sob
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This is amazing. President Obama's rating I think is definitely higher abroad then in the US.
Personally I think that Hillary Clinton would have made a much better POTUS.
US Tips Global Power Scales with Fracking
- Thread starter asianobserve
- Start date
Personally I think that Hillary Clinton would have made a much better POTUS.
sob
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Canada does not have the refinery capacity that the US. This is the reason why US is exporting refined products in large quantities.
Another interesting point about the refineries in the US is their ability to refine Venezuelan Crude. There are not many refineries around the world which have this capability.
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the red area seen to be 90% in PakistanSorry wrong statement on China's shale gas deposits. I misconstrued it for something else. My apologies to Amoy.
according to usa state energy firm Pakistan has 51trillions cubic feet shale gas reserves
though few years before a Pakistani energy firm said Pakistan has 217tcf shale gas reserves
http://www.eia.gov/analysis/studies/worldshalegas/
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Good for you.
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No need to be worried about ME because they are on the spree of industrilization..and they may not need to export oil beyond 2030
money buys brain
money buys brain
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ME in the midst of industrialization? Yeah, industrialization subsidized by petrodollars. Just wait until their oil revenues dry up. The lazy subsidized Saudi youths will be the first to riot...
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Well no
the present youth is alot different and hard working.KSA may even cross turkey in industry after 2020..if the present pace is continue
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Hahaha! You're a funny guy. A country that has no use for its women outside their homes will overtake an industrial liberal democracy where practically all members of the society (including females) contribute to its economy and that is strategically located in between Asia and Europe? Keep your stratospheric expectations of KSA back to earth...
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I may sound funny.but reality should be accepted and reality is what i said in my previous post
though as i said only if the pace is continue..
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Just to give you a perspective of what you're talking about... KSA 2011 GDP 576.8 billion USD while Turkey 773.09 Billion USD.
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already know this.but it seems like turkey is almost close to saturation state and last year there economy grew by less than 3%.
Blackwater
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you mean (foreign worker) as youth who work hard in KSA. locals youth are busy in watching camel ass and looking for ways how to get it
....And now you are an elite member of his prestigious ignore list. Enjoy you stay.
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US Is on Fast-Track to Energy Independence: Study
Published: Monday, 11 Feb 2013 | 2:29 PM ET
By: Patti Domm
CNBC
U.S. oil and gas production is evolving so rapidly—and demand is dropping so quickly—that in just five years the U.S. could no longer need to buy oil from any source but Canada, according to Citigroup's global head of commodities research.
Citigroup's Edward Morse, in a new report, projects a dramatic reshaping of the global energy industry, where the U.S., in a matter of years, becomes an exporter of energy, instead of one of the biggest importers.
The shift could sharply reduce the price of oil, and therefore limit the revenues of the producing nations of OPEC, as well as Russia and West Africa. Those nations face new challenges: not only are the U.S. and Canada increasing output, but Iraq increasingly is realizing its potential as an oil producer, adding 600,000 barrels a day of production annually for the next several years.
"OPEC will find it challenging to survive another 60 years, let alone another decade," the report by Morse and other Citi analysts said. "But not all of the consequences are positive, for when it comes to the geopolitics of energy, the likely outcomes are asymmetric, with clear cut winner and losers."
The U.S. is a winner in many ways. Its super power status could be prolonged because of this new growth in oil and shale gas production, made possible by "fracking" and other non-conventional drilling technologies.
Crude oil generated the largest single annual increase in liquids production in U.S. history last year, with an increase of 1.16 million barrels per day. Oil production is booming in places like Texas and North Dakota, which has the lowest unemployment in the country at just 3 percent last September, compared to the national rate of 7.8 percent then.
Citi analysts also foresee a new era of U.S. industrialization, fueled by cheaper power. They cite dozens of industrial projects across America that have already begun or are planned, in such industries as auto, chemicals and steel.
The oil producing nations of OPEC, and others, will have to adjust to a world of lower prices. Separately, OPEC, in its February report Tuesday, commented about the U.S., noting it is the fastest growing producer this year among the non-OPEC nations. But it noted there are risks associated with these supply forecasts, including weather and technical, environmental and price factors, as well as the heavy decline associated with shale drilling in the first year of production.
