Home' acuity : Acuity Oct 14 Contents significant refining infrastructure.
Europe, which curtailed its
dependence on Middle Eastern oil in the
1970s and 1980s by expanding nuclear
facilities, would be the loser but is
relatively unaffected in either case.
It’s very hard to predict the longer-run
effects of another significant oil price
spike, which makes alternative sources
more attractive and other oil reserves
“ The explosion in shale oil and gas in
the US was simply not predicted but as
prices rose the theory proved correct –
extra supply was found and bought to
market,” says Parry. US shale oil became
economic at prices around US$80 and
above. The technique – fracking – that
made new supplies possible has existed
since the 1930s.
“US shale oil is a game changer
psychologically and politically, drawing
the US’s interest away from the Middle
East and toward Asia,” notes Sheng.
“Its transformative impact, both for
the US and the world as a whole, cannot
be emphasised enough,” the IEA said in
its latest oil report.
From being among one of the more oil
import-dependent nations a decade ago,
the US is already a net exporter of refined
products – 1 .5mb/d in 2013. By the end of
this decade it is expected to be “energy
independent”, an overall net oil exporter
of around 3.5 mb/d, around one third of
Saudi Arabia’s current export supply.
US shale and light oil resources may
not amount to more than 15% of the
world’s total reserves by some estimates.
But it is relatively accessible.
“ There’s the possibility of shale oil
under Paris, for instance, but we’re
unlikely to see much fracking there,”
Parry jokes, noting that ownership laws
in the US – giving landowners title to
what was beneath the ground as well as
the surface – may have helped prompt
the success of fracking there.
A price shock would prompt structural
shifts in oil demand too, as it did in
the 1970s and 1980s when an array of
new fuel-efficient cars and household
“China is trying to reduce its energy
dependence and improve internal
energy efficiency before it believes it
becomes too energy dependent,” Sheng
says, pointing out that greater energy
efficiency is an important part of the
country’s official five-year plan.
“Don’t underestimate the capacity
of the Chinese to deliver what they
promised,” he says.
Closer to home, most Australians and
New Zealanders are unaware of how
dependent on foreign supplies of energy
they are, especially Australians who
perhaps conflate their unprecedented
“resource boom” with energy
In both countries the significant
political forces acting to block expansion
of fracking for shale oil and gas – a mix of
environmentalists and farmers – might
suffer a setback were voters suddenly
made aware of this in a costly and
shale oil under
to see much
FOCUS ASIA-PACIFIC OIL
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acuity | OCTOBER 2014
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