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The Great American Oil & Gas Boom & the Future of Iran

Balatarin

No country, No Nation, has ever added oil production capacity – yes ever – like the United States has in the past few years. America has gone from producing 5 Million barrels of oil per day in 2011 to over 7.5 Million barrels this past year; and will soon surpass 10 Million barrels of oil production domestically. It’s an incredible oil boom that will have a profound impact on the lives of ordinary Americans.

 

By the time Obama leaves office, he will have presided over a country that has gone from importing 11 Million barrels of oil a day to actually becoming a net exporter of energy.  The center of gravity of global energy production has swung toward the Americas as shale oil and gas fields in North Dakota and Texas hum with activity. America is moving to the fore as the world's largest producer of petroleum and natural gas.

 

For the past 40 years, U.S. presidents have launched distant wars, allied with autocratic sheikhs and dispatched naval fleets to protect sea lanes, all for the imperative of keeping foreign oil spigots flowing. That imperative has now subsided.

 

Today, U.S. taxpayers foot the bill for Navy ships that largely protect supertankers headed to Asia. China overtook the United States as the largest importer of Persian Gulf oil two years ago. That trend will surge, and "it's going to raise all new questions," said Amy Myers Jaffe, an expert on global energy production at the University of California, Davis. "You have the Chinese and other Asians free riding on a U.S. security presence, and I'm not sure that's sustainable," said Manning of the Atlantic Council.

 

That change will reorder the globe in ways large and small. This is very, very profound.

 

Most U.S. experts concur that a big loser from the growth of the U.S. shale industry will be Russia, which has locked in Eastern and Western Europe as clients for its natural gas, leveraging the reliance on its supplies for political gain.

 

The Russian share of the European Union's natural gas imports is expected to drop, however, from the current 34 percent to below 15 percent over the next 10 to 15 years, according to some analyses, replaced by supplies of liquefied natural gas from the United States.

 

“The United States should see its role in the world as a singular superpower enhanced and prolonged," according to a recent Citigroup report.  And according to a senior Chinese Statesman Wu Sike (a former Chinese envoy to the Middle East and a key member of China’s foreign affairs committee, “The United States will take a more dominant position in global energy distribution."

 

While OPEC’s share of world energy production is slated to initially drop from roughly 50% (today) to about 35% for the next decade, by mid-2020’s, OPEC should be back up to 50% because of soaring economic growth in Asia – notably China and India. Iran (and most other producers in the Middle East) will eventually see booming trade with major economies in Asia.

 

Last time, a shift of this magnitude occurred a revolution was engineered in Iran. When both Alaskan Oil (US) and North Sea Oil (in Britain) came on stream, one ‘major’ producer had to be effectively shut out of the market to make space for new oil (and to maintain tight market pricing). Alaskan Oil and North Sea oil were extremely expensive to extract, and it was imperative that oil and gas pricing remain high for at least a few decades until core production targets were met. By the way, it was NOT a coincidence that BP was a major investor (and player) in both Alaska and North Sea oil. Britain’s economic demise was thwarted with this huge strategic coup by the Mullahs (in exchange for a drop in Iranian oil production). And as we Iranians all know, Britain's prosperity was achieved via North Sea oil largely at the expense of Iran (and Iranians).

 

We are now witnessing a similar – cataclysmic – strategic shift that could change life Iranians again.

 

In the short term, the Iran bogus 'nuclear' deal will ease the political risk premium baked into oil prices. In the medium term a comprehensive deal with Iran could add 1 million or more barrels per day to the market. In the long-term a gush of Iranian oil would soften oil prices; and this ‘gush’ might be enough to kill the economics of America’s tight oil boom. A gush of Iranian oil would NOT be good for the U.S. (and its oil boom) – unless (of course) there is a plan to undermine one OTHER major producer out of the market!

 

Right after the Iran deal was announced the price of benchmark Brent crude slid about 1.5% to $109 per barrel. West Texas Intermediate crude was down about 1% to $94 per barrel in mid-morning trades.

 

These modest declines are a reasonable reaction to the deal signed over that weekend. No one is expecting any flood of Iranian crude back to the market. The White House insists that sanctions on Iran’s oil and banking sectors remain in place and that the international community will “continue to enforce these sanctions vigorously.”