Citigroup's report predicts a price decline in crude oil that will impact all producers -— and consumers. Brent crude, the international benchmark, could trade in a new lower range of $70 to $90 per barrel by the end of the decade, from its recent range of $90 to $120 per barrel, Citi projects. That would be below the break-even levels required by many producing countries. The price required by Saudi Arabia is $71, and Kuwait is $44 per barrel, but many other countries have break-even levels of $110 or greater.
"This is a momentous year for what's happening, and we're having almost two million barrels a day of pipeline capacity built out in the U.S.," Morse said on "Fast Money." "The U.S. is actually going to push out about 700,000 barrels a day of light sweet crude imports this year. We think as a result of that, plus production elsewhere, we think the price is going to average, by the time you get to December, $10 less than where it is right now."
As the U.S. and Canada rise, some oil producing countries could face the threat of becoming "failed states" as their leadership grapples with greater pressure for economic and political reform while resource revenues decline, the report said. Others, especially China, could make up for some of the demand, but not all.
"Nigeria, the picture is fairly bleak. Venezuela is pretty bleak," Morse said.
As for Russia, "If it is the case that what is now a $90 Brent floor price becomes a $90 Brent ceiling price, given the dominance of hydrocarbon exports in Russian revenue, there could be a three percent hit to GDP which is by no means insignificant over the next five years. because that's how critical hydrocarbons are," he said. "Here you have a country that requires, on its own public record, $117 per barrel Urals crude, on average, to balance their budget. If the price of oil collapses to only as low as $90 a barrel, it does have that order-of-magnitude effect."*
At the same time, Citi sees a big impact on the U.S. economy. The current account deficit is about 3.2 percent of GDP, and the oil import bill is 1.7 percent of GDP. Citi expects that energy self-sufficiency, combined with the impact of low natural gas prices, could cut the current account deficit by up to 2.4 percent of GDP, with an associated improvement in the dollar of 1.6 to 5.4 percent.
To realize this production boom, the energy industry's near-term challenge is moving the U.S. and Canadian oil that is locked in the heart of the continent because of insufficient pipeline transportation. Citi expects that to improve but in the meantime, the railroad industry is helping pick up the slack, shipping U.S. crude across the continent, and creating big demand for rail tanker cars.
Interdependent North America
The Citi report, titled "Energy 2020: Independence Day," also projects a larger and quicker decline in demand for oil in the U.S. over the next decade or two, due to efficiency and the shift to cheaper natural gas.
For instance, Citi expects 30 percent of the U.S. heavy duty truck fleet to turn to natural gas-based fuel by 2015, well above the 10 percent it previously forecast. That would reduce diesel demand by an estimated 600,000 barrels per day. It also expects new automotive efficiency standards to reduce U.S. oil production by two million barrels per day, up from the one million forecast last year.
"Starting this year, North American output, as we indicate in this report, should start to have tangible impacts both on global prices and trading patterns, and will eventually turn the global geopolitics of energy on its head," the report said.
Morse surprised markets a year ago with a report that envisioned the U.S. as part of an energy independent North America. Since then, the view has become mainstream. The International Energy Agency forecast last fall that the U.S. will overtake Saudi Arabia and Russia as the top oil producer by 2017. The IEA also forecast that North America could become a net oil exporter by around 2030 and the U.S. could become nearly self-sufficient by 2035.
Morse's latest report, released Tuesday, has an even more aggressive view of the U.S. move to dominance as an energy producer.
If crude oil and field condensates, natural gas liquids, renewable fuels and refinery processing gains are counted, the report put U.S. production at 11.2 million barrels per day at the end of 2012, making the U.S. the biggest oil producer already last year.
Canadian production is expected to increase to 6.5 million barrels per day, and even Mexico is now expected to join the North America energy renaissance under a new government interested in exploiting its resources.
In the past six years, oil imports into the United States have been cut in half, after peaking in 2006.
