The unconventional oil and gas revolution has dramatically changed the global energy landscape, and in its wake is altering the world’s competitive manufacturing and industrial panorama, according to a new report from IHS.
The report, Energy and the New Global Industrial Landscape: A Tectonic Shift, is being released for the World Economic Forum 2013 Annual Meeting in Davos-Klosters, Switzerland where IHS is a strategic partner. It looks at the impact of unconventional (shale gas and “tight oil”) energy on world energy markets, the automotive and chemical industries as well as on the United States where it is improving manufacturing competitiveness.
While unconventional energy has been “a big boost” for North America, IHS Chief Economist Nariman Behravesh, one of the report’s authors, says its impact will also eventually be seen more widely as other countries develop their shale gas and tight oil resources.
“Initially, this has been – and will continue to be – a big boost for North America,” Behravesh says. “However, other regions and countries with large shale gas and tight oil deposits can, with time, also participate in this energy revolution and industrial renaissance.”
A new study by IHS estimated that in the United States alone, the surge in unconventional oil and gas extraction has led to the creation of 1.7 million jobs and added $62bn to federal and state coffers in 2012.
The big drop in energy prices has also led to a surge in investment in the United States, posing a risk for Europe and Asia which face migration of manufacturing to North America and the loss of competitiveness, says Behravesh.
The question of whether the unconventional oil and gas revolution will go global is increasingly being asked by companies and governments alike as major opportunities have been identified around the world, according to IHS Vice Chairman Daniel Yergin, also an author of the report.
“Major opportunities are being identified around the world,” says Yergin. “Our research indicates that the resource base in China may be larger than in the United States, and we note prospects elsewhere. However, circumstances that promoted this development in the United States differ in important aspects from other parts of the world. It is still very early days and we believe that it will take several years before significant amounts of unconventional oil and gas begin to appear in other regions.”
The continuing impact of the recession is evident in Europe, where new car sales will be 18.1m units, below the 18.4 registered during the downturn in 2010. The same holds true for Japan, with 4.7m cars sold in 2013, compared to 4.9 in 2010.
“The global recession has coincided with a global shift towards emerging markets,” writes IHS Automotive Senior Director Philip Gott in the report. He adds that the oil and gas revolution is only one of many challenges facing the auto industry. Perhaps the most burning issue is that “The consumer’s love affair with the automobile may be turning into a star-crossed relationship.”