"The United States Is the Next Saudi Arabia of Energy."
Yes and no. American oil production, once thought to be in terminal decline, is up strongly for the first time in a quarter-century. Natural gas output, largely flat since the mid-1990s, has grown rapidly for the last five years. These trends look poised to continue, and observers are predicting major geopolitical consequences to follow. Ed Morse, an influential Citigroup analyst and former U.S. official, asserts, "North America is becoming the new Middle East." Robin West, another perceptive industry observer, predicts that by 2020, the United States will become the world's largest producer of oil and gas -- "the energy equivalent of the Berlin Wall coming down."
These sorts of views are quickly becoming conventional wisdom. But it takes more than sheer volume of oil and gas production to dominate world energy markets.
No doubt, the renaissance in U.S. oil and gas is really happening, fueled by new technology and high oil prices. About a decade ago, innovators aggressively began to marry horizontal drilling, which allows producers to access large swaths of an underground resource from a single well, with hydraulic fracturing -- better known as fracking -- which uses high-pressure fluids to crack dense rock and allow oil and gas to flow. The combination has unlocked vast quantities of oil and gas buried in shale rock deep underground. Technology has also allowed producers to tap resources far beneath the sea in a way that wasn't possible before; just two years after the Deepwater Horizon oil spill in the Gulf of Mexico, offshore production has recovered, helping spur U.S. oil production upward.