"The numbers are striking. The month of peak was 12.6 million barrels a day in October 2006 and ... now it's under six, and by late 2012 totaled 6.8 million bpd," Morse said in an interview.
Since 2006, U.S. oil field production of crude, plus natural gas liquids and bio-fuels has grown by three million barrels a day, about the same as the total output of Iran, Iraq, or Venezuela. In the same period, Canadian production has grown by 510,000 barrels a day.
"The impact of this extraordinary production growth is becoming increasingly apparent and even if the growth rate subsides in the years ahead the mushrooming impacts of this growth will have dramatic impacts," the report said. "A half decade from now combined US and Canadian output will be in surplus of projected needs. Over the next five years, demand for natural gas in the US should catch up with supply, opening up unexpected opportunities in transportation and igniting a re-industrialization of the country."
Morse, in an interview, said the U.S. could in theory need to import only from Canada within five years. "Our projection of U.S. supply growth and U.S. demand collapse is to levels where the U.S. will not need to import oil from any other country except for Canada," he said.
He expects to see a fight for market share in the U.S. and the ultimate result will be that the U.S. could re-export some Canadian crude. "But technically there should be no room for anyone else's crude," he noted.
But this does not mean the U.S. will be immune to price spikes, even with its growing supply. "Disruptions actually affect the price of oil globally and the more integrated we are in the world oil economy, the more we're going to be impacted by it. If there's a price spike, we're going to feel the price spike but the weight of our production is going to make that prices pike come from a much lower base in the future than it is now," Morse said on "Fast Money."
2013—Year of Change
U.S. oil has been landlocked in the Midwest, lacking a strong transportation system to bring supply to refining areas. A hodge podge of pipeline and rail transport has taken over, as the industry awaits further pipeline development, including the stalled Keystone pipeline.
But Citi points out that 2013 brings big change, what it calls "the most dramatic year of change ever in light sweet crude flows." Pipeline capacity in the U.S. will expand by 1.7 million barrels a day, and up to 600,000 barrels of new rail capacity will be opened between the U.S. and Canada. The report said there is an expected near doubling of receiving capacity of rail-shipped oil from 2012 to 2013.
The industry has innovated where necessary. Lacking pipelines, over half the North Dakota crude production, of 480,000 barrels a day at the end of 2012, was estimated to have been moved by rail. Much of it went to St. James, La., and Port Arthur, Texas and Mobile, Ala. Bakken is also being railed to facilities in Albany, N.Y., and New Brunswick, Canada.
The report also points out the big backlog in rail cars, many of them tank and hopper railcars. Citi said American Railcar Industries last fall said backlog for rail-cars at the end of September was 61,400, and 75 percent were tank rail-cars. Tank rail-cars transport materials like crude, chemicals, propane ethanol and asphalt.
Independent North America
The report describes how shipments of oil from West Africa have been waning and as early as this summer, West African crude shipments into the U.S. Gulf Coast could be unnecessary. East Coast refiners could also decrease dependence on West African crude, replacing more imports with midcontinent oil, brought in by rail from Pennsylvania and Virginia to upstate New York and New Jersey. That would also have a likely impact on gasoline prices, currently at record highs for this time of year because of refining issues.
There is also pressure to move light sweet crude from the Gulf Coast to higher value locations. For instance, Morse expects to see light sweet crude move form the U.S. Gulf Coast to eastern Canada, displacing more West African imports to North America.
Citi expects that within in two years, there could be pressure for more exports to other destinations or for pipelines on the East Coast or to change laws that would allow shipping of crude from the Gulf Coast to the East Coast by non-U.S. flagged ships.
By the end of 2014, Citi expects that sour Canadian crude should make its way to the Gulf Coast by way of new pipelines and that should provide a challenge for other producers shipping to the Gulf Coast, including Saudi Arabia, Iraq, Kuwait , Venezuela and Mexico. Morse says they could be pushed out by Canadian crude, or these producers could preserve market share by cutting prices.