 

How much geopolitical risk is baked into the price of a barrel of oil? At the height of former President Ahmadinajad’s bellicose anti-Israel rhetoric and threats to blockade the Straits of Hormuz, and Israel's counter-threats it was understood that as much as $20 per barrel represented a risk premium. All that premium could quickly melt off prices in months to come, and bring crude oil down from about $100 a barrel in the U.S. into the $80 range.

 

Since the toughest sanctions were imposed in 2012, Iran’s oil production has declined 900,000 barrels per day, according to analysts at Tudor, Pickering & Holt. Much of that production is heavy oil. Saudi Arabia has adeptly replaced those Iranian barrels in the market by boosting their own production by roughly 1 million bpd. But when it comes time for Iranian oil to come back onto the market, the Saudis (though no friends of Iran), would likely dial back their exports to make room.

 

But how much room will the Saudis be willing to make in the years ahead? Iran has the reserves to add millions more in supplies. It would take time. As Bill Herbert, analyst at Simmons & Company, has pointed out, “sustainably increasing production levels well above 3 million bpd for a consistent period of time will most likely require substantial foreign investment from global oil companies and western service companies (in Iran).”

 

Some of these companies have recently jumped at the opportunity to invest in untapped oil fields just over the border from Iran in the Kurdish region of Iraq. The fields in the Kurdish region have proven to be enormous, the flow rates prodigious, the ease of recovery unmatched anywhere else in the world. Iran’s potential though is even greater.

 

Given sufficient investment in drilling and infrastructure, there are ample oil reserves in Iraq and Iran to add another 5 million barrels per day (bpd) to global oil supplies within 10 years. In addition, there remains roughly 1 million bpd of Libyan production offline due to continued unrest there.  Nigeria too has at least 250,000 bpd shut in. And let’s not forget Israel. Israel now sits on some of the largest oil and gas reserves in the world on its northern Mediterranean shores.  Solve all these political and security problems in the Middle East and other countries and the world could suddenly be awash in excess oil.

 

Over the long run the easing of sanctions against Iran spells trouble for the economics of the tight oil plays that have sprung up across the United States in recent years. The Eagle Ford and Permian Basin and Bakken fields need sustained high oil prices to make the economics of expensive drilling and steep decline rates pay off.

 

It’s no coincidence that America’s great oil and gas renaissance has coincided with sanctions on Iran and unrest in Libya. The concern for U.S. drillers is that successful Middle Eastern diplomacy could end up being the worst thing for their business. If crude oil benchmarks were to fall to $75 a barrel and stay there for a couple months you’d see drilling rigs across Texas and North Dakota fall silent.

 

The U.S. onshore oil industry has been perhaps the brightest spot in America’s economic recovery. How ironic then that America's recovery might end up being a casualty of the Middle Eastern peace making processes. Which brings me to my final point, obviously the U.S. will NOT jeopardize its recover (and therefore prosperity) by accelerating Middle Easter peace. I hate to say it, but there is obviously something huge a foot. There has to be a plan in someone's back pocket.

 

Surely, if there is normalization of relations with Iran, then production somewhere else has to ‘drop’ for a while. Could the U.S. be ‘turning’ away from its key ally Saudi Arabia? Might they be planning to undermine or double cross another key (dictator) ally (like they did with the Shah of Iran) last time they needed production off the market? Or might negotiations with Iran be a total farce, with no real intent to ‘normalize’ at all! Would a 10 year hiatus of oil and gas from Saudi Arabia, Qatar and Bahrain be long enough to undermine those feudal dictatorships and put in democratic states - or is the plan to democratize the Middle East now totally off the table? Will the dictatorships in Azerbaijan, Turkmenistan, Uzbekistan (budding new oil and gas producers from the Caspian Sea) survive this 'neccessary drop' in global production?

