The rapid growth in shale oil and gas could put an end to end to the era of high oil prices sooner or later. This si going to make a major change in the economic and political landscape of the global economy, according Nirmal Bang Commodities and FX Year Book 2014.United States crude oil production has surged from 4 million barrels per day (mbpd) in 2008 to above 8 mbpd in 2013 and natural gas production has surged to 28.9 billion cubic feet (bcf) in the year 2013, which was just 4 bcf in 2007. The most important thing is that it is not the end. This is likely to continue for years to come and this revolution is spreading across the globe, Nirmal Bang Year  Commodities Year Book said.

The shale revolution would lead to bigger growth trajector for global economy and USA stands to benefit most from it. The US trade deficit is shrinking rapidly because of the drop in oil imports from OPEC and canada.

Between 2010 and the end of 2012, the industry added 1,69,000 jobs nationwide, growing at a rate of about 10 times that of overall US employment. The US has started exporting natural gas and from being a net importer of LNG, it has become an exporter of LNG. Energy cost in the US is much cheaper than other countries as the number of gas-based power plants are increasing, which will lead to lower manufacturing costs for producers, Nirmal Bang said in its YearBook.

Oil producing countries have enjoyed higher oil prices over the last five years due to geopolitical tensions, easy monetary policies and robust Chinese demand growth. However, now the only upside risk to oil prices is geopolitical tensions. We foresee a gradual drop in oil prices in the years to come, which will lead to a shift in
the political landscape across the globe, where Middle East, Russia and other oil producers will be in a spot and the US will be in a much better shape.

The theme for 2014 is recovery in the global economy. Globally, economies have recovered from crises and are heading towards a new growth trajectory and one of the biggest reasons for the same is energy boom. The commodities super cycle is not dead; demand from the developed world is likely to inch up whereas Chinese demand will remain subdued. On the other hand, supply side of most commodities is likely to remain strong. We believe that during 2014 broadly commodity prices will not be able to outperform in spite of uptick in global GDP. The US dollar is back and likely to strengthen, going forward in 2014, which will also put pressure on the prices of dollar-denominated commodities.
Source: Nirmal Bang Commodities