Canadian and U.S. crude should be delivered in greater quantities to the U.S. East Coast and Gulf Coast by mid-decade. A happenstance of poor transportation for all this energy wealth leaves Canadian crude locked in North America, but with exporting ability through the U.S. Gulf Coast until pipelines are approved and built in Canada. Morse said if that were to happen, Canada could see an export boom to the Pacific basin, turning Canadian crude into the benchmark for that region.
The report notes that even before Canada builds pipelines to the Pacific: "There should be exports of crude from the U.S. Gulf Coast - Canadian crude for sure and potentially U.S. crude if the U.S. succumbs to economic logic and lifts current multiple bans on exports," the report said.
Asked how his report has been received so far, Morse said, with an ironic laugh, that he's had some "push back but not as much as last year."
US Is on Fast-Track to Energy Independence: Study
* Attention Russian huggers...
Published: Monday, 11 Feb 2013 | 2:29 PM ET
By: Patti Domm
CNBC
U.S. oil and gas production is evolving so rapidly—and demand is dropping so quickly—that in just five years the U.S. could no longer need to buy oil from any source but Canada, according to Citigroup's global head of commodities research.
Citigroup's Edward Morse, in a new report, projects a dramatic reshaping of the global energy industry, where the U.S., in a matter of years, becomes an exporter of energy, instead of one of the biggest importers.
The shift could sharply reduce the price of oil, and therefore limit the revenues of the producing nations of OPEC, as well as Russia and West Africa. Those nations face new challenges: not only are the U.S. and Canada increasing output, but Iraq increasingly is realizing its potential as an oil producer, adding 600,000 barrels a day of production annually for the next several years.
"OPEC will find it challenging to survive another 60 years, let alone another decade," the report by Morse and other Citi analysts said. "But not all of the consequences are positive, for when it comes to the geopolitics of energy, the likely outcomes are asymmetric, with clear cut winner and losers."
The U.S. is a winner in many ways. Its super power status could be prolonged because of this new growth in oil and shale gas production, made possible by "fracking" and other non-conventional drilling technologies.
Crude oil generated the largest single annual increase in liquids production in U.S. history last year, with an increase of 1.16 million barrels per day. Oil production is booming in places like Texas and North Dakota, which has the lowest unemployment in the country at just 3 percent last September, compared to the national rate of 7.8 percent then.
Citi analysts also foresee a new era of U.S. industrialization, fueled by cheaper power. They cite dozens of industrial projects across America that have already begun or are planned, in such industries as auto, chemicals and steel.
The oil producing nations of OPEC, and others, will have to adjust to a world of lower prices. Separately, OPEC, in its February report Tuesday, commented about the U.S., noting it is the fastest growing producer this year among the non-OPEC nations. But it noted there are risks associated with these supply forecasts, including weather and technical, environmental and price factors, as well as the heavy decline associated with shale drilling in the first year of production.
Citigroup's report predicts a price decline in crude oil that will impact all producers -— and consumers. Brent crude, the international benchmark, could trade in a new lower range of $70 to $90 per barrel by the end of the decade, from its recent range of $90 to $120 per barrel, Citi projects. That would be below the break-even levels required by many producing countries. The price required by Saudi Arabia is $71, and Kuwait is $44 per barrel, but many other countries have break-even levels of $110 or greater.
"This is a momentous year for what's happening, and we're having almost two million barrels a day of pipeline capacity built out in the U.S.," Morse said on "Fast Money." "The U.S. is actually going to push out about 700,000 barrels a day of light sweet crude imports this year. We think as a result of that, plus production elsewhere, we think the price is going to average, by the time you get to December, $10 less than where it is right now."
As the U.S. and Canada rise, some oil producing countries could face the threat of becoming "failed states" as their leadership grapples with greater pressure for economic and political reform while resource revenues decline, the report said. Others, especially China, could make up for some of the demand, but not all.
"Nigeria, the picture is fairly bleak. Venezuela is pretty bleak," Morse said.
