Despite Shale, Middle East Remains Key to Oil Demand
Lower gas prices mean that energy-intensive industries that are sensitive to higher prices such as petrochemical and iron in the United States have a competitive advantage over countries with higher gas prices. The U.S. and emerging countries will emerge as winners in the new market, while Europe and Japan will be among the losers.
This cost difference between the United States and its economic competitors will remain for some time, and Birol believes this difference could give a strong boost to the United States economy in 2015 through a renaissance of manufacturing and balance of trade.
The United States and other countries should use this time wisely to see how much they can make out of this opportunity.
“Competitiveness is a life and death” problem in Europe, said Birol, noting that not one speech in recent time by a European leader has not touched on competitiveness.
While Europe’s competitiveness has been hurt by the price differential between U.S. and European gas prices, Birol said liquefaction, transportation and regasification costs to bring U.S. gas to other markets makes it impossible that the world will see one gas price anytime soon.
“We may see some increase in U.S. gas prices and some decline in Europe, but the difference will remain for years to come,” Birol noted.
Oil prices will likely continue to trade at the $100 benchmark, barring a major economic downturn in certain parts of world.
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