The Future of American Energy Dominance

Comments Off on The Future of American Energy Dominance
The Future of American Energy Dominance

The North American Energy Revolution continues to radically transform the world’s economy by flooding the market with inexpensive oil and natural gas.   As of year-end 2018, U.S. crude production had climbed to 11.3 million barrels a day.  That puts the U.S. ahead of the second and third largest producers, Russia and Saudi Arabia, to become the world’s largest oil producer for the first time since 1973.

Meanwhile, in early January 2019, Crude oil prices reached a 17-month low; Brent crude dropped to $53.82 a barrel, while West Texas Intermediate stood at $45.59 a barrel.  This trough in energy prices was great news for U.S. consumers, with unleaded regular gasoline retailing at $2.25 a gallon.  Some experts even feared that oil companies would be forced to stop drilling if prices dipped below $40, since drilling is only profitable if oil is priced at $50-to-$60 a barrel.  However, those fears remain misplaced with the consensus saying global competition will take prices back into the $60s later this year, with prices above $80 a barrel being quite possible in 2020.  The biggest market unknowns are on the demand side and are related to trade concerns and international sanctions on Iranian oil; both of these factors will be heavily influenced by strategic decisions made in the United States.

As we predicted in early 2016, American shale has become the world’s “swing producer,” forcing prices into a trading range of $50-to-$75 a barrel, with occasional moves into the $40s and $80s.  This ensures a virtuous self-reinforcing cycle where a growing supply of low-cost energy accelerates the ramp-up of the Golden Age of the Fifth Techno-Economic Revolution.   This relatively stable “Goldie-Locks” energy price is exactly what’s needed for revving-up global economic growth while encouraging aggressive exploration and production increases.  

Today, as in prior techno-economic revolutions, surging productivity is being made possible by:

  • the rapid growth in relevant populations of consumers and producers,
  • the widespread roll-out of transformative technology,
  • the availability of abundant capital, and
  • access to abundant, low-cost energy. 

One thing that’s different this time is that, for the first time in history, the relevant populations include nearly everyone, everywhere...

To continue reading, become a paid subscriber for full access.
Already a Trends Magazine subscriber? Login for full access now.

Subscribe for as low as $195/year

  • Get 12 months of Trends that will impact your business and your life
  • Gain access to the entire Trends Research Library
  • Optional Trends monthly CDs in addition to your On-Line access
  • Receive our exclusive "Trends Investor Forecast 2015" as a free online gift
  • If you do not like what you see, you can cancel anytime and receive a 100% full refund