- Western energy giants are increasingly hunting for supplies in rich, developed countries
- Driving the change is the boom in unconventionals—shale gas and oil sands are being exploited on an unprecedented scale
- By 2020, shale sources will make up about 1/3 of total U.S. oil and gas production
A favorite technique of people who want to promote option B over option A is to create fears of option A. Hence, for decades, opponents of fossil fuels have tried to promote alternatives by stirring up fears of depletion: they’ve been warning of peak everything since, well, Malthus. And, they have a nearly perfect track record in their predictions of peak oil, peak gas, peak resources, peak commodities...they’ve been wrong virtually every single time.
"Western energy giants are increasingly hunting for supplies in rich, developed countries—a shift that could have profound implications for the industry, global politics and consumers." The Wall Street Journal has an interesting article that shows the problems with predicting peaks: technology is not predictable, ingenuity is not predictable, markets are not predictable, global business trends are not predictable, and innovation is not predictable. From “Big Oil Heads Back Home:”
Western energy giants are increasingly hunting for supplies in rich, developed countries—a shift that could have profound implications for the industry, global politics and consumers. Driving the change is the boom in unconventionals—the tough kinds of hydrocarbons like shale gas and oil sands that were once considered too difficult and expensive to extract and are now being exploited on an unprecedented scale from Australia to Canada.
The U.S. is at the forefront of the unconventionals revolution. By 2020, shale sources will make up about a third of total U.S. oil and gas production, according to PFC Energy, a Washington-based consultancy. By that time, the U.S. will be the top global oil and gas producer, surpassing Russia and Saudi Arabia, PFC predicts.
That could have far-reaching ramifications for the politics of oil, potentially shifting power away from the Organization of Petroleum Exporting Countries toward the Western hemisphere. With more crude being produced in North America, there's less likelihood of Middle Eastern politics causing supply shocks that drive up gasoline prices. Consumers could also benefit from lower electricity prices, as power plants switch from coal to cheap and plentiful natural gas.
And how big are these new “unconventional” deposits? Another article in the Journal points out that while we were worried a few years ago about running out of natural gas, and having to turn to imported liquid natural gas (LNG), now, the US could achieve energy independence:
“the excess supply of cheap natural gas will lead to energy independence in the U.S., and stop the export of American petro-dollars.” said Mickey Cargile, managing partner at Cargile Investment Management.
Peak oil? Peak gas? More like Peak Prediction Fail.
Kenneth P. Green is a resident scholar at AEI.