The US economy is set to receive a big crucial boost by the end of 2020. This is because of the increased oil production in its own shores. The amount of production expected in the coming decade will exceed that of Saudi Arabia, making it the biggest oil producing country in the world. Due to this fact, Saudi Arabia may have to cede the top position to US as a leading fuel supplier of the world.
This revelation comes from the Paris-based independent research and advocacy firm, International Energy Agency (IEA) that follows the economies of all the developed oil-importing countries in the world. Moreover, IEA has also predicted in its report titled ‘World Energy Outlook’ that US may become energy independent by the turn of another decade, i.e., it will not have to buy fuels from the oil producing countries within 10 years down the line.
Furthermore, IEA said in its report that North America may become the single largest exporter of oil by 2030. Currently, 20% of the fuels consumed in US are imported from different oil producing countries. However, this is going to get reversed since most of the oil-importing economies are about to become self-reliant in terms of energy supply.
Both rising oil prices and development of more sophisticated technologies have contributed to the oil boom the US is witnessing now. For instance, the successful and profitable use of hydraulic fracking has made it possible to extract oil and gas from the shale rocks. According to the US Energy Information Administration, there is a 14% rise in total oil production from 2008-2011. In addition to that, natural gas production rose by around 10% during the same time.
Effects of increased energy production on US
Economists say that this is really a commendable improvement in the US economy. They hope that the fracking technology proves to be an eco-friendly mode of production that will sustain the increasing amount of oil and gas that is being produced as of now. As a result of this unconventional energy production, the US economy will be able tackle wide variety of its socio-economic problems. Some of them are as follows:
Infrastructure development – As per the findings made by IHS Global Insight, infrastructure spending in the US will increase to about $5.1 trillion from 2012-2035. This capital will be used to build to oil drilling wells, roads, railways and pipelines in support of the growing oil & natural gas production and consumer demand.
Employment generation – Energy sector currently employs both directly and indirectly around 1.7 million people all the across the US. However, it is going employ around 3 million people by the end of 2020, if the data provided by the IHS Global Insight are to be believed.
High natural gas demand – The IEA expects to see a growth in demand of natural gas amongst the consumers by 2030. This may happen due to reduced prices and overwhelming supply of natural gas. As a result of this growth in demand, natural gas may become the most preferred form of energy in the US.
Trade equilibrium – As already discussed, US meets 20% of its energy needs from foreign shores. In 2011 alone, it bought around $327 billion worth of oil from other countries. This is why the US is regarded as the largest importer of foreign oil. However, it is expected to change since US is moving towards better energy efficiency standards.
Therefore, the money that filled the treasuries of other countries will not go anywhere else. The same capital can then be infused in the US economy itself that will boost the domestic energy sector.
Author Bio - Robert Christopher is a financial writer associated with the Oak View Law Group. He is a subject matter expert on economy and finance. He loves to share his knowledge and experience through his articles based on debt relief and other similarly related topics.