With US shale gas revolution, has OPEC become a paper tiger? – Page2 – The Economic Times

But an even bigger part of the reason is that the shale revolution in North America is utterly changing the supply-demand dynamic. Since 2008, says Bernard Weinstein, an energy expert at Southern Methodist University, oil production in the United States is up 60 percent. That’s an additional 3 million barrels a day. Within a few years, predicts Morse, America will overtake Russia and Saudi Arabia and become the world’s largest oil producer.

What’s more, according to another article Morse wrote, this one for Foreign Affairs magazine, “the costs of finding and producing oil and gas in shale and tight rock formations are steadily going down and will drop even more in the years to come.” In other words, the American energy industry might well be able to withstand further price drops easier than OPEC members.

When I got Jaffe on the phone, I asked her if she thought OPEC was a spent force. “You can never say never,” she replied, and then laid out a few dire scenarios – mostly revolving around oil fields being bombed or attacked – that might make supply scarce again. But barring that, this is a moment we’ve long been waiting for. Thanks to the shale revolution, OPEC has become a paper tiger.

via With US shale gas revolution, has OPEC become a paper tiger? – Page2 – The Economic Times.