environmentally-sound opportunity untapped. Additionally, energy efficiency measures should be implemented with new industry fuel standards to encourage cleaner energy use to fill gas energy gaps.

Ultimately, the US is no longer on the oil decline. Rather, this is a growing industry strongly based at home and has the energy to develop further. Contemporary foreign policy has stressed the importance of energy independence and the opportunity is now in American hands. A reversal of the energy trend has come, and the United States may take the crown.

The World Energy Outlook report is published annually by the IEA in Paris.

Posted by: Sophia Higgins

Sources: IEA, Reuters, Bloomberg, CNN Money

Photo Credit: Triple_Divide_Oil_Gas_Pipeline6 @ photostream courtesy of Flickr user Public Herald

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