As for Russia, "If it is the case that what is now a $90 Brent floor price becomes a $90 Brent ceiling price, given the dominance of hydrocarbon exports in Russian revenue, there could be a three percent hit to GDP which is by no means insignificant over the next five years. because that's how critical hydrocarbons are," he said. "Here you have a country that requires, on its own public record, $117 per barrel Urals crude, on average, to balance their budget. If the price of oil collapses to only as low as $90 a barrel, it does have that order-of-magnitude effect."*
At the same time, Citi sees a big impact on the U.S. economy. The current account deficit is about 3.2 percent of GDP, and the oil import bill is 1.7 percent of GDP. Citi expects that energy self-sufficiency, combined with the impact of low natural gas prices, could cut the current account deficit by up to 2.4 percent of GDP, with an associated improvement in the dollar of 1.6 to 5.4 percent.
To realize this production boom, the energy industry's near-term challenge is moving the U.S. and Canadian oil that is locked in the heart of the continent because of insufficient pipeline transportation. Citi expects that to improve but in the meantime, the railroad industry is helping pick up the slack, shipping U.S. crude across the continent, and creating big demand for rail tanker cars.
Interdependent North America
The Citi report, titled "Energy 2020: Independence Day," also projects a larger and quicker decline in demand for oil in the U.S. over the next decade or two, due to efficiency and the shift to cheaper natural gas.
For instance, Citi expects 30 percent of the U.S. heavy duty truck fleet to turn to natural gas-based fuel by 2015, well above the 10 percent it previously forecast. That would reduce diesel demand by an estimated 600,000 barrels per day. It also expects new automotive efficiency standards to reduce U.S. oil production by two million barrels per day, up from the one million forecast last year.
"Starting this year, North American output, as we indicate in this report, should start to have tangible impacts both on global prices and trading patterns, and will eventually turn the global geopolitics of energy on its head," the report said.
Morse surprised markets a year ago with a report that envisioned the U.S. as part of an energy independent North America. Since then, the view has become mainstream. The International Energy Agency forecast last fall that the U.S. will overtake Saudi Arabia and Russia as the top oil producer by 2017. The IEA also forecast that North America could become a net oil exporter by around 2030 and the U.S. could become nearly self-sufficient by 2035.
Morse's latest report, released Tuesday, has an even more aggressive view of the U.S. move to dominance as an energy producer.
If crude oil and field condensates, natural gas liquids, renewable fuels and refinery processing gains are counted, the report put U.S. production at 11.2 million barrels per day at the end of 2012, making the U.S. the biggest oil producer already last year.
Canadian production is expected to increase to 6.5 million barrels per day, and even Mexico is now expected to join the North America energy renaissance under a new government interested in exploiting its resources.
In the past six years, oil imports into the United States have been cut in half, after peaking in 2006.
"The numbers are striking. The month of peak was 12.6 million barrels a day in October 2006 and ... now it's under six, and by late 2012 totaled 6.8 million bpd," Morse said in an interview.
Since 2006, U.S. oil field production of crude, plus natural gas liquids and bio-fuels has grown by three million barrels a day, about the same as the total output of Iran, Iraq, or Venezuela. In the same period, Canadian production has grown by 510,000 barrels a day.
"The impact of this extraordinary production growth is becoming increasingly apparent and even if the growth rate subsides in the years ahead the mushrooming impacts of this growth will have dramatic impacts," the report said. "A half decade from now combined US and Canadian output will be in surplus of projected needs. Over the next five years, demand for natural gas in the US should catch up with supply, opening up unexpected opportunities in transportation and igniting a re-industrialization of the country."
Morse, in an interview, said the U.S. could in theory need to import only from Canada within five years. "Our projection of U.S. supply growth and U.S. demand collapse is to levels where the U.S. will not need to import oil from any other country except for Canada," he said.
He expects to see a fight for market share in the U.S. and the ultimate result will be that the U.S. could re-export some Canadian crude. "But technically there should be no room for anyone else's crude," he noted.
But this does not mean the U.S. will be immune to price spikes, even with its growing supply. "Disruptions actually affect the price of oil globally and the more integrated we are in the world oil economy, the more we're going to be impacted by it. If there's a price spike, we're going to feel the price spike but the weight of our production is going to make that prices pike come from a much lower base in the future than it is now," Morse said on "Fast Money."
