“American energy independence, for decades the preserve of quixotic rhetoric, has became a serious prospect, thanks to the resurgence in US oil and gas output ... the US could overtake Saudi Arabia as the world’s biggest producer by 2020.”So writes Daniel Yergin, author of famous reference books on oil industry.

However, the argument of the article published in the Financial Times of 18 November is not about volumes or levels of production, nor about the unusual figures we will see in a short time. It is about the political consequences of the new situation, which comes quite unheralded and will start to have its effects in a short time.

”The significance   of the rebalancing of world oil production goes beyond the Middle East to the most critical 21° century relationship –the US and China“ writes Yergin. And he says that China will in any case depend from the regional security created by the US “to maintain freedom of the sea lanes”. 

However, the Middle East oil is about 12% of the total oil imports of the USA, and those   imports will probably shrink, or, at least, lose their precious importance. Yergin still sees China as in need of the US as a “world policeman”, the only country capable to intervene not only to protect his own interest, but also to guarantee the “status quo “among the great powers of the area.

Up to now, it does not seem that China would need protection or geopolitical guarantees. China is already allover the place, as importer and exporter, and does not need any support. That may change, but possibly only in another direction, as China seems to become more aggressive in its foreign policy. So, perhaps, we will witness a bigger change in demand and supply of energy in Europe, not only because the US becomes an exporter, but because of a stagnant demand, which might not change if and when European economy will pick up, and resume it economic growth.

The structure of energy demand has changed in Europe, and will continue to change in the same direction.  So, the realignment may be bigger and multilateral. Every additional barrel of oil to Europe from the US will meet a relatively stagnating demand, and that might, if we accept to become optimists for a minute, have an effect on prices.

Up to now, the speculators on the “future market” for oil have succeeded in creating a fear of scarcity, so that every possible event is seen as a menace of   breakdown of world economy. This atmosphere is becoming less and less in line with the reality of supply and demand.  Will the increase in oil production in the USA reverse the trend, and usher in a period of cheap energy?