Experts: US Energy Independence Is A Mirage

Thursday, 15 Nov 2012 11:37 AM

By John Morgan

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New estimates from the International Energy Agency (IEA) that the United States is headed rapidly toward energy independence are probably wishful thinking, according to experts cited by Business Insider.

The IEA predicted this month that the “extraordinary growth in oil and natural gas output in the United States will mean a sea change in global energy flows.”

The United States will become a net exporter of natural gas by 2020, and by 2035 North America is destined to emerge as a net oil exporter. The effect will mean that most Middle Eastern oil will be drawn to Asia by 2035, the IEA said.

Editor's Note: Google Banned This Video But You Can Watch it Here

Even if Canadian energy production is added to the equation to create broader North American energy independence, the outlook does not add up, Business Insider reported.

The IEA projected U.S. oil production will increase to 10 million barrels per day (bpd) and 11.1 million bpd in 2020 before slipping to 9.2 million bpd by 2035, Reuters reported.

But Manuj Nikhanj, lead oil play analyst at research firm ITG, predicted it will not be possible for U.S. output to be raised enough to meet U.S. demand, which now stands at 19 million bpd, according to Business Insider.

David McColl, who covers oil and gas stocks for Morningstar, told Business Insider that Canada is likewise unable to boost its production enough to fill the gap.

McColl said Canada might be exporting significant volumes of oil overseas by 2020, not necessarily keeping it within the North American market. Business Insider said the result would be that some U.S. refineries would still be relying on oil imports, which will likely be priced for international markets.

McColl said the IEA report relies incorrectly on current growth rates in shale oil and gas production to reach its positive conclusions. “New areas might need to be opened to achieve this (i.e., offshore),” he told Business Insider.

Even if the United States soon becomes the world’s top energy producer, as the IEA projects, that does not mean the United States will produce enough to meet its own needs, Business Insider suggested.

McColl said increased U.S. production would have scant impact on domestic pump prices because gasoline prices are influenced by international price movements.

Meanwhile, The Atlantic predicted that while the United States might become the world’s top energy producer, it is unlikely to achieve energy independence.

“We can’t drill our way to oil independence. But by conserving our usage, we can insulate ourselves from rising gas prices,” The Atlantic said.

Editor's Note: Google Banned This Video But You Can Watch it Here

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