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Global Economy Throwing Up Red Flags For Oil

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Investors are feeling increasingly gloomy…

Why Achieving Energy Independence will Change Nothing for the US

According to the IEA’s World Energy Outlook 2012, the US will become a net energy exporter by 2035, due to technological developments which have increased the extraction efficiency of both oil and natural gas wells.

Many hope that upon achieving energy independence, the US would also earn some freedom from the Middle East and the constant troubles and conflicts that it gets involved in. In fact as an energy exporter it may find itself with more power over other nations.

This hope of liberation from world energy politics as a result of energy independence offers a huge over-simplification the situation, and of how energy runs through the core of our society.

Many issues stand in the way of the US being able to declare energy independence, to such an extent that many experts are uncertain if it is even possible. Firstly there are technical issues, such as how easy it will be to develop deep-water oil rigs, hydraulic fracturing wells, and oil sands extraction technologies on a large scale. Economic issues arise with the possibility that trying to extract the oil using these costly methods could raise its price and mean that it cannot compete with oil on the international market that has been extracted from cheaper, traditional sources.

Related Article: Keystone XL: Welcome to the Proxy Energy War

Then there is also the fact that if by some fortune the US does manage to achieve energy independence, it does not mean that it can leave the Middle East. Some of its relationships there are multidimensional and will not be voided so easily.

Truly, in a world of economic interdependence the US economy is just as vulnerable to other economies as ever. Even if it managed to achieve energy independence, it could never achieve economic independence, and whilst the other countries rely on energy imports and exports the US will be affected by the international energy market.

By. Joao Peixe of Oilprice.com



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