Until recently, there were concerns the world would run out of oil and gas – but the development of hydraulic fracking has diminished those fears.
The US is producing more oil than it imports and this is seriously denting oil-producing countries’ export earnings.
For many years, the Opec cartel was able to manipulate prices through their grip on supply – however, many forecasts now suggest that in Europe the price of Brent crude may soon fall below $100 a barrel.
A steeper-than-expected rise in US shale oil reserves is about to change the global balance of power between new and existing producers, a report says.
Over the next five years, the US will account for a third of new oil supplies, according to the International Energy Agency (IEA).
The US will change from the world’s leading importer of oil to a net exporter. Demand for oil from Middle-East oil producers is set to slow as a result.
“North America has set off a supply shock that is sending ripples throughout the world,” said IEA executive director Maria van der Hoeven.
Canadian oil sands production is also contributing to the “supply shock”, the IEA said.
The surge in US production will reshape the whole industry, according to the IEA, which made the prediction in its closely-watched bi-annual report examining trends in oil supply and demand over the next five years.
The IEA said it expected the US to overtake Russia as the world’s biggest gas producer by 2015 and to become “all but self-sufficient” in its energy needs by about 2035.
The rise in US production means the world’s reliance on oil from traditional oil producing countries in the Middle East, which make up Opec (the Organization of the Petroleum Exporting Countries), would end soon, according to the report.
The sharp rise in US oil production is largely thanks to shale oil, a product many have hailed as the saviour of the US energy market.
Fracking, the process of blasting water at high pressure into shale rock to release oil (or gas) held within it, has become widespread in the US.
But critics of shale oil point to environmental concerns such as high water use and possible water contamination, the release of methane and, to a lesser extent, earth tremors caused by drilling. The process has been banned in France, while the UK is embarking on drilling for shale gas.
Source: BBC News