Introduction

The shale revolution in the U.S. is changing the country's position in the market from a major importer of energy to an energy exporter. In 2013, U.S. energy production reached to 81.7 quadrillion BTU (quads) which was sufficient to supply 84% of its total energy demand of 97.5 quads. In the same year, U.S. energy mix included 82% of fossil fuels, 10% renewable and 8% nuclear energy. U.S. domestic energy supplies, particularly natural gas and crude oil have, increased markedly since 2005. Between 2005 and 2014, U.S. tight oil and shale gas production boosted significantly and rose nearly 34 and 65 percent, respectively.

American oil output in 2013 has witnessed its largest annual increase since 1989, reaching 7.44 million barrels per day. It also projected that by 2015, America's oil output will reach to 9.6 million barrels a day – the highest number ever produced since 1970.

Dry natural gas production in 2013 was also at its highest level ever, having increased by 21 percent since January 2010. Most of this production increase has been a result of increase in drilling productivity particularly in Marcellus shale formation. Alongside this production increase, U.S. exports of refined petroleum products and natural gas pipeline export to its neighboring countries grew dramatically last year. Refined petroleum exports jumped 10 percent in 2013 and reached to 2.95 million barrels a day in October of this year. This was a 70 of percent increase in comparison to the past decade. U.S. natural gas pipeline exports to its neighboring countries in 2013 peaked at nearly 99 billion cubic feet (bcf) in January. This number was 84 bcf in 2012 and 25 bcf in 2003. Over the past decade, U.S. natural gas exports to Mexico, via pipeline, almost doubled and more than tripled to Canada. At the same time, overall U.S. energy imports in 2013 fell by 10 percent compared to 2012, and 15 percent in compared to 2011.

The last time this ratio of U.S. domestic energy supplies to consumption was so high was during the 1978 to 1982 period. This was the time that U.S. oil consumption declined as a result of global oil prices rose due to the 1979 revolution in Iran, and the Iran-Iraq war between 1980 and 1988.

This dramatic increase of domestic energy production is, as we know, mainly the result of technological innovations. Hydraulic fracturing and horizontal drilling technologies have increased U.S. oil production by 30 percent.