CIAO DATE: 12/2012
October 2012
The bulk of the world’s proven oil reserves are concentrated in places that are hostile to the West, unstable or a combination of the two. Since the US is the world’s largest importer of oil, concerns about energy security have long simmered in Washington. On top of this, global oil prices have hit new highs in recent years and remained persistently strong. This adds to anxieties about the security of energy supplies and places a burden on the US economy. Partly as a result of elevated prices, however, something new—and, arguably, revolutionary—has happened. Oil that was previously uneconomic to extract is now a profitable prospect. Technological breakthroughs in horizontal drilling and hydraulic fracturing (“fracking”) have played a part in making it possible to tap previously off-limit reserves. In particular, large-scale extraction of shale oil—crude oil present in tight rock formations—is now a reality. Coupled with the prospect of increased output from the Gulf of Mexico, offshore California and possibly Arctic fields, the shale-oil boom is spawning talk about the US eventually becoming self-sufficient in oil. Indeed, US oil imports have fallen by one-fifth in absolute terms since 2005; net oil imports (total imports minus exports) peaked that year at 60% of US oil consumption, falling to around 40% in recent months. But even if the supply of shale oil surpasses all expectations over the decade, it is unlikely that the US will achieve self-sufficiency by 2020, the end of the Economist Intelligence Unit’s forecast period. By the reckoning of the US Energy Information Administration (EIA), net crude oil imports will fall from 8.9m barrels/day (b/d) last year to 7.5m b/d in 2035.
Resource link: Independence day: A special report on North America's oil and gas boom [PDF] - 1.2M