Register to get unlimited access to all of Citywire’s Fund Manager database. Registration is free and only takes a minute.

In graphs: eight signs fracking is revolutionising the US

The International Energy Association (IEA) predicted last week that the US would become a dominant energy superpower by 2035

The International Energy Association (IEA) predicted last week that the US would become a dominant energy superpower by 2035. More interesting than its relative standing will be the impact on the US economy, however, an impact that is already being felt. The chart above shows the IEA's predicted energy import costs, with the US approaching self-sufficiency.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

The reason for the IEA’s prediction was shale-derived petroleum. The potential change to the oil extraction dynamic is hard to overstate – US government estimates endorsed by the oil industry put the potential reserves at more than all the world’s conventional reserves combined.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

While the US Energy Information Administration factors in something less than the full suggested potential of these reserves ever being exploited, its projections are still dramatic. Oil imports to the US are expected to fall to a 20-year low next year and continue falling in the years thereafter.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

For a glimpse into the near future, the spread between the US Henry Hub natural gas index and equivalent European pricing provides some insight. After hitting a peak together in 2008, the two have dramatically diverged and essentially broken a historical correlation due to US shale gas.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

The lead indicators are already apparent. While the difference between the Brent and WTI indices apparent over the last two years has colloquially become known as the WTF spread due to its lack of immediately obvious causes, the most frequently cited factor is the emergence of domestic oil.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

This is corroborated by US crude oil inventories, which have consistently run much higher than the 10-year seasonal average over 2012. Part of this is technical as pipeline infrastructure has shut down – but by nowhere near enough to explain the sustained margin of difference.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

A lack of refinery capacity has kept this from becoming a consumer bonanza at the pump, with refined petroleum stores actually below the seasonal average. Petroleum’s relative portability is likely to keep the spread between US and European pricing tighter than is the case for gas.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.

The macro level is where the difference will be felt – and here it has the potential to be huge. Even a rough back-of-a-fag-packet calculation shows the impact on the US trade deficit, with the headline figure on the above graph, and the trade deficit with oil import prices stripped out.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play WMR: Why Russia will lose this war

WMR: Why Russia will lose this war

Author and journalist Adam Lebor believes a perfect storm is brewing when it comes to the Russian economy. .

Play WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

WMR: Gerard Lyons warns Asia is the real risk, not Russia & Ukraine

Chief economic adviser to London mayor Boris Johnson outlines the geo-political risks in Asia and explains why the risk of another eurozone crisis must not be underestimated.

Play Japan's slump, the umbrella revolution and the battle for Brazil

Japan's slump, the umbrella revolution and the battle for Brazil

With the arrows of Abenomics appearing to be missing their targets and political uncertainty rife in Hong Kong and Brazil we take a look at investor sentiment in this week's Investment Pulse

Your Business: Cover Star Club

Profile: The adviser that tempted Robin Minter-Kemp on board

Profile: The adviser that tempted Robin Minter-Kemp on board

It is rare to meet an impassioned individual who is willing to bang the drum for investment advisory right now

Wealth Manager on Twitter