Eye on the Market | October 22, 2012 J.P Morgan The most important energy developments of 2012: how countries are planning for Independence Day Some detail on the components of increased US energy independence: Net increase in domestic production: we have modeled an increase of 1.8 mm bpd. For context, the 2012 Energy Information Administration (EIA) outlook has a variety of crude oil production scenarios for 2025 ranging from no increase to an increase of 2.8 mm bpd (the “technically recoverable resource” case). Any production increase from current levels is expected to come from “tight oil”, extracted from formations such as Bakken and Eagle Ford, and the Permian Basin. While conventional crude production volumes in the Gulf may rise, these are expected by the EJA to offset declines elsewhere (Alaska). The EIA’s optimism is matched by a June 2012 paper from Leonardo Maugeri at Harvard’s Kennedy School, which projects a US crude oil increase of 2.6 mm bpd by 2020. An illustrative quote’: “The shale/tight oil boom in the United States is not a temporary bubble, but the most important revolution in the oil sector in decades. It will probably trigger worldwide emulation over the next decades that might bear surprising results - given the fact that most shale/tight oil resources in the world are still unknown and untapped.... Thanks to the technological revolution brought about by the combined use of horizontal drilling and hydraulic fracturing, the US is now exploiting its huge and virtually untouched shale and tight oil fields, whose production — although still in its infancy — is already skyrocketing in North Dakota and Texas.” Regarding the Bakken shale, Maugeri’s estimate of 300 billion barrels of oil in place are exceeded by larger mean estimates from USGS geochemist Leigh Price and Continental Resources. Reduced consumption due to higher CAFE standards and Corporate Average Fuel Economy standards the automobile replacement cycle: this is a topic that Miles per g