by MICHAEL T. KLARE
Rarely does the release of a data-driven report on energy trends trigger front-page headlines around the world. That, however, is exactly what happened on November 12th when the prestigious Paris-based International Energy Agency (IEA) released this year’s edition of its World Energy Outlook. In the process, just about everyone missed its real news, which should have set off alarm bells across the planet.
Claiming that advances in drilling technology were producing an upsurge in North American energy output, World Energy Outlook predicted that the United States would overtake Saudi Arabia and Russia to become the planet’s leading oil producer by 2020. “North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world,” declared IEA Executive Director Maria van der Hoeven in a widely quoted statement.
In the U.S., the prediction of imminent supremacy in the oil-output sweepstakes was generally greeted with unabashed jubilation. “This is a remarkable change,” said John Larson of IHS, a corporate research firm. “It’s truly transformative. It’s fundamentally changing the energy outlook for this country.” Not only will this result in a diminished reliance on imported oil, he indicated, but also generate vast numbers of new jobs. “This is about jobs. You know, it’s about blue-collar jobs. These are good jobs.”
The editors of the Wall Street Journal were no less ecstatic. In an editorial with the eye-catching headline “Saudi America,” they lauded U.S. energy companies for bringing about a technological revolution, largely based on the utilization of hydraulic fracturing (“fracking”) to extract oil and gas from shale rock. That, they claimed, was what made a new mega-energy boom possible. “This is a real energy revolution,” the Journal noted, “even if it’s far from the renewable energy dreamland of so many government subsidies and mandates.”
This is one hidden surprise in the report that’s gone unnoticed. According to the DoE’s 2011 projections, Saudi production was expected to rise to 13.9 million barrels per day in 2025, and Russian output to 12.2 million barrels, jointly providing much of the world’s added petroleum supply; the United States, in this calculation, would reach the 11.7 million barrel mark.
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The IEA’s latest revision of those figures suggests that U.S. production will indeed rise, as expected, to about 11 million barrels per day in 2025, but that Saudi output will unexpectedly fall to about 10.6 million barrels and Russian to 9.7 million barrels. The U.S., that is, will essentially become number one by default. At best, then, the global oil supply is not going to grow appreciably — despite the IEA’s projection of a significant upswing in international demand.
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