 

Saudi princes are up in arms, lobbying hard against any sort of normalization with Iran. Israel too is fighting a good fight – doing everything possible to undermine a ‘final’ deal with Iran. Both Qatar and Saudi Arabia are funding al Qaeda and fundamentalism everywhere, with a goal of destablizing Iraq's Central (Shia) government and fighting a good fight in Syria for them there too. Would the Brits 'allow' it, with their whole economy now fundamentally based on oil and gas (theft) from Iraq, Azerbaijan and Qatar? What about Putin, will he sit idly by while Europe diversifies away from Russia?

 

Everyone understands that if there is a deal with Iran's Mullahs and Iranian oil comes back on the market, someone’s oil will have to be removed for roughly 10 years. The question is whose?

Balatarin

ayatoilet1 @ayatoilet17

B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

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amirparvizforsecularmonarchy

amirparvizforsecularmonarchy I Love Waterfalls and Find One of the most humorous things in the world; is the notion that Americans are a greater force for good & more civilized than Nazi's, Mullahs and Communists.

The USA is in an uphill struggle in the syria quagmire, many foreign and al-quaeda fighters being armed by the saudi's are taking the weapons to Iraq and instead of fighting assads forces are fighting the US installed prime minister who was given control of Iraq. If the US side had prospects of success it would have happened by now, but no one can see an end to it in the next year or beyond and national borders are not even being observed with fighters crossing every border to fight their enemies. Meanwhile what is left of the FSA is no longer fighting assads forces, but is busy fighting the extremists in the name of saving the country.

It's not clear if the west has the capability to fully back the extremists so that they defeat Assad first, before they defeat Maliki in Iraq. The west is not prepared to lose Iraq for Syria, but based on how the war is going they may have to give it consideration in the next year as they figure out what the extremists are really doing with their weapons and man power.

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Amir-Jan, Not sure what this comment has to do with the article, though it might be a response to my statement (in passing in a reply to your earlier comment) that the war in Syria has to do with getting pipelines across Syria to Turkey. In any case, yes, the backers of the extremists are the countries looking to feed into the pipeline in Turkey (Qatar and Saudi Arabia). From my vantage point, it looks like both Qatar and Saudi Arabia have suffered a huge strategic defeat in Syria - without their desired outcome. And the movement into Iraq by the extremists will ONLY bring US and Iran closer strategically - which could spell the end of the princes/emirs!! And to answer the question in my blog, could it be that US has turned its back on Qatar and Saudi Arabia - with this huge increase in oil output. I mean Saudi Arabia NO LONGER exports to the U.S., Qatar never did, AND ARAMCO is NO longer owned by U.S. entities....(fully owned by Saudi's).

amirparvizforsecularmonarchy

amirparvizforsecularmonarchy I Love Waterfalls and Find One of the most humorous things in the world; is the notion that Americans are a greater force for good & more civilized than Nazi's, Mullahs and Communists.

"could it be that US has turned its back on Qatar and Saudi Arabia"
not necessarily, although with the USA anything is possible, the US challenge is not Saudi's it's GCC or the IRI which are under major US control, the US challenge is elsewhere. The entire US strategy is a failure because it is not based on alliances, but its own economic and military strength ie stupidity. While the USA knows very well how to play its game, better than anyone else in the world ie sign of intelligence, it is a total failure at playing all the other player's games. It is trying to use the same strategy that it used to build itself and dominate its own borders, to control and dominate the world, which is an impossibility. The US was already a loser the moment it got out of bed and took that the uneducated and ignorant direction it has been on for 34 years. Think about the big picture, do you think it will take more than another 40 years for the USA to no longer be one of the G9 or even top 20? On this path it will likely come down in a worse place than where it started. And it is obvious how, where, in what process, by whom. The only mystery that is not clear is when.

amirparvizforsecularmonarchy

amirparvizforsecularmonarchy I Love Waterfalls and Find One of the most humorous things in the world; is the notion that Americans are a greater force for good & more civilized than Nazi's, Mullahs and Communists.

Almost entirely false points and overall just pure nonsense. From A to Z. With a Political Flavor to spice it up also. The USA can not supply LNG at a cheaper rate than Russia can provide it to Europe. The Transport and Liquifying costs of Natural Gas for the USA are more than they would get paid if it was 100% free. The Only way the Russian monopoly could be weakened is by Iran and that isn't on the cards for the USA. The article does a great job of misinforming people and keeping them in the dark. The Global Economy will benefit from USA oil production as will the USA and also the USA will be capable and ready to start a major change of policy sooner than expected. However it's more likely the USA will lose the reserve status of the US dollar as the sole global currency before any major policy change occurs. The USA is hoping their act is not too little too late, who knows for sure?

