Source of graph: http://thinkprogress.org/
By John Richardson
DANIEL Yergin's superb book, The Prize, describes how the history of the 20th century was shaped by oil and gas.
Now we are entering a new era.
Some 600,000 jobs have already been created by the US shale and oil gas revolutions, leading to hopes of a much more broad-based US manufacturing revival, including in petrochemicals.
In 2008, the US imported 60 percent of its oil for vehicles and industry. Imports have since fallen to 45 percent, largely because of the shale oil boom, according to this excellent article in The Australian newspaper.
Oil production has increased by 1.3 million barrels a day in three years, more than double that of Russia.
And an even bigger prize is being eyed, to add to the abundance of hydrocarbons emerging from shale gas fields such as the Marcellus in West Virginia, New York State and Pennsylvania and the Bakken shale oil formation in North Dakota, continues The Australian.
This is the "Green River Formation" which stretches across Colorado, Utah and Wyoming and represents the world's biggest shale oil formation.
About half the deposit could be extracted - 1.5 trillion barrels of oil - according to the US-based research group, the Rand Corporation, which was quoted in the same article in The Australian.
This is equivalent to the world's entire proven oil reserves, creating discussion that the US might become energy independent in 15 to 20 years.
"In collaboration with Canada and Mexico, the US could - and should - forge a broad pro-development, pro-export policy to realise the benefits of our hydrocarbon resources," writes Mark Mills from the American think tank, the Manhattan Institute.
Greater access to energy might lead to an overall US economic recovery. It could also reshape geopolitics through reducing the US dependence on the Middle East, including a change in its relationship to Saudi Arabia, which, as Daniel Yergin pointed out in The Prize, helped shape 20th Century history and politics.
But the US might easily squander its energy bonanza through failing to use cheaper oil and gas as the basis for a wider manufacturing revival (the "Dutch Disease"). We discuss some of the policy challenges confronting the US in chapter 10 of our free e-book, Boom, Gloom & The New Normal.
A parallel with what might happen in the US is already happening in Australia through its government policy, or lack of policy, regarding its natural-gas reserves.
Dow Chemical Australia and New Zealand managing director, Craig Arnold, highlights some of the problems facing Australia and natural gas in this article.
This blog post cannot, of course, come close to covering every potential outcome of the new energy revolution.
But here are four more thoughts:
*Other countries have big shale gas reserves, including Europe and most notably China. BASF said last week that subtantial development of European shale gas reserves could be as long as a decade away. But China has the capability of surprising everyone by pressing ahead with exploiting its shale gas reserves, if it feels its economic and geopolitical position is under threat. Prospects for shale oil outside the US are the greatest in again, China, Russia and Argentina.
*Overcoming technological challenges will play a pivotal role. In the US, for example, the Green River Formation confronts the difficulty that the bulk of material being extracted from its wells is kerogen. This requires expensive heating treatment to yield small amounts of commercially useful oil and gas. In China, Peter Voser, CEO of Shell, highlighted in June that much of China's shale-gas reserves are geologically challenging.
*Access to technology will therefore be crucial and could become a highly sensitive political issue with broader implications for international trade relations. Politicians might come to believe that avoiding"Dutch Disease" involves barriers to technology transfer.
*The environmental challenges surrounding fracking will continue. But we think that money and jobs will always overcome most environmental objections.