2013—Year of Change
U.S. oil has been landlocked in the Midwest, lacking a strong transportation system to bring supply to refining areas. A hodge podge of pipeline and rail transport has taken over, as the industry awaits further pipeline development, including the stalled Keystone pipeline.
But Citi points out that 2013 brings big change, what it calls "the most dramatic year of change ever in light sweet crude flows." Pipeline capacity in the U.S. will expand by 1.7 million barrels a day, and up to 600,000 barrels of new rail capacity will be opened between the U.S. and Canada. The report said there is an expected near doubling of receiving capacity of rail-shipped oil from 2012 to 2013.
The industry has innovated where necessary. Lacking pipelines, over half the North Dakota crude production, of 480,000 barrels a day at the end of 2012, was estimated to have been moved by rail. Much of it went to St. James, La., and Port Arthur, Texas and Mobile, Ala. Bakken is also being railed to facilities in Albany, N.Y., and New Brunswick, Canada.
The report also points out the big backlog in rail cars, many of them tank and hopper railcars. Citi said American Railcar Industries last fall said backlog for rail-cars at the end of September was 61,400, and 75 percent were tank rail-cars. Tank rail-cars transport materials like crude, chemicals, propane ethanol and asphalt.
Independent North America
The report describes how shipments of oil from West Africa have been waning and as early as this summer, West African crude shipments into the U.S. Gulf Coast could be unnecessary. East Coast refiners could also decrease dependence on West African crude, replacing more imports with midcontinent oil, brought in by rail from Pennsylvania and Virginia to upstate New York and New Jersey. That would also have a likely impact on gasoline prices, currently at record highs for this time of year because of refining issues.
There is also pressure to move light sweet crude from the Gulf Coast to higher value locations. For instance, Morse expects to see light sweet crude move form the U.S. Gulf Coast to eastern Canada, displacing more West African imports to North America.
Citi expects that within in two years, there could be pressure for more exports to other destinations or for pipelines on the East Coast or to change laws that would allow shipping of crude from the Gulf Coast to the East Coast by non-U.S. flagged ships.
By the end of 2014, Citi expects that sour Canadian crude should make its way to the Gulf Coast by way of new pipelines and that should provide a challenge for other producers shipping to the Gulf Coast, including Saudi Arabia, Iraq, Kuwait , Venezuela and Mexico. Morse says they could be pushed out by Canadian crude, or these producers could preserve market share by cutting prices.
Canadian and U.S. crude should be delivered in greater quantities to the U.S. East Coast and Gulf Coast by mid-decade. A happenstance of poor transportation for all this energy wealth leaves Canadian crude locked in North America, but with exporting ability through the U.S. Gulf Coast until pipelines are approved and built in Canada. Morse said if that were to happen, Canada could see an export boom to the Pacific basin, turning Canadian crude into the benchmark for that region.
The report notes that even before Canada builds pipelines to the Pacific: "There should be exports of crude from the U.S. Gulf Coast - Canadian crude for sure and potentially U.S. crude if the U.S. succumbs to economic logic and lifts current multiple bans on exports," the report said.
Asked how his report has been received so far, Morse said, with an ironic laugh, that he's had some "push back but not as much as last year."
US Is on Fast-Track to Energy Independence: Study
* Attention Russian huggers...
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parijataka
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Good for US, Mexico etc. China having large recoverable shale oil reserves as shown in the map means it will be even bigger bully in the neighbourhood - so, not good for India !
One good fallout perhaps will be the reduced support for Islamic radicalism funded by Saudis and other Gulf states as their importance as energy suppliers to the world decreases.
One good fallout perhaps will be the reduced support for Islamic radicalism funded by Saudis and other Gulf states as their importance as energy suppliers to the world decreases.
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The source here is Republican, but I cite it here anyway because a good point is made..
