In spite of anti-fracing pundits and the twists politics may take in the near future, the outlook for oil and gas production in the U.S. is still positive—so positive, in fact, that the phrase “energy independence in North America” during an industry presentation now elicits supportive nods rather than looks of disbelief or confusion. This was the case when Edward Morse, a “basic believer in energy independence,” took the stage at Oil and Gas Investor’s Energy Capital Conference in early June.

“There are really two major threats on the horizon that could prevent the sudden growth of production in North America from continuing,” said the managing director and global head of commodity research, Citigroup Global Markets Inc. “One is a considerably lower oil price. (But) as long as oil stays above $70 per barrel, it’s unlikely that production growth will diminish very much. The other threat is political, since North America has some politicians who don’t like the use of oil and want to decrease our dependence on it.”

In spite of these threats, Morse quickly turned positive, highlighting the tremendous production growth afoot in North America. “What’s happening now is very exciting. You’d have to pinch me to assure me that I’m seeing what I’m seeing.”

Economically, this production growth could lead to as many as 3.6 million more jobs being created on net by 2020, and some $471 billion could be shaved off the current deficit—about 2.4% of the hypothetical GDP in 2020. This would also have implications for the U.S. dollar, potentially helping it appreciate by 2% to 5% in real exchange-rate terms, Morse said.

He referenced a weekly petroleum report from the Energy Information Administration, which indicated production in the U.S. in early June grew over the previous week by 18,000 barrels a day. Year on year, physical oil production is up close to 700,000 barrels per day in the U.S. alone, while natural gas liquids production is up close to 500,000 barrels per day, he said.

In looking at projected liquids production in the U.S., by 2020, given declining consumption of petroleum products in North America and an increase in daily production, there still will be a glut, Morse said.

“That means production in the U.S. will be greater than consumption and there will be some export opportunities. Also, one of the conclusions is that by 2020 there will be no room in the U.S. market for imports from places such as Venezuela, Colombia and Saudi Arabia.”

Growing production in the U.S. has lent credence to the idea that North America is slowly emerging as a major petroleum product exporter, with the continent playing an increasingly important role in balancing global markets.

“In fact, preliminary estimates suggest that the U.S. has surpassed Russia as the largest refined petroleum product exporter in the world. We now export more than 3 million barrels per day of petroleum products. That number looks like it’s going to rise by another half million barrels per day this year due to growth in refining capacity, net reduction in product demand and export opportunities….”

As for gas, Morse said his research group concluded that the U.S. natural gas supply sector is likely to be very responsive to demand increases and price signals. Around 2014 he expects to see a significant boost in the price gap between gas and crude in North America, as demand snowballs.

The shale boom that has bolstered production in North America has been difficult to replicate internationally, for two reasons, Morse said. “One is our independents and their ability to experiment at the field level and try to bring in new supply. The other is our ability to generate capital, which has benefited from the robustness of the futures and capital markets. State-owned monopolies just can’t do what the North American oil and gas industry can do in conjunction with the capital markets.”

Morse concluded with some positives about the natural gas market, which is seeing a demand response to lower prices in five areas. The first is greater use of natural gas in power generation. There’s also increasing demand in the transport sector and solid growth in residential and commercial requirements, due to switching of heating oil to gas. Finally, North American LNG exports are growing and a re-industrialization of America is under way based on this low-cost feedstock that benefits various sectors, from petrochemicals to steel.

While natural gas prices are in the $2 range now, the supply and inventory overhang should be worked off once the market reaches its annual “restart” at the beginning of winter, pushing prices to $4 to $5.