The global energy race is on

The implications of rising U.S. energy production stretch beyond domestic companies.

Dec 18, 2013 | Our Perspectives Archive

Stephen Jury
Global Head of Currencies & Commodities

Which nation will be the future leader in the energy space?  
An energy revolution in the United States has seen dramatically higher domestic production of oil and natural gas, giving the United States a competitive edge as an energy producer—and tipping the global energy balance of power.

 “And this is all because of a new drilling technique popularly known as fracking,” explains Stephen Jury, Global Head of Currencies & Commodities at J.P. Morgan Private Bank. “The United States stands to reap the benefits globally.”

U.S. consumers and companies win
American companies and consumers are already benefiting from markedly lower energy costs as the switch to cleaner sources of energy, such as natural gas, accelerates. In fact, says Mr. Jury “the OECD estimates that last year alone, U.S. industry saved $130 billion from switching to natural gas, and that’s a significant savings that is going to be reflected in better margins for companies in the United States.”1

And, as domestic production continues to grow, there is increased pressure on the United States to export energy overseas. At present, American producers face restrictions on the export of oil and natural gas, but this might change in the near future.

While acknowledging that this is a “very complicated and highly political subject,” Mr. Jury notes that already, for example, there are some 20 requests filed with the Department of Energy to allow the export of liquefied natural gas (LNG). The approval process, he says, is just beginning, but might eventually result, over the next 10 or 20 years, in a big boost for the U.S. energy sector and stabilization of the natural gas price globally.

The United States as a global energy player
It would be a mistake to expect that greater U.S. energy independence would allow America to decouple from the global energy scene. “Even if the United States is just using energy produced within its own borders,” explains Mr. Jury, “the reality is that crude oil is a global commodity and we will forever be tied to the price of oil coming out of the Middle East.”  

In the global natural gas market, however, the United States is likely to remain the leading producer for the next seven to 10 years.

For additional insights from our energy experts, including ideas on how to add energy sector investments to your portfolio, we invite you to contact us, and someone will be in touch with you.

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