OPEC and the US declaration of (energy) independence

Citibank analyst Edward Morse sees total US energy independence arriving in 2020 and independence from energy produced by all other nations save for Canada within five years.

The consequences of new US energy production for OPEC nations will be significant. In 2011, the US imported roughly 40% of its 11.4 million daily barrels of oil from OPEC. For countries like Saudi Arabia – where the petroleum sector accounts for roughly 45% of budget revenues – abrupt decline in North American demand will complicate government finances.

On the same day as the Morse publication, OPEC released a report of its own, warning of risks associated with an energy supply dependent upon shale gas and oil.

The report outlined potential flaws in the US independence narrative, citing "weather, technical, environmental and price factor" risks that could significantly dampen US energy production outlooks.

OPEC rightly points out that the longevity of many US shale oil and gas wells is in doubt, dampening the plausibility of more optimistic declarations.

Figure 1.

Figure 1. Share of total gross crude oil and petroleum product imports (2011 data)
Source: US Congressional Research Service report