The Natural Gas Revolution in the US: Geopolitics, Economics and the Environment

Leading American energy companies have research arms that publish forecasts regularly. Yet none of them had foreseen the strong recovery in gas and oil production that is now occurring in the United States. Perhaps this is because they had not taken into account domestic technology, “made in the USA,” that made it possible.

Oil production in the United States had decreased over the past 40 years, but America is on its way to becoming the largest producer of this energy source in 2015. The latest data from the International Energy Agency demonstrate this. Natural gas had also been produced at a much smaller rate over the last four decades. However, the U.S. Energy Information Administration states that at current production rates, and with current consumption ratios holding steady, the United States will have a 100-year supply of natural gas assured. Consumption will decrease as energy efficiency and smart use increase; therefore, the administration estimates an energy independence scenario of up to 200 years.

Crude oil production will continue increasing by over 25 percent per day – up to 9.3 million barrels per day in 2015 – reaching its highest level since 1972, a year before the first oil crisis. Daily natural gas production, which grew 5 percent in 2013, will increase sharply and will turn the United States into its largest net exporter worldwide in 2018.

From the American point of view, this is good news for economic growth, increased domestic consumption and households’ disposable income, as well as for President Obama’s environmental protection policy and the national security of the United States, for whom energy independence is necessary, as we have previously said.

Given that American natural gas reserves are huge and that energy in the United States is much cheaper, energy bills will be much lower in the entire country. Natural gas is replacing much “dirtier” energy sources, such as oil and coal, in power generation. From an economic point of view, conservative as well as liberal scholars — Fareed Zakaria, Thomas Friedman, Joseph Stiglitz, Paul Krugman, etc. — are in agreement that the American energy boom is the country’s main social and economic achievement, together with the Internet revolution in the 90s. Leading Spanish companies such as Gas Natural Fenosa are leading the process in the United States.

Environmental protection is essential, and the EPA, following orders from President Obama, has initiated programs to reduce CO2 emissions that, in fact, are already decreasing: they are 5 percent lower today than they were in 2005. It is plausible to think that the United States will achieve its emissions reduction goal of 17 percent below 2005 levels in 2020.

Information technology and President Obama’s new regulation explain this positive trend in CO2 reductions, which affects the auto industry — which is much more efficient — and factories that use coal and oil, who must reduce their emissions of CO2.

The United States has been — and is — a leader in economic growth and has also been one of the worst enemies of environmental protection. But this already began to change for the better under President Clinton, with strong support by Vice President Al Gore. Barack Obama is completing this task and beginning a new era of economic growth and environmental protection, setting an example for the rest of the world. It is time for China, Russia, Venezuela and many others to take note of the positive American example.