Cap and Trade is a high price to pay for Keystone Pipeline.
http://www.humanevents.com/2013/02/12/keystone-pipeline-dissed-by-obama/
"All of the Above" | Republican Party Of Virginia
Cap and Trade is a high price to pay for Keystone Pipeline.
http://www.humanevents.com/2013/02/12/keystone-pipeline-dissed-by-obama/
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Energy Boom Ripples Through US Economy
25 Mar 2013
By: John W. Schoen, NBC News
The boom in new oil and natural gas flowing through U.S. pipelines is beginning to ripple through the wider American economy.
Just ask Edrick Smith.
In September, Smith traded temp agency jobs for full-time employment with Baltimore-based Marlin Steel Wire Products, which makes wire baskets for industrial customers. An experienced machinist, Smith is now expanding his skills by learning to set up and operate factory robots.
Knowing each and every machine in here gives me an opportunity to make good money, and to educate myself more," he said. "This is my career."
Smith's hiring was just one of thousands of openings created indirectly by a new boom in domestic oil and natural gas drilling – a bounty so rich that it has even caught energy industry insiders by surprise. In part 2 of our four-part "Power Shift" special report, we examine how the explosion in drilling in places like North Dakota and West Texas is spreading through the general economy – despite controversy over the potential environmental impact of the new industry practices.
Marlin Steel Wire, for example, has expanded its payroll and invested in high-tech equipment to keep up with a steady pick-up in orders from other U.S. manufacturers. Orders are rising, said owner Drew Greenblatt, because his customers are receiving a widening discount in the price of natural gas and electricity.
"That's making U.S. companies that used to be at a price disadvantage now uniquely positioned to win contracts they never won in the past -- or haven't for a while," he said. "Everyone talks about what's going on in North Dakota, but it's filtering down now to conventional factories throughout America."
Some analysts believe the energy cost savings for businesses, factories and consumers will last for decades.
"This is not going to be a one- or two-year thing," said Ross Eisenberg, head of energy and resources policy at the National Association of Manufacturers. "We're going to see lower natural gas prices for a long, long way into the future."
Booms, Busts and Booms
Since the first gusher of oil spewed from of the ground above the Spindletop salt dome outside Beaumont, Texas, more than a century ago, the U.S. energy industry has enjoyed its share of booms and busts. After peaking in the early 1970s, U.S. oil and gas production began to decline as thousands of depleted wells were shut down. The U.S. rapidly became dependent on foreign suppliers to fuel its economy.
About a decade ago, advanced oilfield production technologies like hydraulic fracturing, or "fracking," and horizontal drilling began to reverse that trend. Many of the now-bountiful fields being brought back on line were mothballed long ago when the remaining "tight" oil and gas deposits were considered too costly or technically difficult to produce.
"It is a sizeable opportunity," said John Larson, an economist with IHS Global Insight. "It's a game changer."
The economics of production have also played a role in the boom. A tripling in the market price of a barrel of crude over the past decade supports widespread use of costly extraction methods that didn't make sense when energy prices were lower.
Barring an unanticipated setback, so-called "unconventional" oil and gas production is expected to continue to grow over the next two decades. Over that period, the industry is expected to make more than $5 trillion in new capital investment that will support more than 3.5 million jobs by 2035, according to the financial analysis firm IHS Global Insight.
That economic impact of such spending already is spreading, especially to companies that rely heavily on natural gas as a raw material or energy source and investing and hiring.
Steel makers, for example, benefit from both the lower cost of manufacturing and from strong demand for steel pipe used for oil and gas drilling. Companies in the steel rustbelt of Pennsylvania and Ohio are polishing up aging plants to replace coal with cheaper natural gas. Others are setting up shop closer to major gas distribution hubs like Louisiana, where steel giant Nucor is investing $750 million to fire up a new plant later this year.
Chemical, plastics and fertilizer makers, who rely on natural gas both as a raw material and an energy source, have also been expanding production. Last year, Dow Chemical announced a $4 billion investment in facilities, part of some $15 billion in expansion plans announced by Gulf Coast chemical makers. And Vancouver-based Methanex Corp. decided last year to spend $425 million to disassemble an idled methanol plant in Chile and move it lock, stock and pipeline to Louisiana.
In December, economists with UBS bank tallied some $65 billion in announced construction of new plants related to cheaper natural gas, and said another 11 plants had been announced worth billions more.
