Interesting Snippet on US Oil Production

Posted by Graham Parlane on 14 November 2012

All

I have been a fan of shorting U.S oil on just this theme of increased U.S production (refer ‘Time to sell Crude Oil?’ dated 29 Aug. Crude then US$96 – now US$85).

A somewhat less risky trade to capture this theme could be a ‘pairs’ trade selling U.S Crude buying Brent as the supply expectations widen.

G.

US is top dog in oil

Many of us can (vaguely) remember the oil crises of the mid-70s when the Middle East countries held the world to ransom over oil supply, causing petrol prices to skyrocket.

An everyday item that we all took for granted suddenly became an expensive luxury, particularly if your Dad drove a big Holden V8 gas guzzler to cart the kids around.

Now the worm has turned.

For so long, Saudi Arabia has been the world’s largest single country producer and together with all its OPEC mates has kept the western world on tenterhooks for the best part of three decades or more.

U.S. Energy Production – click here to view chart

But now with the shale gas revolution in the US (and elsewhere around the non-OPEC world), the International Energy Agency (IEA) thinks that the US will become a net oil exporter by 2030 and almost self-sufficient in oil by 2035. The US currently imports around 20% of its oil requirements and is by far the biggest consumer of petroleum products.

The IEA’s latest annual review of world energy supply says the US will overtake Russia as the biggest gas producer by 2015 and become the world’s largest oil producer by 2017.

U.S. Fossil Fuel Production – click here to view chart

The combination of producing its own energy and more frugal consumption through technology, education and basic economics will also dramatically shift the geopolitical balance of power around the world.

In short, the US may not have to be so friendly to the Saudis or anyone else in the Middle East any more.

The shale gas bonanza also has the fortuitous side effect of replacing coal as the main energy fuel stock in the US which would also go a long way to mitigating many greenhouse gas concerns.

This story has a very long way to play out, but has already become a major global issue.

Tags: Broker, CFD trading, CFDs, Commodities, Crude Oil, Fossil Fuel, Futures, Futures trading, Gas, IEA, Oil, Petroleum products, Russia, Shale Gas, Trader, US