North America’s energy revolution is remaking all aspects of the global economy and international relations in what has turned out to be the most profound shift in the second decade of the 21st century.
Policymakers and climate scientists prefer to talk about the transformational potential of clean technologies like wind, solar and electric vehicles.
But in reality the biggest shifts in economic relations and the balance of power at present stem from changes in the production of decidedly old-fashioned and polluting fossil fuels such as oil and gas.
Hydraulic fracturing, coupled with tougher fuel-economy standards and increased use of biofuels, has reversed the growing dependence of the United States on energy imports in less than 10 years.
If fracking has not yet made the United States “energy independent”, it has certainly created a crucial source of competitive advantage and given policymakers much more room to manoeuvre.
By the start of the century, the cost of importing energy was one of the largest burdens on the U.S. trade balance, and threatening to worsen in the medium term.
Crude oil and refined petroleum products such as gasoline accounted for most of the imported energy, but there was growing concern that the country would also become a big net importer of natural gas within a few years.
In 2008, the United States ran a net energy trade deficit with the rest of the world amounting to $411 billion, 2.8 percent of GDP.
Crude petroleum and refined products accounted for around one-third of the record trade deficits which the United States ran between 2004 and 2008.
But 2008 proved to be the high-water mark for the net cost of energy imports. (Reuters)