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Shale Boom Is Keeping US Energy Independence Hopes Alive

29 June 2013 in Trading Ideas

Expectations have been building in recent months following forecasts that the surge in oil and gas production – driven in part by new technologies aiding shale gas output – will see the US become essentially energy-independent by about 2035, according to the International Energy Agency.1

Now, we’re starting to see some real numbers measuring that production surge.

Earlier this month, British oil conglomerate BP’s oft-anticipated annual review of global energy demand revealed that energy production in the US rose 1.3% in 2012 to now account for 15% of the world’s total.2

US production of natural gas climbed nearly 5% last year, BP said, adding that the US is now the largest producer of natural gas in the world, with 20% of the total. It’s also the biggest consumer of both natural gas and crude oil.

BP Chief Economist Christof Ruhl told CNBC that the US was responsible for the “biggest increase in oil and gas production of all the countries in the world,” as well as representing the largest rise in oil production in US history, mostly on the back of the shale boom.

The shale-gas boom has rejiggered the US economy, driving down coal consumption and prompting companies to consider exporting gas as well as investing in steel, chemical and fertilizer plants that consume gas.

shale gas motif

Of course, the shale industry’s corporate players have also seen their fortunes re-jiggered, as optimistic investors await high revenue and profit growth for years to come. (The Shale Gas motif, a portfolio of related stocks in the shale gas industry, has risen 9.4% in 2013, and 15.0% in the past 12 months).

But for some analysts, the distance between booming oil and gas production and energy independence is vast – if it can even happen at all.

Michael Levi, a senior fellow at the Council on Foreign Relations, believes the idea of US energy independence is a bit of a myth, since the shale boom and other production breakthroughs, such as alternative energy, are intricately tied to increasing global energy demand. “The United States is more entangled in the global energy system than it has ever been,” wrote Levi.3

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Those investing in energy may find that a consistent market for energy companies’ production will mean more to the bottom line than the timing of US energy independence.

1U.S. forecast to become world’s top oil producer,” CBSNews.com, Nov. 12, 2012, http://www.cbsnews.com/8301-505123_162-57548554/u.s-forecast-to-become-worlds-top-oil-producer/,” (accessed June 28, 2013)

2Javier E. David, US Energy Production Growing by Leaps and Bound: BP, cnbc.com, June 14, 2013, http://www.cnbc.com/id/100816544, (accessed June 28, 2013).

3Michael Levi, “The Emerging Irony of US Energy Independence,” cnbc.com, June 3, 2013, (accessed June 28, 2013).

Tags: Shale Gas
  1. justme
    5 Jul at 2:33 pm

    LOL America wont be around that long lol. By that time we will have 40trillion debt. I dont think so lol