News Column

Energy Boom: Cohen Column

Nov. 20, 2012

Isaac Cohen --

oil pump

Almost 40 years after the 1973 oil embargo, the world energy map is being redrawn again, but this time by an energy boom happening -- who could have imagined? -- in the United States.

This is one of the main conclusions presented last week by the International Energy Agency, an organization set up precisely after the oil embargo, to advise the industrialized economies on energy matters. According to the agency's annual report, presented at its headquarters in Paris, the U.S. will overtake Saudi Arabia by 2020 as the world's largest producer of oil. Previously, the agency also predicted that the U.S. will overtake Russia by 2015 as the main producer of natural gas.

This transformation is the result of the utilization of new technologies in the U.S. such as hydraulic fracturing, or fracking and horizontal drilling. Both have led to spectacular increases in the domestic production of oil and gas.

For instance, the IEA projects that, by 2020, U.S. oil imports will decrease to 4 million barrels per day, from 10 million barrels per day this year. In fact, due to restrictions on exports of crude oil, in 2011 the U.S. became a net exporter of refined oil products, such as diesel and gasoline, which was not seen since 1949.

Some experts have warned that this does not mean that the U.S. will become energy independent or self-sufficient. It means importing less oil from the Middle East, the most volatile region in the world.

Isaac Cohen is an international analyst and consultant, a commentator on economic and financial issues for CNN en Espaņol TV and radio, and a former director, UNECLAC Washington Office.

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Source: (c) 2012. All rights reserved.

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