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U.S. to pass Saudi Arabia as top oil producer

An oil pump jack near Tioga, N.D. A boom fueled by hydraulic fracturing of shale should add millions of jobs in the U.S. The question: How long will it last?

A new projection suggests the United States will leapfrog the Saudis in oil come 2020 or so. This comes not from an oil company or a bank, but the blue-ribbon International Energy Agency in Vienna. It advises governments around the world.

The IEA cites as a main reason the new drilling technology known as hydraulic fracturing, or fracking. That same controversial innovation is driving the domestic natural gas boom.

Optimistic economists think the boom could create three to four million new jobs, and push down the U.S. jobless rate by a full percentage point. They also forecast ultra-low energy bills for households and energy-intensive manufacturing sectors.

"The order of magnitude is the same as the technology boom in the '90s," says independent energy economist Philip Verleger. "We are going to see an economic surge very similar to that."

Already, new jobs have come to the U.S. in drilling, and supplying the drillers with pipes and trucks and hotel rooms.

Also: petrochemical plants. They use a natural gas product as a cheap raw material.

"The U.S. is the cheapest, large-scale petrochemical producing country in the world," says Ed Morse of Citigroup. "Massive new petrochemical facilities are being built, not only in Louisiana and Texas, but also in places like Pennsylvania and Ohio and West Virginia."

But this being economics, there are competing assumptions and prophecies. Some think the U.S. oil and gas boom is just a one-decade, one-off bonanza.

 

INTERACTIVE: See the top global oil producers rise and fall from 1960 to 2010 in this interactive map. View the map


"In the IEA's estimation, the most commercially attractive fields are the ones that are getting developed right now," says Trevor Houser of the Rhodium Group consultancy. "And tight oil or shale gas fields produce pretty rapidly early on, but then decline fairly sharply.

The decline rate of these new oil and gas wells is a big debate. As is whether fracking is ushering in an energy game-changer, equivalent to the Internet. At the very least, energy pros see a solid 10- to 15-year economic boost.

About the author

Scott Tong is a correspondent for Marketplace’s sustainability desk, with a focus on energy, environment, resources, climate, supply chain and the global economy.
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I would like to add my voice to those already here who were upset that a discussion about a US dirty energy boom and the prospect of cheap energy supply for the next 10 years went on without a mention of climate change. In fact, Ky Risdall jumped in with a closing editorial remark (segue?) about how much Europe would envy our position. This report hailed from the Sustainability Desk!?! At this point, with our atmospheric CO2 at 391 ppm, to do so is simply irresponsible journalism. I propose you use your Sustainability Desk funding to develop a well researched report on the impact cheap (I would argue artificially cheap) energy has on the development of clean energy alternatives and on energy consumption levels. Without market pressures, we will not develop alternatives to our current self-destructive systems. Cheap, dirty energy is nothing to celebrate.

When petroleum runs out- which it will, sooner or later, the countries that pumped their resources dry too early will be at the mercy of those who prudently saved theirs. If we are going to deplete our resources this early in the "draw-down", we should work hard in the ~10 years it buys us to move as strongly as possible to other energy alternatives. Otherwise, the Saudis and others will be chuckling soon at our short-term thinking.

One other thing to consider- oil is the source of many organic compounds that are used to make just about everything we rely on today- even if we "solve" the energy conundrum, we may then simply be reliant on oil-producers for other major portions of our economy. Let's hold onto ours as long as possible and let others pump theirs dry.

It is unconscionable to discuss increasing fossil fuel extraction and use without also talking about the increasingly dire climate impacts of spewing additional gigatons of CO2 into our atmosphere. The financial (not to mention human suffering) inplications are extreme. I cannot fathom how the people pontificating on energy are allowed to be completely divorced from the scientific reality of climate change.

Agreed! This story was a complete failure to cover the subject objectively. The science says we have only another 16 years at the current rate of fossil fuel consumption before we completely blow past 2 degrees C of warming. Who cares how much fossil fuel each country has? 80+% of it HAS to stay in the ground or the planet is in serious trouble. http://www.rollingstone.com/politics/news/global-warmings-terrifying-new...

Marketplace is doing a disservice to the environment as well as to its investor listeners who should understand this basic economic problem: we're in a fossil fuel bubble driven by the ridiculous idea that all the oil/coal/gas reserves are being valued as fuel in the future, but in reality only a fraction of these companys' and countries' "assets" can be sustainably extracted and burned.

This development is positive in many ways. We must, however, reduce our carbon foot print for economic and other reasons. I am very concerned that cheap oil will reduce the efforts of the US to deal with this problem.

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