Friday, December 02, 2011

Thank you North Dakota

You don't often hear about North Dakota, a remote sparsely populated State. But, today a milestone was passed thanks to N. Dakota, the US became a net exporter of oil after more than 60 years. No more dependence on Arab oil! A record finding of oil under N. Dakota estimated at 4 billion barrels, has now begun to be exploited. Production is booming and is only just getting under way using modern techniques including horizontal drilling. Other finds in Montana and Colorado has made the US the country with the largest oil reserves in the world, now above Saudi Arabia and Russia.

This has tremendous implications, first the Arab States can no longer blackmail the US by denying oil in any political situation. Second, the price of oil in the US and around the world should stabilise, thus not adding to the difficulty of the current economic situation. Third, the recent emphasis on non-carbon sources of energy other than fossil fuels, such as solar, wind and tide, will be partially reduced. That is not to say that we don't need non-polluting electric cars, its that the urgency of that need has somewhat abated.

Of course, Europe and Japan are entirely dependent on Middle Eastern oil supplies and the denial of oil to them could trigger a world-wide economic catastrophe. But, now with the US able to partially fill that gap the outcome might not be as bad. For example, if there were a war with Iran over its development of nuclear weapons, and the Straits of Hormuz was blocked by Iran to oil tankers, the effect would not be as catastrophic as it might have been before the US became a net exporter of oil.


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