While all the publicity goes to the global economic slowdown and Europe's currency trouble, there is a another big economic story developing with global implications, according to the New York Times. "The most important story in the global economy today may well be some good news that isn't yet making as many headlines -- the coming surge in oil production around the world," The Times wrote in a recent article.
"Until very recently, our collective assumption was that oil was running out. That was partly a matter of what seemed like geological common sense," the article states. While obvious, that conclusion was incorrect. "Thanks in part to technologies like horizontal drilling and hydraulic fracking, we are entering a new age of abundant oil," the article states.
The Times quotes Leonardo Maugeri, a research fellow at the John F. Kennedy School of Government at Harvard's Belfer Center, saying, "Contrary to what most people believe, oil supply capacity is growing worldwide at such an unprecedented level that it might outpace consumption."
Maugeri reportedly bases that assertion on a field-by-field analysis of most of the major oil exploration and development projects in the world. He concludes that "by 2020, the world's oil production capacity could be more than 110 million barrels per day, an increase of almost 20 percent." Four countries will lead the coming oil boom: Iraq, the United States, Canada and Brazil.
Much of the "new" oil is coming on-stream thanks to a technology revolution that has put hard-to-extract deposits within reach: Canada's oil sands, the United States' shale oil, Brazil's presalt oil.
The Times wrote that Maugeri thinks the tipping point will be 2015. Until then, the oil market will be "highly volatile" and "prone to extreme movements in opposite directions." But after 2015, Mr. Maugeri predicts a "glut of oil," which could lead to a fall, or even a "collapse," in prices.
To read the New York Times article, click here.