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Research Report


Dan Blumenthal
Derek M. Scissors
Andreas Goldthau
Michael Mazza
James A. Slutz
Sara Vakhshouri
Copyright Date: Feb. 1, 2015
Pages: 86
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Table of Contents

  1. (pp. 3-6)
    Michael Mazza

    Access to affordable energy resources has long been an arbiter of economic growth and driver of geopolitical machinations. Examples from the 19th and 20th centuries abound. In the United States, the growth of oil production and, eventually, the Texas Oil Boom undergirded the Second Industrial Revolution and contributed to greater growth in East Coast oil-exporting cities. Across the Pacific, starting in the late 1800s, Japan’s resource limitations contributed to setting it on an imperial path. Some observers see China as facing the same limitations today. Most notably, through much of the 20th and into the 21st century, concerns about the...

  2. (pp. 7-26)
    James A. Slutz

    The reversal of America’s energy fortunes has taken place within an unprecedentedly short period of time: although oil and natural gas production from shale was only first recognized as an important source of supply in 2008, by 2013 the United States had become the largest combined petroleum and natural gas producer in the world. A newly discovered offshore oil field requires around 10 years to develop, yet in just 5 years America’s declining petroleum production of the previous 40 years was reversed. This energy landscape upheaval is an astonishing change in a very short time period.

    Over the past few...

  3. (pp. 27-40)
    Derek M. Scissors

    The People’s Republic of China (PRC) will be the largest national energy importer over the 2015–30 time frame and most likely the largest importer of both coal and oil individually. It is already the largest total energy consumer, largest generator of power, largest coal producer and consumer, and biggest alternative-energy spender.

    That China matters a good deal to the global energy market is plain, but the reverse is not entirely true: the key factors determining the size and composition of the Chinese energy sector are unlikely to be global energy supply and prices. Thanks to its huge foreign-exchange reserves,...

  4. (pp. 41-50)
    Sara Vakhshouri

    Technological developments and the recent shale revolution in North America have significantly changed the global energy landscape. The United States, once seen as the major market for oil and gas exporters, is now expected to outstrip Saudi Arabia in oil production and surpass Qatar and Australia in liquefied natural gas (LNG) exports. Overall US oil production could reach its historic high level of 9.6 million barrels per day (mbd) in 2015, last achieved in 1970. US tight oil production may surge to 5 mbd by 2017.

    This remarkable rise in unconventional production raises concerns about the possible implications for the...

  5. (pp. 51-60)
    Andreas Goldthau

    Russia’s economy is hydrocarbon-driven. The energy sector will remain decisive for the development of the Russian economy going forward as well as a key source of government income, today amounting to some 52 percent of Russian federal revenues. State ownership in strategic sectors, notably oil and gas, will remain the dominant pattern in Russian economic governance, meaning that the Russian economy will modernize, but only slowly.

    Russia will remain one of the world’s top energy producers and exporters, but energy-sector developments crucially hinge on several factors it cannot influence: Western energy sanctions, international market developments, European Union (EU) market regulation,...

  6. (pp. 61-66)
    Derek M. Scissors

    There are common factors across the globe that will drive net energy demand over time:

    1) Energy resource endowment;

    2) Macroeconomic development and growth;

    3) Resource ownership rights;

    4) The competitive structure of the energy industry;

    5) The functioning of capital markets; and

    6) Domestic and international politics.

    Over our 2015–30 forecast horizon, these factors vary in importance by region. Most of the world’s major energy producers are in the Middle East, while the biggest net energy consumers are China and the European Union (EU). The United States is swinging from consumer to producer. Among truly powerful shifts in...

  7. (pp. 67-78)
    Dan Blumenthal

    Over the next 15 years, the United States and People’s Republic of China (PRC) will be the prime players in international energy markets. According to Jim Slutz, the US will likely have a positive net energy demand profile, while Derek Scissors concludes that the PRC’s profile will be relatively negative. US energy production and exports will increase, while China will have a difficult time matching production with growing demand in the absence of economic and energy reform. However, China’s energy consumption growth rate will be tempered by a slowing economic growth rate.

    The two countries will not only be the...