Wednesday, November 15, 2017

energy independence could be just around the corner

The not-always-trustworthy BBC: "US leads world in oil and gas production, IEA says."

International energy markets are set for "major upheaval" as the US cements its status as the world's largest oil and gas producer, while China overtakes it as the biggest oil consumer.

The predictions come from the International Energy Agency's annual energy forecast. It believes that global energy demand will rise 30% by 2040, driven by higher consumption in India.

At the same time, the renewable energy sources will become more important.

The IEA, which tracks the energy for 29 countries, said the US - once reliant on imports - is becoming the "undisputed global oil and gas leader". It expects the US to account for 80% of the increase in global oil supply to 2025, driven by increases in shale. That will keep prices down and help make the US a net exporter of oil - in addition to gas - by the late 2020s.

The US Energy Information Administration estimated that the US became the world's top petroleum and natural gas producer in 2012. The emergence of the US "represents a major upheaval for international market dynamics", said Dr Fatih Birol, IEA executive director.

This means a few things. It means Venezuela, which relies almost exclusively on oil to prop up its economy, won't be recovering anytime soon given the continued low price of fuel. It also means less leverage for OPEC nations, quite a few of which use their oil money to sponsor terrorism. Further, it means the potential to create new European trading partners (especially in Eastern Europe) who might want cheap US oil and not be at the mercy of Russia's Gazprom, which supplies fully a third of the EU's gas. On a stranger note, the US's new status might lead to a significant reevaluation of the country's relationship with Canada, from which the US imports the largest amount of oil. As much as we focus on Middle Eastern petrostates, it's easy to forget that our neighbor to the north is actually our largest source of foreign oil. I wonder how the US-Canada relationship might change if we took oil out of the equation.


Anonymous said...

What you seem to be asking is two questions: 1) Is Canada nice to us because of the money we give them for their oil, and 2) are we nice to Canada to keep the oil coming?

For the first question, the main effect of loss of exports would be the western, oil-producing provinces. The eastern provinces are rapidly heading the same way as France, England, and Germany and already see us a evil. Canada is a great target for Chinese immigrants, and if we reduce imports to the western provinces they will sell it to China.

I think we are nice to Canada because we see them mostly as a defense partner, and we generally 'like' them. I have seen nothing to indicate an undercurrent of dislike or resentment towards Canada in my reading and travel.

The net result? Much the same as before.


Kevin Kim said...

Great points. In terms of defense partnership, I suppose it's in our best interests to remain friendly with the Great White North, with whom we share a long and very porous border. In terms of energy independence, though, I think it's in our interest not to be too beholden to Canada on that score, although I hear your point about they'd sell to the Chinese if they don't/can't sell to us.