Growth in US oil and gas production is good news, not bad news, for Opec countries and for the whole world economy.
Fracking boom will help keep oil prices stable
Technology changes the world. In the global oil and gas industry, some of the fastest and biggest changes today are coming from the technology called hydraulic fracturing, or fracking. This technique is opening up vast reserves of natural gas and increasingly of oil that had been trapped inaccessibly in rock layers deep beneath the landscape, in the United States and elsewhere.
US petroleum production has been growing rapidly; last week, the country produced 89 per cent of the oil and gas it consumed, the highest share in over 20 years. The US is now the world's leading exporter of petrol and other refined fuels.
It would be easy to assume that the growth of fracking is bad news for the Organisation of Petroleum Exporting Countries. Indeed, Opec acknowledged this week that while overall global demand is continuing to grow, supply from outside Opec is sufficient to meet the extra demand. No doubt this will limit prices.
Properly understood, however, this is good news, not bad, for everyone. The long-term trend of growing demand is inexorable, raising millions out of poverty and improving living standards. Supply must keep up. As new sources of oil and gas grow this diversity of supply will, broadly speaking, serve to stabilise prices, rather than to depress them abruptly.
The fracking boom has already silenced, at least for now, the gloomy apostles of "peak oil" who have for decades been claiming that dwindling supplies and soaring prices will soon strangle global growth.
Opec has long worked for stable prices, knowing that steady, sturdy worldwide economic growth serves producers' long-term interests far better than a short-sighted policy of maximising short-term profit.
Of course, greater diversity is even more essential as time goes by, not only in sources of oil and gas but in forms of energy; however many more technological breakthroughs such as fracking may come along, extraction costs keep growing higher, to say nothing of the environmental price of obtaining and using fossil fuels. It is worth noting that in the US and Europe, "green" campaigners are fighting fiercely, though with little success so far, to limit or stop fracking.
Solar power, nuclear power, wind and tidal and hydroelectric power, all of these and more are going to be needed, and prudent governments - including the UAE's - are busily pursuing diversification for the future, along with stable oil prices for the present.