As the production of unconventional oil and gas in the United States rises -- and as the United States increasingly exports that energy -- the world’s economic map will be forever changed. The power of today’s petro states, such as Iran and Russia, will continue to wane. More and more, the United States will be the stable, competitive source of choice for gasoline, diesel, natural gas liquids, and, soon, liquefied natural gas (LNG).
In the past two years, the United States has licensed four terminals for exporting LNG, mostly to countries with which it has no free trade agreement, such as Japan and various Latin American and European countries. By 2020, the United States could export as much as 61.7 million tons per year of LNG. That would make the United States the second-largest LNG exporter in the world, next to Qatar. Other deals in the licensing queue are likely to push the total closer to 80 million tons per year, compared to Qatar’s current total of 77.
Not everyone is pleased with the coming export boom: domestic petrochemical manufacturers believe that the United States is in danger of exposing itself to global energy price volatility. But nothing could be further from the truth. Although there is some potential for that, the United States and the world have much more to gain -- in economic and geopolitical terms -- from expanding U.S. energy exports. The United States should thus embrace the role of energy exporter and think carefully about how to maximize the potential rewards, including by heading off attempts by coalitions of other energy producers to create artificial rises in oil and gas prices or to tack political restrictions onto importers, either of which could cause financial and economic harm to the United States and the global economy.
THE NEW ENERGY MAP
Much has been written about the shale revolution in North America, which has taken U.S. oil production from barely five million barrels per day prior to the 2007–8