Energy and the new global industrial landscape: A tectonic shift?
In its recent report released at the World Economic Forum in Davos, IHS looks at the unique preconditions that have allowed the US to gain an early start in unconventional energy, even as...
A new IHS report says that the unconventional oil and gas revolution has put the US at the forefront of global competitiveness.
In a report released in time for World Economic Forum 2013 in Davos last month, global information company IHS said the unconventional oil and gas revolution has changed the world's energy landscape and put the US at the forefront of global competitiveness.
The report looks at the country's rising edge and theimpact of unconventional fossil fuels on global energy markets and industries.
It noted that the country's oil and gas output is having profound impacts on the global chemical industry and long-term challenges await the automotive sector.
North America gained from an early start in unconventional energy, a well-developed energy infrastructure and private-sector boost. The US is projected to add three million new jobs and US$111 billion to federal and state coffers by 2020.
Investment in the region surged in 2012 and companies are eyeing up to US$95 billion worth of new facilities by the next decade. Europe, Asia and Latin America are also increasingly shifting manufacturing operations there.
The US is leading oil supply growth that could outstrip global demand, while increased shale gas production has led to a sharp drop in emissions despite a global rise. In less than a decade, demand for oil imports has dropped by 18 percent.
The production boom and subsequent dip in prices have given the country a competitive edge thatwill force regions and companies to rethink their strategies inproduction and investment.
"Governments worldwide need to consider whether they want to establish the preconditions that will stimulate the development of unconventional natural gas and oil resources," said IHS Chief Economist Nariman Behravesh in the report.
It is only a matter of time before governments catch up with technology and favourable policies. Already, major opportunities have been identified around the world and China has emerged a bright spot with a resource base potentially larger than the US.
However, IHS remains cautious. Daniel Yergin, IHS Vice Chairman and one of the report's authors, warned that it would take several years before significant amounts of unconventional oil and gas begin to appear in other regions.
"The circumstances that promoted this development in the United States differ in important aspects from other parts of the world: A large number of independents, private ownership, infrastructure, and service ecosystems," he wrote.
"Governments have to create fiscal and regulatory regimes that permit work to go ahead and avoid being overly prescriptive with evolving technologies."
While the US has benefited from favourable market forces and robust entrepreneurship, it will still need to work to maintain its edge. Policymakers must nurture the country's energy boom, protect the environment from harmful impacts of fracking, and address political issues in future LNG exports.
This article was republished with permission from IHS, a global information company with experts in the pivotal areas shaping today's business landscape: energy, economics, geopolitical risk, sustainability and supply chain management. The original article, which first appeared in January 2013.
BY : IHS