This week’s Baker Hughes report…
Oil prices could be stuck…
In the 2012 edition of the World Energy Outlook, the International Energy Agency (IEA) announced that the US could grow to overtake Saudi Arabia and become the largest producer of oil in the world, and achieve energy independence, by as soon as 2017.
Unconventional sources, such as shale gas, and shale oil, will enable the US to reduce its reliance upon Middle Eastern oil, however, developing such resources in such large volumes will lead to huge increases in greenhouse gas emissions, putting any hopes at limiting climate change well beyond reach.
Fatih Birol, the chief economist at the IEA, said that unless the US stopped with their ambitions to become energy independent, the future of climate change looks bleak. “I don't see much reason to be hopeful that we will see reductions in carbon dioxide.”
Related Article: IMF: Do we Have a Peak Oil Problem?
Unfortunately, around the entire world, governments have been reducing the assistance they give to renewable energies, and increasing the subsidies that they grant to fossil fuels.
If the US does indeed manage to vastly increase its oil output, and achieve energy independence, then the Middle East would be free to sell as much as 90% of its product to Asia, namely China.
It will be very interesting to see how this whole situation plays out, as the relationship between the US and the Middle East has, for decades, been defined by America’s dependence on oil. Once the US no, longer needs the Middle East will they withdraw their protection and leave the region alone?
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com