Big changes are already underway in the global energy sector. And some of these changes are contrary to previous expectations. What we now realize, once again, is that capitalism works. Capitalism has always solved our most basic problems. Even now it is solving our energy problem.
Four years ago Russia was the rising powerhouse of global energy production. Marshall I. Goldman’s 2008 book on Russia was titled Petrostate: Putin, Power and the New Russia. As Goldman explained, “Russia … finds itself in a newly assertive, even dominant, international position. Its emergence as a new super energy power overlaps with the weakening of the United States as we have squandered our … resources in Iraq.” But Russia’s energy sector has always been a state-manipulated behemoth with serious problems of its own.
Some in Russia are worried about declining Russian production and rising North American energy production, along with rising American energy efficiency. In a Nov. 21 Moscow Times piece titled “What the U.S. Oil Revolution Means for Russia” Chris Weafer wrote, “The expected growth in U.S. oil and gas supply is the most serious concern for Russia and other leading energy exporters.” According to Weafer, the U.S. demand for imported oil is already falling, and is expected to fall to 10 million barrels per day by the end of next year. He also sites a report of the International Energy Agency, World Energy Outlook 2012.
In a recap of the report on the International Energy Agency Website, we read: “The global energy map is changing in a dramatic fashion….” According to IEA Executive Director Maria van der Hoeven, “North America is at the forefront of a sweeping transformation in oil and gas production that will affect all regions of the world….” The World Energy Outlook report “finds that the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows.”
According to the IEA report, the United States will become “nearly self-sufficient in energy” by 2020, and will become a net exporter of natural gas. Even more surprising, North America will emerge as a net oil exporter, “accelerating [a] switch in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to Asia by 2035.”
The question may be asked: Are these projections part of some bizarre fantasy? Damian Carrington of the Guardian UK recently wrote that the IEA report is a reminder that the “peak oil idea has gone up in flames.” The Financial Times headline reads, “US to be world’s top energy producer.” And then there was the 13 November Forbes piece by Mark P. Mills, “The International Energy Agency Catches Up With America’s Oil Producers” – which begins with the following comment: “We welcome the IEA to the community of experts noticing the energy world has changed. It takes time for the prognosticators and pundits to catch up with the producers.”
While America’s natural gas boom has gotten a lot of attention over the past year, the country’s oil boom “is now catching everyone’s attention,” noted Mills. “The IEA’s forecast that the US will become the world’s largest oil producer before 2020 has enormous economic implications and geopolitical implications for everyone.” And it most certainly does.
Of course, big daddy government could put an end to America’s glorious energy future. Bureaucrats who fear “global climate change” might easily invoke rules and regulations that could kill our best economic hopes at the outset. It should be remembered that the creative miracles of capitalism depend on economic freedom, and economic freedom is seriously threatened today. I am reminded of the poignant short video, “If I wanted America to Fail.” Readers should visit FreeMarketAmerica.org and view other educational videos about the assault on economic freedom and the “miracle of the free market.”