The International Energy Agency (IEA) released its annual report Monday, which predicted that U.S. oil output will overtake Saudi Arabia’s by the end of the decade. While many supporters of U.S. energy independence will welcome the news, the IEA report also warns that the global energy system is on an unsustainable path.
According to the IEA, the U.S. will become the world’s top oil producer by 2017 and is on a path to energy self-sufficiency by 2035: “The United States, which currently imports around 20 percent of its total energy needs, becomes all but self-sufficient in net terms – a dramatic reversal of the trend seen in most other energy importing countries,” the Western agency wrote.
The U.S. oil boom would accelerate a switch in the direction of international oil trade, the IEA said, predicting that by 2035 almost 90 percent of oil from the Middle East would be drawn to Asia.
The geopolitical implications of an energy independent U.S. could be profound, as Reuters noted Monday, “if Washington feels its strategic interests are no longer as embedded in the Middle East and other volatile oil producing regions.”
The report explained its U.S. forecast: “The recent rebound in U.S. oil and gas production, driven by upstream technologies that are unlocking light tight oil and shale gas resources, is spurring economic activity – with less expensive gas and electricity prices giving industry a competitive edge.”
Exemplifying the patterns behind the IEA statistics, a lengthy Bloomberg Businessweek feature last week profiled the shifting fortunes of a North Dakota-based reservation where, five years ago, oil was struck through hydraulic fracturing (fracking). “Since 2008, according to tribal records, more than $500 million in oil revenue from fracking leasing rights and royalties has flowed into Fort Berthold,” Bloomberg reported, noting however, that “with the influx of money, scores of problems have bubbled up with the crude, including lawsuits, environmental scares, and questions about where the money is going.”
Environmentalists argue that U.S. energy independence comes at the cost of contaminated water supplies, increased air pollution and yet unknown environmental destruction related to fracking — a relatively new extraction process. Indeed, the IEA’s annual report noted that the world is still failing to put the global energy system onto a more sustainable path. “Our analysis shows that in the absence of a concerted policy push, two-thirds of the economically viable potential to improve energy efficiency will remain unrealized through to 2035,” the IEA noted.