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Amir-jan: Europe already has one supply source through Turkey (Nabucco Pipeline) that is running at 40% of capacity. All they need to do is fill the rest of that pipeline and they will be free from Russian monopoly. The war in Syria is precisely about that - Israel, Qatar and Saudi Arabia want to draw pipelines across Syria to feed Nabucco. Whether or not US supplies Europe, Russian monopoly will be broken. As for the rest of the article - well its all factual, drawn from reliable sources.

amirparvizforsecularmonarchy

amirparvizforsecularmonarchy I Love Waterfalls and Find One of the most humorous things in the world; is the notion that Americans are a greater force for good & more civilized than Nazi's, Mullahs and Communists.

Last time I checked Syria is a quagmire, with all the extremists forces the west has got its GCC states to arm and fund killing more of one another, than the Syrian Government forces. No Access to NG there, so long as Russia and China are United, which they are. FYI China is never going to put itself under US domination. So the USA has no real options for dealing with either Russia or China, if it did have a real option for dealing with either in a successful way the USA would then have a basis of Hope for its own future. However it is impossible for the USA to create a basis for hope with out at the very least having a working alliance. That's where the UK comes in and as I'm sure you know therefore the USA has no workable Alliance with any one nor can it have anytime soon. The words that sum the situation up for the greatest economic and military power on earth today the USA is "hopeless in the long term", because the US doesn't even want the EU to receive cheap energy as they are already in a position to replace the USA as the largest single market. Either way the USA can not succeed. Ironically if Iran was Free and Independent, the way the late Shah had made Iran, there would be no way for anyone to be in a position to even replace the USA as Number 1 and instead of having 3 major vital threats struggling to feed their unstable societies, the USA wouldn't even have one serious threat with an Iran of 35 million wealthy and free people. That's the lesson of betraying a true friend, who dreams were not selfish but generous. I have no answer as to how long the USA can kick the inevitable down the road except, as long as it can.

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Its true that US politicians are often their own worst enemies (check the government shut down - it was stupid and suicidal). From my personal vantage point, I would like to see a multi-polar world with 12 balanced global powers working together - selling each other, rather than telling each other - what to do...for the betterment of humanity. 12 Federal structures: USA, European Union, African Union, China, India, Russia, Latin American Union, Arabian Union, ASEAN, Canada, Median (Central Asian) Union, & Non-Aligned Group. Each with their own assemblies, their own federal structures ...managing their own regions with their own resources....united in a NEW UN security council and UN Operating System. The US, and US taxpayer should not have to foot the bill to police the world....send its navy into the Persian Gulf to guarantee oil tanker shipments to China (for example).

AminP

AminP

Very good article. I may not agree with everything in it, but agree with most of it.

In 2000, world used about 75 million bpd. Now it is up to 90 million. Most of that increase is for Asia (China and India). We have introduced all sorts of alternatives, but we need more.

Another fact to remember is that the Iran-China 25-year oil deal is over now or it is almost over. That's why US is talking to Iran again.

http://www.eia.gov/cfapps/ipdbproject/iedindex3.cfm?tid=5&pid=5&aid=2&cid=regions&syid=2000&eyid=2012&unit=TBPD

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

One more thing, I started writing this blog and then did some research to find additional facts, when I came across the Forbes article (and other articles) with some interesting quotes by third parties in it as well as some excellent support for the premise of my article, so I used as much of it as I could while retaining the approach and message in the blog I was writing. It was great that I found that, and it really reinforced the core premise I was addressing. And as I said before, citations are not usually provided in blogs otherwise, I would have proudly referenced it. I don't subscribe to Forbes so I did not see the original article back in November. I am glad that writing this blog resulted in me discovering it, and then sharing some of it with the audience here. It definitely is eye opening.

