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U.S. set to become world’s top oil producer

The new Saudi Arabia?

American could surpass Saudi Arabia to become the world’s leading oil producer in the near future. 

American crude and liquid hydrocarbon output is set to rise by 7 per cent this year to just under 10.9 million barrels/day.

The US energy department predicts that this figure will rise to 11.4 million barrels per day by the end of 2013, falling just short of Saudi Arabia’s output of 11.6 million. Analysts at Citibank forecast that this figure could reach between 13 and 15 million barrels by 2020.

The boom has brought a raft of positive knock-on effects for the US economy, with ExxonMobil announcing a $1.6bn investment package in US oil last month.

States involved in the exploration, transport and refining of crude such as Texas, North Dakota, Oklahoma, Wyoming and Montana have benefited most from the surge in output. All have unemployment rates far lower than the national average of 7.8 per cent, with South Dakota’s unemployment level reaching just 3 per cent.

IHS CERA, an energy consulting firm, predicts that the hydrocarbon boom will bring a staggering 1.3 million jobs to the US economy by 2020, adding to the 1.7 million already created by the oil industry. 

“Five years ago, if I or anyone had predicted today’s production growth, people would have thought we were crazy”, said Jim Burkhard – chief oil analyst at IHS – to the Associated Press.

Despite the figures, the US will remain a net-energy importer, with imports clocking in at roughly 18.7 million barrels per day. However, future increases in oil production and improving car fuel efficiency could slash this number by come 2020.

There are several factors driving up the American oil boom. 

Firstly, the costs of extracting oil from shale and rock formations has plummeted following the development of a technique called “hydraulic fracking”, wherby water, sand and chemicals are pumped into shale formations to squeeze out oil that was previously too expensive to tap.

The amount of oil extracted using this newfound method is expected to grow from 1.6 million barrels per day for 2012 to a 4.2 million per day by the end of the decade.

Furthermore, owing to increased energy demand in the developing world and political instability in the MENA region, oil prices have soared, which in turn has incentivised exploration and covered the high costs inherent to hydraulic fracking. In the 2000s, the price of oil averaged at $69 per barrels, in the 1990s it was just $21 per barrel.

Additionally, a surfeit of gas discoveries in the past few years has freed up capital for greater oil exploration, whilst exploration and production in the Gulf of Mexico has rebounded following the BP oil spill in 2010.

Alex Ward is a London-based freelance journalist who has previously worked for the Times & the Press Association. Twitter: @alexward3000

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The Tories' aim is to put Labour out of business for good

Rather than merely winning again, the Conservatives are seeking to inflict permanent damage on the opposition. 

The Conservatives are numerically weak but politically strong – that is the peculiarity of their position. Their majority is the smallest of any single-party government since October 1974. Yet, to MPs at the Tory conference in Manchester, it felt like “2001 in reverse”: the year of Tony Blair’s second election victory. Then, as now, the opposition responded to defeat by selecting a leader, Iain Duncan Smith, who was immediately derided as unelectable. Just as Labour knew then that it would win in 2005, so the Conservatives believe that they have been gifted victory in 2020. David Cameron has predicted that the party’s vote share could rise from 37 per cent to a Thatcherite 43 per cent.

For Cameron and George Osborne, who entered parliament in 2001, this moment is revenge for New Labour’s electoral hegemony. They believe that by applying Blair’s lessons better than his internal successors, they can emulate his achievements. The former Labour prime minister once spoke of his party as “the political wing of the British people”. In Manchester, Cameron and Osborne displayed similarly imperial ambitions. They regard Jeremy Corbyn’s election as a chance to realign the political landscape permanently.

Seen from one perspective, the Tories underperformed on 7 May. They consistently led by roughly 20 points on the defining issues of the economy and leadership but defeated Labour by just 6.5 overall. It was their enduring reputation as the party of the plutocracy that produced this disparity. Those who voted for Labour in spite of their doubts about Ed Miliband and the party’s economic competence may not be similarly forgiving of Corbyn. To maximise their gains, however, the Tories need to minimise their weaknesses, rather than merely exploit Labour’s.

This process began at conference. At a dinner organised by the modernising group the Good Right, Duncan Smith, Michael Gove and the Scottish Tory leader, Ruth Davidson, affirmed their belief that, contrary to Thatcherite orthodoxy, inequality is a problem. Only the Business Secretary, Sajid Javid, an admirer of the libertarian heroine Ayn Rand, insisted that equality of opportunity was the defining metric.

George Osborne’s assured speech was most notable for his sustained appeal to Labour voters. Several opposition MPs told me how unsettled they were by the Chancellor’s declaration that Labour’s new leadership calls “anyone who believes in strong national defence, a market economy and the country living within its means” a Tory. He added, “It’s our job to make sure they’re absolutely right. Because we’re now the party of work, the only true party of labour.” The shadow minister Jonathan Reynolds told me: “We’ve got to be extremely clear that this is not business as usual. This is a real attempt by the Tories to put us out of business – possibly for ever.”

The Conservatives’ aim is to contaminate Labour to the point where, even if Jeremy Corbyn were deposed, the toxin would endure. For those opposition MPs who emphasise being a government-in-waiting, rather than a protest movement, the contrast between the high politics of the Tory conference and Corbyn’s rally appearance in Manchester was painfully sharp. They fear guilt by association with the demonstrators who spat at and abused journalists and Tory delegates. The declaration by a rally speaker, Terry Pullinger, the deputy general secretary of the Communication Workers Union, that Corbyn’s election “almost makes you want to celebrate the fact that Labour lost” was regarded as confirmation that some on the left merely desire to run the party, not the country.

But few Tory MPs I spoke to greeted Corbyn’s victory with simple jubilation. “It’s a great shame, what’s happened to Labour,” one said. “We need a credible opposition.” In the absence of this, some fear the Conservatives’ self-destructive tendencies will reassert themselves. The forthcoming EU referendum and leadership contest are rich in cannibalistic potential. Tories spoke forebodingly of the inevitable schism between European Inners and Outers. As the Scottish experience demonstrated, referendums are almost never definitive. In the event of a close result, the party’s anti-EU wing will swiftly identify grounds for a second vote.

Several cabinet ministers, however, spoke of their confidence in Cameron’s ability to navigate the rapids of the referendum and his pre-announced departure. “More than ever, he’s the right man for these times,” one told me. By this December, Cameron will have led his party for ten years, a reign exceeded in recent history only by Stanley Baldwin, Winston Churchill and Margaret Thatcher. That the Conservatives have so far avoided cataclysm is an underappreciated achievement.

Yet there are landmines ahead. An increasing number of MPs fear that the planned cuts to tax credits could be a foul-up comparable to Gordon Brown’s abolition of the 10p tax rate. Despite the appeals of Boris Johnson and the Sun, Cameron and Osborne have signalled that there will be no backtracking. At such moments of reflection, the Tories console themselves with the belief that, although voters may use Corbyn as a receptacle for protest (as they did Michael Foot, Neil Kinnock and Ed Miliband), they will not elect him. They also acknowledge that the current Labour leader may not be their opponent in 2020. The former paratrooper Dan Jarvis is most often cited as the successor they fear. As with Cameron and Blair, his relative lack of ideological definition may prove to be a strength, one MP suggested.

William Hague is fond of joking that the Tories have only two modes: panic and complacency. If the danger before the general election was of the former, the danger now is of the latter. 

George Eaton is political editor of the New Statesman.