US examines new scenarios for oil imports In the highly volatile oil industry, long-term forecasts, stretching two, three or even more decades, are destined to be wrong. The US Annual Energy Outlook released recently would probably be no different. But this year, the outlook from the US Department of Energy includes several "what-if" cases that are worth paying some extra attention to as they encapsulate the shift in the debate in Washington from one of oil scarcity to that of abundance. The most striking of those scenarios are two that forecast a massive decline in US oil imports - and even the shift to net exports - between now and 2040. The International Energy Agency has already touted the idea of net oil exports from North America - combining the US and Canada - but the new report only considers America. The two alternative possibilities the US department presents are the "high oil and gas resources" scenario, which predicts significantly lower imports of 7 per cent of expected consumption, and the "no net imports" scenario, which sees the US becoming a net exporter by 2040. If either comes true, the developments could not only trigger profound changes in the oil industry, including much lower prices, but also affect geopolitics, with the US severing its ties with the Middle East. The US first became a net oil importer in 1946 and since then the reliance on foreign sources has been a matter of national security. The degree of dependence peaked at 60 per cent in 2005. Since then, lower demand due to the impact of high oil prices and the economic crisis, combined with booming domestic production on the back of the shale revolution, have lowered net imports to 41 per cent of consumption. In its reference case - its main forecast - the US Department of Energy predicts that the reliance on imports will drop a bit more in the next few years. But as the impact of the shale revolution starts to fade by 2020, the share of net imports should stabilise at about 35-37 per cent. Of its two alternative scenarios, the "no net imports" is the most striking, considering that only a few years ago the talk in Washington - and Houston, the capital of the US oil industry - was about scarcity, rather than abundance. The Department of Energy says the scenario is built around "optimistic assumptions of the availability of domestic oil and natural resources," including continued growth in US domestic production from new shale resources beyond 2020, "combined with assumptions that lower demand for liquid fuels," including wide use of natural gas for transportation and continued improvement in fuel economy for cars. The result is that the US net oil imports disappear by 2030 and the country becomes a net exporter a decade later. By 2040, the US Department of Energy sees the potential for exports equal to 8 per cent of domestic demand.