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Keeya - yes. Blogs are not scientific papers with citations. Forbes was one source, but I had many more. The point here anyway, is that the facts are reliable.

baraitna

baraitna I was one of the very early members of your excellent organization. But because of your disagreement to publish an article of mine; I went away. My bio is finished but hope you read it when published (promised for October.

Just a small correction: Middle East oil (by far the major producer in OPEC) accounts for only 28% of global production and has been doing so for decades. The 50% mentioned in the article appears excessive as the remainder of OPEC is not significant enough to produce the other 22%. The Middle East oil politics is more complicated than can be explained in just one scenario. One can come up with all sorts of statistical variations to make a particular point.

The Iranian loss of Oil production (and subsequently that of Iraq's) was mainly picked up by the Saudis who in truth did not really need all those excess revenues. The benefiting multitude of "Princes" can afford to live with less billions of the temporary windfall that the Iranian and Iraqi oil reduction brought them. In reality it was the same America that urged the Saudis to hastily increase their production to nearly 12MM/day with some 2 MM barrels/day unused capacity, which, as always, will be used as the larger stick to bring other OPEC members to fall in line. Even if, a big if, the Iranian oil production resumes its earlier glories, the Saudis will be employed to dictate OPEC oil production levels to best suit the circumstances.

When one remembers that Iran has the world's second largest Gas reserves of roughly 350 trillions cubic meters next to Russia's reported 450 (Saudis third place with under 40 trillions), the significance of Iran as an energy producer (with the potentials of the largest LNG production) will be much felt by America for its future LNG exports to meet its enormous gas production. Whether China and/or India become a partner in place of America to share the Iranian gas capacity, is a question to ponder about. The world of energy is far too complicated to settle for only a few possibilities. Wait, see and be surprised.

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Thanks for your comment. Very helpful. This is a good discussion, and very relevant to Iran's future. Your point about OPEC is valid to an extent. I used 50% because its right in the middle of Opec's position globally, if you consider that actually OPEC represents 40% of all crude produced, and actually 60% of all crude traded (http://www.eia.gov/finance/markets/supply-opec.cfm) and in any case my core point is valid in that OPEC's share of global production and trading will drop at least 20% from where it is today for some period going forward as US (and other non-OPEC regions such as for example Israel's) crude production expands.

Finally as a first order of analysis, it is very useful to consider the supply and demand of Oil and Natural Gas to determine (ON A MACRO SCALE) what the future of certain nations such as Iran holds. Even if there are compelling political issues, my experience with actual outcomes is that no-one will make a political move unless there is ALSO a compelling economic case. Or put a different way "follow the money" and you will have your answers....or predictions. And it is simply a fact that the US oil and gas boom will have huge strategic consequences. There is no oversimplification in saying that. And I close by asking a question, not by providing an answer.

Thanks again for your excellent comment. Ghorbanat.

Mohamad.Purqurian

Mohamad.Purqurian Peace is not subjugation آشتی کردن تسليم شدن نيست

Having read some of your recent articles, I am inclined to take your figures on their face value. I appreciate your sharing them with us. I hope Iranian intelligentsia would pay more attention to these issues than falling for Loolooye sare kharman to fight for division.

However, I am sure you would agree that dynamics of world affairs are a lot more complicated. So, while more oil production and alternative energy should cause the prices to go down, it does not necessarily happen because demand does not remain static. Just compare the cost of solar energy for the past 30 years. Its price increase has significantly outperformed its production increase.

Perhaps we should focus on the conflict of interests between war profiteers and Oil profiteers.

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Mohamad-jan: I am persuaded that the war and oil profiteers drink from the same challis. The shift in US actually under Obama has been a huge shift away from 'traditional' war and oil profiteers (BP, Exxon, etc.) to a new batch of 'profiteers' that never-the-less have a similar sophistication (and greed) to Bush-era war and oil profiteers. They (Obama administration) have systematically expanded their bio-fuels production to roughly 15% of transportation fuels (thus reduced refining revenues and oil imports, but not gas pump revenues), but never-the-less made Bio-fuel players a key new part of the game (which does not include BP, Exxon on the production side). Natural Gas is beginning to dominate power production but new (other) 'domestic' conglomerates like Mesa (T. Boone Pickens etc.), Chesapeake, Devon, Andarko etc. are right up with Oil majors BP, Exxon etc.

