Arabs and the future of oil (*)

Abstract:

The discovery of shale oil and gas in North America (the United States and Canada) is considered a ‘game changer’ in the global petroleum industry. It provides an opportunity for the United States to achieve the energy self-reliance it has sought since the 1970s. It is also expected to allow the United States, the largest petroleum consumer and importer globally, to focus its attention on maximizing the economic benefits and comparative advantages of becoming a self-reliant energy state. It could also enable the United States to reprioritize its strategic interests, sharing responsibility for the security of the oil export routes in the Gulf with its European and Asian allies, rather than shouldering that task almost single-handedly, as is presently the case. However, realization of the advantages that North American shale oil and gas discoveries are purported to bring about will depend on whether the depletion rate can be slowed down and minimized and on whether the cost of production can remain competitive compared with that of conventional hydrocarbons. It will also depend on whether the United States will allow a large percentage of its shale petroleum to be exported, rather than be consumed domestically.

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Keywords:

Oil

shale oil and gas

fracturing

horizontal drilling

Liquefied natural gas (LNG)

US energy security

global LNG markets

gas price formulas

conventional oil

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