The USA has become the bigger oil producer in the world , having surpassed the other two great producers , Russia and Saudi Arabia, and this is bound to change the geopolitic relationship with the Middle East.
In the last few years the USA have changed radically its position relative to energy production. When, in mid century , the internal source of crude oil was almost exhausted , the USA became a large importers of Middle East oil. Recently, however, The USA have changed their position: from importer , it has become self sufficient, and is now the bigger oil producer in the world , having surpassed the other two great producers , Russia and Saudi Arabia.
This change has been due to a new technology that allows to drill geological formations , called shists, that could not be produced with the usual technology . The new technology called “fracking”, has been an important step : the shists formations are been produced all over the USA , obtaining large volumes of crude oil and natural gas . Both fuels that had been almost exhausted in the past are quite abundant now. What to do with the new plenty is still being discussed. Should natural gas be exported around the world in liquefied form, or should it be used to the great advantage of the American industries , which, using it as a fuel or as a precious raw material , would increase and improve its output , and perhaps hire more workers.
The international export of gas being in fact quite costly, and the pressure of the USA industry to be able to use such a gas being very strong , natural gas seems by now being reserved to the American industry , which is increasing production and number of workers, responding to the strong preoccupation of the President. The destiny of oil is somewhat more complex to decide. In the history of the USA there have been periods in which oil could not be imported into the country, because internal production was sufficient.
The USA price of crude oil was of course higher than in the rest of the world, but the money did remain into the country. The system was abandoned during the oil crisis of the late sixties. The export of crude oil was forbidden for some time because production was needed for the country and it was feared that the Middle East sources of oil could be stopped by war , which actually happened in one country , Kuwait , for a short period.
So, now the country must take a decision. The oil producers are in a state of great optimism, and talk of a North America Compact , with Canada, the US and Mexico, the latter up to now quite restricted by law, oil being a State Property , and considering now a different solution. The American producers plan to build a huge pipeline from the North to the South of the US, a great project that the Government has not agreed up to now, but may eventually obtain permission to build, as the transport by railways happen to be worse, for security, of the pipeline.
The producers have in their mind the rich markets of China and the Asiatic Countries in full development. Transport from the West Coast USA to China, after all, does not look difficult. On the other side, the companies that own and run the USA crude oil refineries are proposing a totally different future. The oil produced should be refined in the Country, and the products will be exported, virgin naphta to chemical industries , gasoline and gasoil for transport and fuel oil for industry in the Far East and in Europe. This would enlarge the capacity of refineries, and increase their labour force. They do not seem to consider the fact that transporting oil products costs more than moving crude oil , because the tankers are smaller and more dangerous as some products , like gasoline are volatile , and explode easily . However, all oil products , but especially gasoline, are now normally transported by ship, from the European refineries to the USA market .
The discussion is quite open and at the moment there is no visible solution .The result of the contest between two powerful lobbies will have a relevant effect on the European markets, whose interests are not considered in the discussion. The USA exporting products to Europe would be a quite serious hit to the European downstream oil industry , which is already in serious difficulties as demand for oil products has declined visibly in the last years. Up to now, the European refineries are exporting to the USA gasoline with their specific components requested by American law.
To sell to Europe, the USA refineries will have to adapt their plants to the conditions dictated by European laws. There is no doubt that a full export of oil products from the USA would create a great embarrassment in Europe and perhaps also in other countries. Some countries would find it necessary to defend their refineries, and the situation may become complex , and difficult to manage. Up to now, nobody has taken the initiative to present an European view to the American refiners.