Refuelling American power

Refuelling American power
4 World Trade Center dedication ceremony in New York, US, November 4, 2013.

Predictions about the United States' inevitable decline as a superpower are banal - even senior American officials are preparing for a world in which Washington no longer acts as the ultimate arbiter.

But what if all such predictions are wrong? What if the US confounds its doomsayers by performing another economic revival miracle that again leaves all competitors trailing behind?

That's precisely what recent research by the International Energy Agency (IEA), the world's most respected energy body, now suggests. And the main drivers for this potentially astonishing transformation are two commodities whose value, price and impact otherwise remain highly controversial: shale oil and gas.

Established soon after the 1973 oil crisis, the IEA's remit is to plan responses to future disruptions in supplies of oil, as well as to act as an authoritative source of information on the energy sectors.

Crammed with statistics and industry-specific jargon of the "downstream-upstream" variety, the organisation's annual World Energy Outlook is usually read only by oilmen and financial analysts. This year, however, the IEA's report made a startling assessment which deserves a wider audience and more careful scrutiny.

The organisation predicted that, as early as the end of next year, the US will become the world's top oil-producing nation, largely due to hydraulic fracturing and horizontal drilling, two advanced techniques to extract energy resources locked up in shale rocks and other geological formations.

More importantly, the IEA predicts that this shale revolution alone will boost US manufacturing and jobs, reinforcing America's economic edge over both Asia and Europe at least until 2035.

"We will see manufacturing industry in the US flourish. US companies will enjoy a competitive advantage and increase their market share in terms of exports," said the organisation's chief economist Fatih Birol, at the official launch of the report, which took place in London last week.

"By contrast, the European Union and Japan both see a strong decline in their export shares - a combined loss of around one-third of their current share," the IEA warned.

And, though no other major exporters were mentioned in this context, it is clear that China and India, to name just two of the other big energy-intensive consumers, will also suffer a loss of trade competitiveness.

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