the world with its throttlehold over the world’s energy jugular.
Just as some think America’s dominance of the political globe may be ending, so some think the Persian Gulf’s dominance over energy may be ending soon.
What is prompting such talk? The exploitation of new oil sources in the Americas. The Americas just might replace the Middle East as the world’s biggest oil-producing region.
An article in the current issue of Foreign Policy magazine sums it up in a two-word headline: “Adios OPEC.” It says the Organization of Petroleum Exporting Countries will lose much of its power in the 2020s, because “the Americas, not the Middle East, will be the world capital of energy” by then.
Amy Myers Jaffe, head of the Baker Institute Energy Forum at Rice University and author of the article, says the shift will take place because of both technological and political factors.
While geologists have long known that there are huge untapped deposits of energy in the Americas, most of these reservoirs were locked up in deep waters, shale rock or oil sands, making them economically unfeasible to tap. But new technologies are changing that.
There are more than 2 trillion barrels of oil from unconventional sources in the United States, plus another 2.4 trillion in Canada and 2 trillion in South America, compared with the Middle Eastern and North African conventional oil reserves of 1.2 trillion, the article says. In other words, if the Middle East and North Africa are floating on oil, the Americas are floating on five times as much.
Thanks to new techniques for horizontal drilling for shale gas production in the United States, and other new technologies to extract oil from Canada’s oil sands, or from Brazil’s off-shore deep water deposits, these and other reserves in the Americas will soon become the center of gravity of the world’s oil supply, the article argues.
In addition, the Middle East’s oil production will be affected by the political turmoil in that part of the world.
“The revolution-swept Middle East and North Africa will soon be facing up to an inconvenient truth,” Myers Jaffe says. “Changes of government in the region have historically led to long and steep declines in oil production.”
Libya’s oil production dropped from 3.5 million barrels a day when Col. Moammar Qadhdhafi toppled King Idris in 1969 to 2 million barrels over the next three decades. A similar drop-off happened in Iran after the 1979 revolution that toppled the Shah, when production was cut intentionally from 6 million barrels a day to about 2 million. The Islamic Republic is now producing a little less than 4 million a day—but output has fallen almost every month over the last two years despite desperate efforts by the government to raise it.
But output is already rising in Brazil, Canada and the United States.