As groundbreaking on these projects gets under way, the dividends from the energy boom will flow even further – to construction companies, engineering firms, materials and equipment suppliers and lenders who help finance the projects.
That, in turn, will help shore up state and federal budgets. The added revenue – from income taxes on new jobs created, corporate taxes on added oil and gas profits and state and federal royalty payments – could top $2.5 trillion through 2035, according to IHS Global Insight.
Though prices at the gas pump have remained stubbornly high -- primarily because stepped-up U.S. production makes up relatively small percentage of the global supply, which drives oil prices -- American households are also getting a big break on the lower cost of natural gas and electricity. Larson, the IHS economist, estimated that the energy "dividend" amounts to about $1,000 a year per household and will double by 2035.
"It's a fairly substantial return of wealth to the American consumer," he said.
Increased U.S. oil and natural gas production also promises to help rebalance the long-running trade gaps that have weakened the dollar. If the U.S. moves from a net importer to a net exporter of energy over the next decade, as some experts project, oil will flip from being a source of trade deficits to an important contributor on the positive side of the ledger. With China's energy-hungry economy expected to continue to rely on imported oil, some analysts believe Beijing may soon begin swapping its huge pile of U.S. Treasury bonds for barrels of West Texas crude.
America's growing energy independence also has been fueled by gains in efficiency: U.S. vehicles are squeezing more mileage from every gallon of fuel, and high-tech heating and cooling units and green building techniques and materials have cut energy bills for commercial and residential buildings by 10 percent since 2005.
Challenges remain
To be sure, there are forces that could delay – or even derail – the ongoing energy boom. The drop in natural gas prices has already slowed production of some projects that become too costly when gas prices are too low.
Lower oil prices could have the same impact, but it's not clear that added U.S. supplies will be sufficient to make a dent in global oil prices, especially if OPEC producers like Saudi Arabia throttle back on supplies to maintain current prices.
But some experts are more bullish on the prospects for a second energy windfall as increased U.S. supplies of oil rein in global prices. Citibank analyst Edward Morse thinks that by the end of the decade, added U.S. output will pull global crude prices back down to a range of $70 to $90 a barrel – a savings of as much as 30 percent.
That kind of price drop would further amplify the economic boost from lower natural gas prices already flowing through the economy.
Last year, for example, the U.S. consumed roughly 7 billion barrels of oil at an average price of about $100 a barrel. A 30 percent discount on that oil bill works out to about 1.3 percent of gross domestic product. In an economy growing at roughly 2 percent a year, the impact of that dividend would be substantial.
Other factors could slow development. Widespread environmental concerns about the impact of hydraulic fracturing on water supplies have delayed drilling of the Marcellus shale field in New York, where the state Assembly recently voted to extend a moratorium for another two years. In California, the state Legislature is considering at least eight bills to regulate expanded production in the Monterey shale field, estimated to be one of the largest deposits in the country.
Oil and gas producers also face a looming labor shortage as a generation of petroleum engineers and geologists approach retirement age. Their departure is compounded by a dearth of trained younger workers to take their places. From a peak of 11,000 students enrolled in geology and petroleum engineering programs at 34 universities in 1983, only 1,500 were enrolled in 17 programs by 2004, according to a 2007 report from the Interstate Oil and Gas Compact Commission.
Finally, transportation bottlenecks have already slowed the distribution of new energy supplies and could further slow future expansion. Expanding the existing pipeline network, which was planned and constructed decades ago, long before new drilling techniques rewrote the U.S. energy map, is already raising safety and environmental concerns.
The most visible controversy – construction of the proposed $7 billion Keystone pipeline through the nation's heartland – could be the opening round of ongoing local battles over the build-out of the network required to get new supplies of oil and natural gas from producer to consumer.
"We imported natural gas this winter to the Northeast because we don't have the capacity yet to move the gas where we need it," said Larson. "As a country, we need to address the issue of how we develop the infrastructure we need to enable this energy to flow to where it's needed."
Energy Boom Ripples Through US Economy
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