GOLDMAN: The Shale Oil Revolution Is Real, And It Will Have A Massive Impact On The Global Economy

TBI ^ | 12-5-2012 | Rob Wile

[blam]

GOLDMAN: The Shale Oil Revolution Is Real, And It Will Have A Massive Impact On The Global Economy

Rob Wile
Dec. 5, 2012, 7:55 PM

We are seeing calls that, thanks to shale drilling, the U.S. is poised to become the world leader in oil production, leading some to begin invoking "Saudi America."

Today, Goldman Sachs analyst Kamakshya Trivedi, weighed in on the global macro implications of this phenomenon in a note titled: The shale revolution is changing the global energy landscape.

The note actually goes further, talking about how the entire economic landscape could potentially change.

The main impact, they write, is that oil prices will no longer prove a brake on growth:

...shifts in production are gradually loosening the oil price constraint that has been a persistent feature of the global economy. If global demand growth can recover, the risks that it will be choked off by rising oil prices are receding.

This will produce a knock-on effect for household incomes in the West, while blindsiding petro-states:

The drag on household incomes in the developed world from this source should end.

The flipside of the improving terms of trade for these consumers, of course, is a less friendly picture for producers and producing countries, where the sustainability of spending based on sustained high oil prices may

(snip)

The lion’s share of this would come directly from improving net energy exports, similar to the forecast increase of $136bn for net imports from our Energy team over this period, with a smaller increase coming from improved competitiveness of US manufacturers.

They conclude by depicting just how truly tectonic America's shale story can be — the third-largest on record:

Goldman Sachs

But with one key caveat: " scaled relative to a $15trn US economy, the impacts look a lot smaller."

[dixiechick2000]

You are so right! This admin is fighting tooth and nail to be LAST in energy, when we have the opportunity to replace the Saudis as the world’s energy super power.

Makes ya’ wanna cuss, doesn’t it? Strongly cuss...

[SierraWasp]

No muss, no fuss, just a good ol vulgar and vile CUSS!!!

[MSF BU]

Actually, the Russians apparently have oil & gas shale potential that makes US resources look modest, but while that may make them self-sufficient it may not provide the type of income needed to arrest the decline of their military.

[meatloaf]

I wonder how much Russia’s oil and gas sales contribute to their economy. I’ve read that Iran needs oil around $80/bbl to fund their programs. In future years, it looks like unless it’s convenient we won’t be importing anywhere near the 12%, IIRC, of the world’s production like we do now.

There really won’t be a drop in demand. There will be an oil surplus. Russia will see their earnings drop along with all oil exporters.