The US Tight Oil Revolution – What Kind of a Revolution?
The recent growth in US oil output has been impressive. From a negative annual growth in 2008, the US added around one million b/d in liquid production in 2012 with similar growth expected for 2013. Looking at global oil supplies from the US perspective gives the impression of plenty. However, in this presentation, Dr Fattouh argues that there is a risk in building one’s analysis on US developments alone. So far, the US contribution to global oil supplies has been camouflaged by the poor supply prospects in non-OPEC supply outside the US which still suffer from high decline rates, project delays, cost overruns and geopolitical outages. Having said that, one should not look at the developments in the US only in terms of a positive supply shock. The growth in US oil output has changed the perception of markets from oil scarcity, a few years ago, to oil abundance. It has also changed the dynamics of trade flows, with traditional exporters to the US forced to find new markets for their crude oil, with implications on oil price levels and differential dynamics. Also for the first time in years, US policy matters specifically with regard to its policy concerning exports of crude oil and natural gas. Finally, the way the US perceives itself vis-à-vis the rest of the world could change if the US thinks it could achieve energy independence.