Shale oil will boost the world economy by 2035 but the rush for black gold will have winners and losers, says a new report.
Accountants PwC have looked into the prospects for shale oil production because of the huge impact the commodity is having on the US economy and found other countries would benefit too.
So much so, they are predicting that crude oil prices will not rocket to $133 a barrel as predicted by the US Energy Information Administration, but will instead fall by up to 40% to $83 a barrel by 2035.
Those prices are based on low levels of shale oil production and will change if shale oil output vastly improves.
Indeed, the report states that shale oil production will eventually revolutionise the world’s energy markets.
Gains and losses
The study also reveals that the production of shale oil could grow to 14 million barrels a day by 2035 to make up 12% of global demand.
Among the big winners would be net oil importing countries, such as Japan and India, which could see their GDPs boosted by between 4% and 7% by cheaper oil.
In the US, the Eurozone, UK and China, GDPs would see gains of between 2% and 5%.
However, big oil producing countries in the Middle East, as well as Russia, will see their trade balances hit hard and they could see GDP falls of between 4% and 10% if they don’t start projects to develop fully their own shale oil resources.
The boom in shale oil production could see the world’s GDP in 2035 being boosted by between 2.3% and 3.7%.
It’s not all good news some downsides are already apparent.
The shale oil boom in the US has also led to an increasing use of natural gas rather coal-fired power.
But Germany has banned the fracturing process required to get shale oil out of rocks and is increasing use of solar power, which is a struggle because of the relative lack of sun in Northern Europe.
Environmentalists and energy analysts are asking whether shale oil has a long-term production future and whether it is viable as an energy source.
PwC also notes that the world’s oil firms will also need to monitor the development of the shale oil industry and adapt to exploit resources or review their business models and ask whether some future crude oil supplies are worth the expense of exploiting.