Oil exports from the United States continue to rise while exports of natural gas are starting to increase. What impact are these developments likely to have on markets? Do they have geopolitical implications? For instance, will U.S. natural gas exports weaken Russia’s position as a gas supplier to Europe?

Image Jason Bordoff Credit... Eileen Barosso

American exports of L.N.G. exports are set to rise sharply by the end of the decade. These exports can make America an energy superpower. Unlike coal or oil, which can be moved easily between ports, exporting natural gas has been a far trickier proposition, usually requiring pipelines between buyers and sellers. Moreover, L.N.G. comes with unique energy security risks for gas-consuming countries, since suppliers can (and have) cut off gas flows. But U.S. gas is linked to a hub price and has no destination restrictions. That means more competition, liquidity and supply diversity, and that will make global gas markets more flexible, efficient and secure. Europe, in particular, will be more able to implement its Energy Union package to reduce its vulnerability to Russian gas dependence through market integration, interconnectivity and diversification.

Production of oil and gas from shale rock, or “fracking,” has brought some benefits to the United States, including cheaper and more abundant energy supplies and reduced reliance on polluting coal in power generation. Are these benefits likely to be sufficient to permit the industry to grow over the long term despite criticism from environmentalists?

The shale boom has been one of the strongest buttresses supporting the recovery of the U.S. economy following the Great Recession, helping to lower energy prices for businesses and consumers and shrink the U.S. energy trade deficit. And cheap natural gas has been the primary reason for the recent decline in U.S. coal consumption, with concomitant environmental benefits. Nonetheless, a 2016 Gallup poll found public opposition to fracking on the rise. Shale development can have disruptive impacts on communities and raises risks that must be mitigated through industry best practices and strong regulatory oversight. Industry and regulators need to work together to address legitimate concerns, like the climate change impacts of methane leakage and the seismic risks from wastewater disposal.

Britain and France recently announced dates for stopping the sale of diesel and gasoline-power cars. Car companies like Renault-Nissan and Volkswagen are increasing their investments in electric vehicles. Do developments like these mean that the sunset of the oil and gas business is coming into view?

We are going to be relying on oil and gas for decades to come, but technology and policy pushes have raised the possibility that peak oil demand may occur far sooner than many believed possible. In addition to pollution concerns, China is pushing aggressively on E.V.s, seeing an opportunity to dominate an emerging industrial sector of the future.

Still, it takes time to convert the vehicle fleet, and there remain open questions about the pace of innovation and whether the long-term targets to eliminate the internal combustion engine will be backed by real policies.