And Mohamad-jan, don't be side tracked by Solar, its a gimmick and won't account for more than a small share of total energy production - ever (at least in its current form). Yes, there are subsidies for putting solar cells on a house but any viable technology has to stand on its own two feet and compete head-to-head. For the next 50 years or so, we're still looking at hydrocarbon fuels being dominant - and therefore politically and economically key to global dynamics. Iranians would do well to understand these issues. The Shah after all never fully got it...and suffered the consequences.

Mohamad.Purqurian

Mohamad.Purqurian Peace is not subjugation آشتی کردن تسليم شدن نيست

Please allow me to drop the last part of your moniker starting with oil! Granted it is done.

Ayat Jaan, When two entities compete over the same source, then there is a conflict of interest. So we are on the same page both on the first issue and the new born baby in the market that is natural gas; not to mention Iran's rank that I believe is second only to Russia. I thank you for elaborating more on the issue. I am looking forward to read more of your thought provoking articles.


Also, I am not side tracked by solar. I just used it as an analogy for the empirical dynamics of the market.

Zendanian

Zendanian An injury to one is an injury to all.

Ayati jan not everyone is as enthusiastic about shale gas as you (for obvious reasons).

Gasland

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Zendanian - I am not enthusiastic about it at all. (1) It will delay Iran's opening (point of the article/blog), (2) There are serious issues (environmental and more)

But the fact that it is being produced and consumed, and is leading to massive increases in US domestic production is a fact. It is a strategically important fact.

And by the way, the growth/shift is not just coming from Shale Oil, but also from Hydraulic Fracturing and Natural Gas....

Zendanian

Zendanian An injury to one is an injury to all.

jgarbuz

jgarbuz

The world desperately needs to get off all fossil fuels ASAP. We became as crazy about oil as the Spaniards were once about gold. Iran has plenty of sun and wind and so does the US. For the sake of saving the world's climate we all have to invest in alternative energy sources altogether. And nuclear reactors are no panacea either.

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Garbuz-jan: The problem with solar is that it takes 90 years of energy output from a solar cell to pay back the energy input it takes to produce a solar cell. Maybe with some new technology its down to 60 years. Maybe one day it will come down to 40 --- but still not a 'real' option. But my point is they are NOT an environmentally benign technology, nor do they have a decent payback on an economic basis. Wind is great. It can compete with natural gas on a dollar for dollar basis, installed. But, big but, wind output is not constant and does not follow load requirements. It has to be supplemented with other methods of producing power. In any case for transportation, Gasoline from Oil is still king. And for stationary power, coal is being phased out, Natural Gas is taking over globally. Alternatives (wind, hydro, wave....) could at best provide 15 - 20% of our needs. Nuclear is best for low cost, base load output which is the role it plays in any economy that it supports. Despite all the fears, Nuclear is actually an excellent option, and still on the rise globally. Wind is NOT a panacea. The solution to the world's energy equation will likely be a 'mix' - no question about it. And as cars slowly migrate to hybrid, then fuel cells; gasoline will play a decreasing role, and central electricity/power production will become an even bigger part of the energy equation (which is good) because there are far more options when it comes to stationary power production versus energy for transportation. For now, and for the foreseeable future (i.e. 50 years) with global population growth and huge shift in prosperity globally with 2 Billion new entrants into the middle classes in China, India, Indonesia, etc. etc. you can be sure that Oil and Natural Gas will be strategically key - and very relevant...and surely energy issues involving hydrocarbons will be a critical political/economic issue that will define who has 'power' literally and figuratively. Iran and Iranians are being 'contained' by world powers precisely because Iran's natural resources would in fact place an 'independent' Iran in a very powerful position vis-a-vis the West, Russia, China, India ... No one wants Iran, under the Mullahs at least, to be a full partner in global power plays. It would be the wrong message to send to Mullahs from Morrocco to Malaysia to grab power and 'succeed' like Iran's Mullahs. Unless they tone down, and democratize - the Mullahs will NEVER be fully engaged. And - big AND - the very point of my article was Iran is probably the best 'bet' for a shut-off if global powers need some oil production shut down to control markets. I for one, am now thinking the Mullahs will be around for another 10 years or so. The Mullah's rhetoric and their nuclear program gives the west the best pretext to sanction, and close off Iranian production. Opening Iran is NOT right now in anyone's interests - except Iranians. And who ever gives or ever gave a damn about Iranians?

