Conference: Global Implications of U.S. Self-Sufficiency in Oil and Gas
Dec 06, 2013
from 09:30 AM to 02:30 PM
|Contact Name||Nancy Dull|
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On December 6, 2013, the Center for Global Business Studies held a conference to study the global implications of U.S. self-sufficiency in oil and gas. Though the United States has always been a resource-abundant country, it still was dependent on oil from other countries and the dependence had grown over time, as the nation was unable to produce as much as its people consumed. Thanks to advancements in technology and a regulatory permissive environment that has allowed the country to exploit unconventional drilling, however, the U.S. has recently witnessed rapid, unprecedented growth in shale oil and gas production. As a result, by the close of this decade, the United States is expected to be a net exporter in gas. Additionally, the country expects to see a large decrease in its oil imports.
Predictably this change will certainly affect the United States, but will it have ramifications on a global scale? As discussed during the Dec. 6 conference, the short answer is yes. Inherently, though, the full answer is much more complex. It's at first vital to note the numerous geopolitical implications of an energy self-sufficient United States. Historically, the United States has relied on the Middle East as its energy source. Because of this position, the region's stability has been a large concern for the United States and the country's own allies. Previously, the country has thus tried to police the region, securing trade routes and monitoring politics and relations to ensure inexpensive access to production sites' reserves. With the shifting dynamic, however, instability in the region might economically behoove the United States because the country could then position itself as the cheap provider of energy. Additionally, if the United States pulls out as policeman by changing its foreign policy, then other countries, such as China, Japan, and Korea, will be challenged to become more involved.
Although the United States will eventually be a gas exporter, this change won't come cheaply. Because it's incredibly expensive to liquify and to transport gas, the process will be expensive and complicated, requiring U.S. companies to invest in new technologies and equipment. Nonetheless, due to the substantial gas price difference — as gas, unlike oil, is expensive and difficult to transport — the U.S. will make the investment. The U.S.' logical export markets will be Europe and the far east, though demand will likely come from European countries given their present situation. Currently, Europe relies heavily on Russian gas, but historically negotiations have not been easy. By seeking U.S. gas, Europe will garner a more secure position in the world.
In addition to changing gas trade patterns, the United States' gas self-sufficiency will also affect the manufacturing industry. Because the price of gas is significantly cheaper in the U.S. (for reference, prices are a third of what they are in Europe and a sixth of what they are in China and Japan), industries that use gas to manufacture their products will increasingly turn to the U.S., with its expansion and new production facilities, for development.
While it's expected that the United States will become a net exporter in gas, the future expected North American self-sufficiency in oil production will also have impacts on a global scale. As oil consumption in the United States continues to decrease, it's foreseeable that the country will use its refineries to export refined products to consuming nations in South America.
Regardless, the United States must be cautious in the way it proceeds in this shifting energy landscape. "It's a good news story [for the U.S.], but we have to do something smart about it," said Sarah Ladislaw, who was the conference's keynote speaker. "One of the greatest dangers that we have is to try to overplay our hand."
Managing Director of Research at ClearView Energy Partners LLC Kevin Book, President and Interim Director at the Center for Sustainable Shale Development Andrew Place, and a specialist in Energy Policy at the Congressional Research Service Michael Ratner joined Ladislaw, Co-Director and Senior Fellow of the Energy and Security Program for Strategic and International Studies, to share their knowledge on U.S. energy self-sufficiency. During the later portion of the conference, the speakers also addressed the possible environmental impacts of this increased unconventional production. Advisor to the Governor of Ohio and Former Vice Chairman of Ernst & Young Jim Boland and Center Founding Director Fariborz Ghadar moderated the conference.