The US shale oil boom is transforming the US oil and gas industry, but it is also likely to change the shape of global politics and macro economics.
Rob Wile from Business Insider US reported this morning that BP is out with its annual energy outlook and that the big news is that the United States, is “on a path to achieve energy self-sufficiency.”
Wile notes that this doesn’t mean that the US won’t still be importing energy but that it will become a net energy exporter in just 4 short years – 2018.
Why is that important?
Because, as we saw with the big $5 billion improvement in the US trade deficit last month, energy self sufficiency translates to less US dollars needed to fund the deficit and corresponds with less US dollars in circulation outside the United States. It also translates to stronger US growth because net exports subtracts less from growth.
This has potentially huge implications for Foreign Exchange markets which have been working on an ever-increasing supply of US dollars for years. It means that the US dollar should be naturally stronger in the years ahead, which will also to translate to lower values for assets across the spectrum including gold, oil, the Aussie dollar and almost anything that is denominated in US dollars.
2018 isn’t that far away, so this just might be the most important macro chart of 2014.