jgarbuz

jgarbuz

I'm more optimistic than that. The very elementary, simple fact is that the internal combustion engine (ICE) is 5 times LESS efficient than the electric motor. That is why electric vehicles (EV's) will eventually overtake gasoline powered cars. And already even today, people with solar panels on their roofs who own EVs report that they have cut both their electric bills AND their gasoline bills down to a fraction of what they were before. And the cost of solar panels decreases annually, while efficiencies increase. And even batteries are projected to get smaller, more efficient and cheaper. The coal and oil industries are putting out lots of propaganda to try to counter what are the harsh truths from their points of view. They are desperate to save their industries and way of life. But the handwriting is on the wall regardless.

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Garbuz-jan: Without sounding cockey, with over 20 patents in the field...I know a thing or two about EV's and Batteries etc. First of all, there isn't enough lithium in the world for EV's using advanced batteries to be a large scale solution to transportation (even in hybrid form) - fuel cell technology will have to do it. Fuel Cells today, are still too expensive to be practical and can't run on anything by pure (very pure) hydrogen - they haven't been able to make on board liquid fuel reforming to work and in any case even if they do work, appear to be too complex, too expensive, and full of contaminants for the fuel cell to last. Its NOT a matter of the electric motor, or even the power management system (which has been transformed due to advanced electronics - thankfully), its a matter of 'how do you store the energy'? And finally - most importantly - do not forget that the you have to look at the whole system. How efficient is it to produce electricity from natural gas, then deliver that power at your home, to then charge a battery to run your car? Even if its 90% efficient at each stage, 90% of 90% of 90% of 90% of 90% ....is what? Now what if its 80% at any single stage? Now what if the actual fuel cells have a 50% efficiency (at the final stage), which by the way is that they run at, when they run at full power? Be very careful. There is hype on the alternative energy side of the picture too. Remember everybody is competing for part of this space and everyone is lying. It's a lying competition... for investors, funds, government policies, etc. etc. One guy leaves the room, promises everything, then the next guy walks in...more, bigger lies...then the next guy walks in!!! The reality is (unfortunately) hydrocarbons will be key as we rise to 9 Billion people on the planet, and we grow one third of us (human beings) into the middle classes within the next 10 years or so. The U.S. will - yes definitely - will shift away from hydrocarbons. The U.S. will shift towards bio-fuels, natural gas, wind power, etc etc. BUT the world as a whole (China, India, Indonesia, etc. etc.) will be almost fully reliant on Oil and Gas. And he who 'owns' those reserves will rule the world...and set the agendas, and grab the loot!! Iran has already given away the Caspian, the Southern Persian Gulf (not only South Pars fields, but very soon eh mullahs will give away the small islands Tombs etc.), and if we Iranians get too cocky they will simply cut the country up into 5 pieces ...Kurdistan, Baluchistan, etc. For now, they ONLY need Iran off the market and contained. Lets sit back and see the "Nuclear" negotiations get dragged on for another 5 to 10 years or so.

Samanro

Saman Just Iran and politics.

Iran needs to liberate americans and their oil from obama.

ayatoilet17

ayatoilet1 B.S. from Argooz U., M.S. from Massachosetts I.T. PhD from Oxfed U; Post Doc @ Kharvard U; Big Shot @ Sheikh Mir Hassan Bank. Plays for a band: Ayatoilet & the Shits. The Supreme Dr. Ayatoilet Kh Kh Kh! www.ayatoilet.com

Saman - I don't understand what you mean? If its a derogatory comment about Obama, I suggest you revise your view based on facts. The very point of this article is that Obama will have engineered the greatest shift in US prosperity ever - EVER!! From near bankruptcy handed to him by Bush, to a huge financial surplus by the time he leaves in 2016 because of this huge boost in oil/energy output. What a massive turnaround?