HOUSTON -- The chief economist of the Paris-based International Energy Agency warns against exuberance when interpreting the global impact of the U.S. shale oil revolution, and that a continued message suggesting Middle Eastern producers will play a lessened role could have unintended consequences.
“If we keep on giving the wrong signal that Middle East oil may not be needed as much as we thought before, investments may not flow in to Middle East fields,” said Dr. Fatih Birol , speaking recently at Rice University ’s Baker Institute for Public Policy in Houston. “We may well see a slowing down of investments, and in the 2020s we may be challenged to see new oil coming from the Middle East.”
Such a scenario would inevitably result in a global oil-demand crisis, he forewarned.
Birol, presenting findings from the IEA’s “World Energy Outlook 2013” report published in October, forecast production of U.S. shale oil to increase into the mid-2020s, then to peak and begin tapering. This domestic production growth is a boon for the U.S. and will likely almost completely eliminate the U.S.’ need for crude imports for a time. “It’s good news for the U.S.,” he said.
However, oil demand growth worldwide -- particularly in China and Japan, and increasingly India -- by then will far surpass the crude volumes left unclaimed by the U.S.
“Yes, shale oil is going to meet almost all of U.S. consumption, but there is a world beyond the United States when it comes to global oil demand.”
In its 2011 World Energy Outlook report, the IEA predicted the U.S. would overtake Saudi Arabia as the world’s leading oil producer by 2017, a date it has since revised to 2015. But that fact does not reverse the roles of the two countries in the global oil marketplace, as it has been interpreted in the U.S., he emphasized.
“To be the largest oil producer is something; to be the largest oil exporter is something different,” he said. “You can be the largest producer, but you’re not going to be the largest exporter if you consume a lot of this oil at home. We need to be very careful when interpreting the results of the shale oil revolution in the United States.”
Birol is adamant to correct the record.
“Asian oil demand growth is increasing substantially, and there is one major address that can meet that growth -- the