We welcome the IEA to the community of experts noticing the energy world has changed.
It takes time for the prognosticators and pundits to catch up with the producers. Now the International Energy Agency (IEA World Energy Outlook 2012) joins a growing chorus of forecasters that have noticed the tech-driven hydrocarbon revolution that is under way in America.
The American natural gas boom has been much in the news over the past year. But it is the oil boom that is now catching everyones attention. The IEAs forecast that the US will become the worlds largest oil producer before 2020 has enormous economic implications (for America – millions of jobs, hundreds of billions in revenues) and geopolitical implications for everyone. (See my July 2012 paper, Unleashing the North American Energy Colossus. And for an earlier vision predicting the current state of the energy world, see the book I co-authored with my colleague, The Bottomless Well.)
Also notable in the IEA report – Iraq grows to become the worlds second largest oil exporter to the world. The geopolitical implications of that trend may give some pause.
The bottom line is that the energy world has changed in a fundamental way that has yet to be absorbed by the punditocracy, or incorporated in policy. In fact, everything policymakers thought they knew was true has been completely reversed by the march of technology.
The idea of energy limits, in particular running out of oil, is no longer in fashion or correct. The epicenter of demand has shifted from the developed to the developing nations. And the U.S. is moving from net consumer, to net producer and – this latter fact yet to be fully absorbed – could become a major exporter to the world. (For more on this see my MI report Liberating the Energy Economy.)
As the Wall Street Journal and others have noted, our good fortune isnt inevitable. The U.S. could choose to follow the energy model of Mexico — vast resources, but declining production because of the heavy hand of government. The jury is out on what a second Obama term means in this regard. Though it bears noting that the President, during the campaign, fulsomely embraced the rise in American hydrocarbon output over the past four years.
America could decide to do more than just allow the private sector to continue to produce this hydrocarbon abundance. We could actively encourage it. It is notable, and rarely noted, that the American oil & gas abundance is almost entirely the work of 18,000 small and mid-sized companies. Its not the oil majors, "big oil," though they are buying into the game now. It is an abundance that has already wildly benefited states like Texas, North Dakota, Ohio and Pennsylvania. It could even solve most of the financial woes of New York and California, conquering deficits, funding education and social programs — if they would just embrace the opportunity.
Technology changes the world faster than policymakers are able to keep up, even when those changes take decades. Consider a relevant example in the not-so-distant past when technology and engineering unlocked the geophysical abundance of the North Sea. The oil had always been there but it wasnt until the 1980s that it was practical to access with the revolution in deep off-shore technology. Those resources have been enormously important for England and Norway to note only two players.
Heres another tech prediction that is still running below the radar. Long before we run out of the cheapest shale oils that are now fueling the current American oil boom, and long before bio-engineers convince bacteria to excrete oil, hydrocarbon engineers will perfect cheap coal-to-liquids. (For a measured technical exploration of all this, see the National Academy of Sciences report.) The latter will unleash another boom. And theres a decent chance America leads that one too.
Original Source: http://www.forbes.com/sites/markpmills/2012/11/13/530/