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Worldcrunch

How The Boom In American Fossil Fuels Could Reshape The Century

Article illustrative image Partner logo Marcellus shale gas-drilling site in Lycoming County, Pennsylvania

-Analysis-

NEW YORK - Not long ago, China replaced the United States as the biggest emitter of greenhouse gases on the planet. And now the International Energy Agency (IEA) is predicting two things: the first is that the U.S. will be the world’s biggest oil producer in the next 10 years. The second is that from 2030 on, America will be exporting more oil than it imports. Suddenly, the global energy outlook as we have known it for decades has been turned on its head.

Not everything about the latest round of predictions will come true. Experts can and do make mistakes, particularly when dealing with the future. But there is no doubt they are right about the trend, signs of which can already be observed.

The U.S. is undergoing a singular change as far as energy is concerned. And it is based not on wind or solar energy, but on fossil fuels – an oil and gas boom that hasn’t been seen for 100 years. This year alone, the country imported 11% less crude than it did during the same period in 2011. The U.S. is already the world’s biggest producer of natural gas, and surplus is becoming a problem. Prices are sinking, and some companies are fighting to survive. Overnight, North Dakota has become an oil sheikdom.

Shifting geopolitical balances

The economic, political and geopolitical consequences of this are far-reaching. For example, in the Middle East, Saudi Arabia, Kuwait, Iraq, and other oil nations will become less important to the U.S. Even now, only 20% of the country’s oil imports come from the region, in contrast to China, which depends on the Middle East for 50% of its energy supplies. This is not to say that militarily the States will withdraw completely from the region. An Iranian nuclear bomb would be just as dangerous even if there were no oil. In the interests of international stability, the U.S. fleet is going to have to see to it that the Strait of Hormuz in the Persian Gulf stays open.

What is different, however, is that there is no longer a direct connection between America’s voracious appetite for energy and its military commitment in the region. Seen purely from the standpoint of economic interests, a stable Middle East is now more important for Asia than it is for the United States. This means that OPEC, the cartel of oil exporters, will still have clout-- but no longer in Washington.

These new realities mean that the United States, with its rich, newfound lodes, is unlikely to become easier to deal with as a partner. President Barack Obama cannot get relevant climate legislation to pass through the Republican-led House of Representatives, and now he can no longer use energy security as leverage. So, as regards energy and climate policy, Europeans should not expect too much from him.

Clean fuel, less carbon emission

We tend to forget that American greenhouse gases are already decreasing, and this is not due only to the weak economy. Stricter standards for cars are beginning to make a difference, and renewable energy sources also play a role, albeit a small one. The decrease is mainly due to the replacement of coal by cheap natural gas in electrical power plants. Of the fossil fuels, gas is the “cleanest,” emitting the least carbon dioxide.

It is difficult to calculate the risks of this new development. The additional gas comes from so-called unconventional reserves stored in layers of shale, which can be accessed using water, sand and chemicals through use of the controversial method known as fracking. There have been anti-fracking protests, particularly in Pennsylvania and New York, and nearly all the protesters voted for Obama. That does not make the president’s position any easier. But even in the best of cases, environmental protest will only serve to make the new energy reality more efficient. It will not change the boom itself. The advantages for the nation are too big for that.

The consequences of America’s change in energy outlook will also be felt on this side of the Atlantic. Theoretically, Europe could profit from cheap American natural gas, but there is not enough of the necessary infrastructure-- liquefaction facilities, fluid-gas tankers -- to do so. Therefore the boom will initially, at least, mean a classic competitive disadvantage for Europe, particularly for Germany as an exporting nation. In the U.S., the cost of energy for industry will sink, and in Germany the cost will rise. A partner becomes a new competitor. 

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About this article source Website: http://www.sueddeutsche.de/

Suddeutsche Zeitung is one of Germany's premiere daily quality newspapers. It was founded on 6 October 1945, and has been called "The New York Times of Munich".

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