Imagine what we could accomplish if we had a president who aggressively developed our oil shale fields?
Growing supplies of crude extracted through new technology including hydraulic fracturing of underground rock formations will transform the U.S. into the largest producer for about five years starting about 2020, the Paris-based adviser to 28 nations said today in its annual World Energy Outlook. The U.S. met 83 percent of its energy needs in the first six months of this year, according to the Energy Department in Washington.
"The IEA outlook feeds into the idea of a shift in the center of influence in the world oil market," said Gareth Lewis-Davies, an analyst at BNP Paribas SA in London. "Given Saudi Arabia is willing to shift production up and down it will retain a large degree of influence, and remain important as a price-influencer."
The U.S., whose crude imports have fallen 11 percent this year, is on track to produce the most oil since 1991, according to Energy Department data. In a year when Iran has threatened to halt Persian Gulf oil shipments, the growing output, coupled with a gas-production boom, may help insulate the nation from supply disruptions. President Barack Obama cited "freeing ourselves from foreign oil" as a policy goal in his election victory speech last week, echoing his predecessor, George W. Bush, who in 2006 urged the U.S. to break its "addiction" to imported crude.
West Texas Intermediate crude, the benchmark U.S. grade, has dropped 13 percent this year to $85.55 a barrel on the New York Mercantile Exchange, as stockpiles swelled to a 22-year high. Prices have more than quadrupled in the past decade, reaching as high as $147.27 a barrel in July 2008.
Next up - building new refineries to deal with the increased production. Also, developing safe and efficient ways to make large scale fracking possible. If done correctly, fracking has proven to be a safe way to extract oil. But whenever industry gears up to produce on a massive scale, it is inevitable that short cuts will be found that may not be as safe as required to protect ground water. Sensible regulations governing how the oil is extracted using fracking will be necessary.
The problem is trusting the Obama administration to be "sensible" about anything relating to energy. The EPA - which has demonstrated an animus toward fracking - might seek to severerly limit the practice. Congress must use its oversight mandate to make sure that both the public interest is protected, and the industry is allowed to exploit these new fields.