World Energy Outlook Update

The New Oil Paradigm


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By Michele Ashby
Wednesday, April 24th, 2013

In the 2012 World Energy Outlook report, published by the International Energy Agency (IEA), the United States’ energy needs could be “all but self-sufficient” by 2020 (2).

New and efficient upstream technologies are “unlocking light tight oil and shale gas resources” prompting better oil productions in areas previously drilled (1). Additionally, natural gas exploration and production has increased within the US, reaching 52 week high in April 2013.

The IEA concludes that with this increased production along with a decrease in oil imports, due new fuel-efficient measures, the US will become the largest global oil producer by 2020, surpassing Saudi Arabia (1). We are seeing a shift in the global energy map and a change in the power players moving towards the United States.

However, this new oil paradigm requires a balance of current production rates and energy efficiency to be maintained.

This new energy independence is dependent on energy efficiency.

In order to balance our energy demands and current production rates, energy efficient policies and technologies must be in place. We need to make sure that fuel efficient measures are implemented and we continue to subsidize our fuel use with renewable technologies. By successfully implementing energy efficient policies, global energy demand growth would be reduced by 50% (2). 

The IEA stresses with energy efficiency comes huge gains in energy security, economic growth, and the environment. Increased oil production is leading to more economic activity within the US and strengthening the U.S. energy position globally (1).

While reading this report, I wondered how this would impact current oil & gas investments.

How would energy independence impact US investment decisions as well as those firms outside the US?

Would it add more?

Will this aid in reducing our foreign deficit in a significant way?

One can surmise the impacts will be broad and significant going forward. Also, what technologies need to continue to produce at the current rate in order to maintain the US’ status? Investment in those technologies and producing companies will be required as well as in energy efficient technologies.

* Michele Ashby is a well-respected mining analyst and CEO of MiNE LLC, which hosts the annual Oil & Gas Finance Forum in New York City. You can read more about the Oil & Gas Finance Forum here.

 


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