Forecasts for the oil and gas markets for 2014 were released recently. They predict a somewhat loose market, along with more positive news for those involved in the North American oil and gas industry. These projections were published in the “Short-Term Energy Outlook”, a document produced by the US Energy Information Administration. The report says that a “loose market” will result from higher global consumption of oil being offset by the increased global supply of fossil fuels.
The Short-Term Energy Outlook predicts that global liquid fuel consumption will remain stable in 2013 but will pick up again and increase in 2014 due to economic recovery–increasing by about 400,000 million barrels per day. The report predicts that most of the increase in consumption will come from outside the Organization for Economic Cooperation and Development (OECD), a group of the world’s developed countries. In the OECD countries, the report predicts a decline in consumption of 300,000 million barrels per day due to decreasing use of liquid fuels in Europe that is not offset by the modest rise in consumption in North America. In 2014, the OECD overall decline will slow to 100,000 million barrels per day. The increase in the US is expected to be 70,000 barrels per day in 2013 and 60,000 barrels per day in 2014. Most of that increase will be in fuel oil and liquid petroleum gas.
Perhaps the more interesting information in the report pertains to energy production. The members of Organization of Petroleum Exporting Countries (OPEC) are expected to decrease crude oil supply in 2013 by 600,000 barrels per day due to a decline in production in Saudi Arabia. Other OPEC members, such as Iraq, Nigeria, and Angola, will increase production to pick up the slack over the next two years. But most growth in oil and gas production will come from non-OPEC members. The report projects that non-OPEC fuel production will grow by 1.4 million barrels per day in 2013 and 1.3 million barrels per day in 2014. The days of fuel shortages due to OPEC policies like in the 1970s are looking more and more like the distant past. Production in North America alone is expected to account for two thirds of that non-OPEC growth!
The US will increase its crude oil production by 900,000 million barrels per day in 2013 from the 2012 total and then increase by another 600,000 million barrels per day in 2014. The Energy Information Administration predicts that the US imports of liquid fuel will continue to decline in the next two years–falling by eight percent from the 2012 numbers. Gas production will also continue to increase, largely due to growth in shale gas. US inventories of gas were at an all time high this past November, and with increased shale production in regions around the country, there is no reason not to expect continued success in this area of energy production.
All of this confirms the dynamism and potential of the US energy industry and our mounting capacity for energy independence.
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