In its report last week, the U.S. Energy Information Administration (EIA) predicted that the production of crude oil in the United States would rise by about 1.61 million barrels per day in 2013 and 2014, mostly accounted for by the rise in shale oil production. If this anticipated increase is added to the actual rise in U.S. crude oil production since 2008, which is 2.48 million barrels per day, then the total increase between 2008 and 2014 would be about 4.09 million barrels per day. Thus, the overall U.S oil output will reach about 7 million barrels per day, while prices are stabilizing at high levels (about $ 110 a barrel through 2012). The rise in shale oil production is taking place in conjunction with a decline in conventional oil production in the United States and other countries outside OPEC. BP has forecasted for U.S. shale oil production to increase to about 5 million barrels per day by 2030, according to Christof Ruehl, the group's chief economist, who predicted that the rise in U.S. production would represent a global spare productive capacity of nearly 6 million barrels per day. It is worth mentioning that OPEC member states enjoyed a productive capacity of about 6 million barrels per day in February 2002, which drove the price of U.S. light crude at the time down to about $ 21 per barrel. In its annual future energy outlook, BP expected for the U.S. to achieve energy independence by 2030, thanks to several factors including: lower demand for energy, and high local energy production ratio of about 99 percent of domestic consumption by 2030, compared to about 70 percent in 2005. But Ruehl added that the shale oil industry will remain an American industry (or rather an industry mainly thriving in North America), and that it will be difficult for it to expand and flourish in the rest of the world given the lack of the necessary legal and economic factors, as well as infrastructure. What is being referred to here is the flexible work environment afforded to companies in North America, where they can invest, sell and buy allotted plots following clear rules and regulations. All these are factors that are difficult to find in other countries, where the priority is given to national oil companies, making it hard for private companies to thrive – not to mention the rigid bureaucracies found in many other countries. The necessary infrastructure that is absent outside of North America includes the required network to transport petroleum supplies from the shale fields that are far from consumption areas, in addition to the financial facilities needed to finance this modern industry. The vast majority of the increase of oil supplies from outside OPEC countries during 2020 - 2030 will come from non-conventional oils: tar sands, bio oil and shale oil, according to BP's report. This would mean that conventional crude oil prices will continue to be the benchmark in the global energy industry, and that oil prices will remain at high levels, to achieve the profits expected for the non-conventional oil industry. The possibility of producing new types of crude oil poses a serious challenge to the Arab oil industry and the economies of the Middle East. It is hoped that this modern industry will spur serious thinking about better management of local economies in the region. This must happen now, and not in years or decades. Certainly, Arab oil officials have begun to wake up to the implications of the success of shale oil production and how to deal with this economically. Indeed, this oil is a competitor for Arab crudes in the markets, as well as on the level of prices. But this is the nature of the commodities trade as a whole. The international oil markets are currently filled with various types of crudes from over 30 countries, some with huge output, such as Russia with more than 10 million barrels per day, and others like Tunisia, which produces less than 100,000 barrels per day. Since the U.S. is the world's top oil consumer and importer, achieving energy independence will no doubt leave its mark on the global oil industry. Here, there are two important questions that must be raised: One, if the world continues to rely on conventional or non-conventional crude oil as the most important source of energy, assuming that the Western industrialized countries will enhance their production of unconventional oil having exhausted their abilities in the production of conventional oil in their countries, then is it going to be possible in this case to overlook or neglect the importance of Arab oils and huge reserves? The second question is this: Will the U.S., despite its energy independence in the future, truly be able to overlook Arab oils, and subsequently alter its security strategy on the Arab oil-producing countries in general, and the Arab Gulf region in particular? There are many doubts about these assumptions, because the U.S. allies and partners will continue to rely on oil. Hence, any interruptions in or threats to the supplies will impact world prices. What can be expected then? First of all, the nature of the markets will change, and a new kind of competition will emerge. This will produce more responsibilities for the Arab oil industry, which has matured greatly and seen many challenges in much tougher circumstances. Second, the countries of the region may be forced to adopt more prudent policies in running the affairs of their countries and economies, not to mention mending relations with the countries of the region, so that none of them would interfere in the affairs of the other, directly or otherwise. It is hoped that these policies would be adopted as soon as possible, amid the surplus in oil revenues, and not wait for a time of tougher challenges. Third, the shift of U.S. strategy in the Arab Gulf will not mean that the West and the western industrialized countries will abandon the region, despite the overwhelming desire to do so. Indeed, it is very possible, and this actually happened in many instances, that the European and Asian countries will bear a bigger share of the burden than the United States in protecting the security of the region. * Mr. Khadduri is a consultant for MEES Oil & Gas (MeesEnergy)
