4:56pm

Tue May 14, 2013
Energy

India, China Could Soon Demand More Oil Than U.S. And Europe

Originally published on Tue May 14, 2013 7:15 pm

Transcript

AUDIE CORNISH, HOST:

From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.

MELISSA BLOCK, HOST:

And I'm Melissa Block.

For years, we've understood the global oil landscape in fairly simple terms: Saudi Arabia and other Middle Eastern countries were the big producers of oil, the United States and its allies were the big oil buyers. But a report today from the International Energy Agency shows a different picture. Turns out the U.S. has become a star oil producer, as NPR's Tom Gjelten reports.

TOM GJELTEN, BYLINE: Petroleum engineers have always known about untapped underground oil in the United States, but it was unreachable, trapped in tight shale rock. Then the engineers figured out how to crack the rock. Hydraulic fracturing, fracking, got that tight oil finally flowing in places like North Dakota. Engineers in Canada got oil out of tar sands.

The International Energy Agency noted last October that all this was potentially big. But executive director Maria van der Hoeven today said the IEA underestimated how big a deal it was.

MARIA VAN DER HOEVEN: North American supply is an even bigger deal than we thought, a real game changer in every way.

GJELTEN: The old idea of depending on the Saudis for oil is fast disappearing. That's the news on the oil supply side. On the demand side, another big development. It's no longer the big industrialized countries - the United States, Europe, Japan - that are the biggest oil users. The IEA, in its last report, predicted countries like China and India would need more oil than the industrialized counties at some point in the future.

HOEVEN: But it's happening, and it's happening fast. It's faster than expected.

GJELTEN: For the first time in history, developing countries are now using more oil than the industrialized countries. So the entire global oil trade has fundamentally shifted. As for the Middle Eastern countries, their clout has diminished. The uprisings in the region over the past two years have brought disruptions in oil production. Antoine Halff, head of the IEA's Oil Industry Division says, once again, his analysts were caught by surprise.

ANTOINE HALFF: The Arab Spring is kind of a bigger deal than we estimated maybe a few months ago in terms of the impact on supply.

GJELTEN: To an extent, these interruptions in the flow of Middle Eastern oil offset the increased flow from North America, so the price of oil remains high. Still, over the next few years, many energy economists think the growth in the supply of oil will outpace the growth in oil demand. One big reason: Energy consumers are looking more and more to natural gas for energy. Antoine Halff today highlighted one example of that move: Trucks and trains, he says, will turn away from oil as their transportation fuel.

HALFF: In fact, we're now expecting that we're going to see some transition of transport demand from oil to natural gas before the end of the forecast period.

GJELTEN: It's already happening in China, just one of many developments in the fast-changing world of global oil. Tom Gjelten, NPR News, Washington. Transcript provided by NPR, Copyright NPR.