India, China Could Soon Demand More Oil Than U.S. And Europe

The United States has emerged as the star performer on the global oil scene, according to the latest oil outlook from the International Energy Agency. Oil production from the United States grew at a record pace last year for a non-OPEC nations. Meanwhile, emerging economies have become the big oil buyers.

Copyright © 2013 NPR. For personal, noncommercial use only. See Terms of Use. For other uses, prior permission required.

AUDIE CORNISH, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

MELISSA BLOCK, HOST:

And I'm Melissa Block.

For years, we've understood the global oil landscape in fairly simple terms: Saudi Arabia and other Middle Eastern countries were the big producers of oil, the United States and its allies were the big oil buyers. But a report today from the International Energy Agency shows a different picture. Turns out the U.S. has become a star oil producer, as NPR's Tom Gjelten reports.

TOM GJELTEN, BYLINE: Petroleum engineers have always known about untapped underground oil in the United States, but it was unreachable, trapped in tight shale rock. Then the engineers figured out how to crack the rock. Hydraulic fracturing, fracking, got that tight oil finally flowing in places like North Dakota. Engineers in Canada got oil out of tar sands.

The International Energy Agency noted last October that all this was potentially big. But executive director Maria van der Hoeven today said the IEA underestimated how big a deal it was.

MARIA VAN DER HOEVEN: North American supply is an even bigger deal than we thought, a real game changer in every way.

GJELTEN: The old idea of depending on the Saudis for oil is fast disappearing. That's the news on the oil supply side. On the demand side, another big development. It's no longer the big industrialized countries - the United States, Europe, Japan - that are the biggest oil users. The IEA, in its last report, predicted countries like China and India would need more oil than the industrialized counties at some point in the future.

HOEVEN: But it's happening, and it's happening fast. It's faster than expected.

GJELTEN: For the first time in history, developing countries are now using more oil than the industrialized countries. So the entire global oil trade has fundamentally shifted. As for the Middle Eastern countries, their clout has diminished. The uprisings in the region over the past two years have brought disruptions in oil production. Antoine Halff, head of the IEA's Oil Industry Division says, once again, his analysts were caught by surprise.

ANTOINE HALFF: The Arab Spring is kind of a bigger deal than we estimated maybe a few months ago in terms of the impact on supply.

GJELTEN: To an extent, these interruptions in the flow of Middle Eastern oil offset the increased flow from North America, so the price of oil remains high. Still, over the next few years, many energy economists think the growth in the supply of oil will outpace the growth in oil demand. One big reason: Energy consumers are looking more and more to natural gas for energy. Antoine Halff today highlighted one example of that move: Trucks and trains, he says, will turn away from oil as their transportation fuel.

HALFF: In fact, we're now expecting that we're going to see some transition of transport demand from oil to natural gas before the end of the forecast period.

GJELTEN: It's already happening in China, just one of many developments in the fast-changing world of global oil. Tom Gjelten, NPR News, Washington.

Copyright © 2013 NPR. All rights reserved. No quotes from the materials contained herein may be used in any media without attribution to NPR. This transcript is provided for personal, noncommercial use only, pursuant to our Terms of Use. Any other use requires NPR's prior permission. Visit our permissions page for further information.

NPR transcripts are created on a rush deadline by a contractor for NPR, and accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of NPR's programming is the audio.

Comments

 

Please keep your community civil. All comments must follow the NPR.org Community rules and terms of use, and will be moderated prior to posting. NPR reserves the right to use the comments we receive, in whole or in part, and to use the commenter's name and location, in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

Support comes from: