A Citigroup analysis of North American oil production suggests that the continent could become the “new Middle East.” The report, ENERGY 2020: North America, the New Middle East?, projects increased oil production as having significant effects throughout North American economies, with an increase in the United States’ real GDP of 2.0 to 3.3% from new production, reduced consumption, and associated activity.
The report points out that “the main obstacles to developing a North American oil surplus are political rather than geological or technological.” In response to the growth in shale development, state and federal governments are crafting regulations to address environmental concerns such as groundwater pollution and increased seismic activity in near well sites. Regulations of greenhouse gases could also complicate oil and gas development in the U.S.
The Oil Drum, an oil and energy blog, argues that the report’s assumptions are overly optimistic, pointing to questions about the future productivity and viability of shale plays across the U.S., as well as declining productivity of current Gulf of Mexico oil rigs and Alaskan oil fields.
What do you make of the Citigroup projections? Could North America become the “new Middle East?” If it can, should it? Does the rising potential of domestic and regional oil and gas production complicate the pursuit of other technologies and policy goals?