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It is official. The US will overtake Saudi Arabia to become the world's top oil producer by 2017.

The International Energy Agency (IEA) said in its world outlook for 2012 this morning that the US will be a net exporter of gas by 2020, with all the vast implications of abundant cheap gas for its chemical, plastics, glass, and steel industries.

"The United States, which currently imports around 20 per cent of its total energy needs, becomes all but self-sufficient in net terms – a dramatic reversal of the trend seen in most other energy importing countries," it said.

This is entirely due to the shale and gas revolution. North America as a whole will become a significant net exporter.

People were too quick to write off America after the Carter Malaise of the 1970s, and they have been too quick again after the subprime bubble (now largely cleared). As Adam Smith said, there is a lot of ruin in a great nation.

Saudi Arabia will quickly fade as swing force in global energy markets unless it stops gobbling up its own output with such careless abandon. It currently charges 14 cents a litre for petrol and seven cents for diesel at the pump. They give it away.

They should copy to Abu Dhabi and switch to solar power pronto for air conditioning, freeing up oil for exports.

Whether or not the world can supply enough oil to feed the Chinese dragon depends on Iraq.

If it all goes well, output will jump from around 2 million barrels a day (b/d) to 8 million by 2035. It if goes really well, output could reach 10 million.

If all this turns out to be wishful thinking, the world is stuffed. The biggest "new supply" over the next quarter century is energy efficiency. That is worth a Saudi Arabia and a half. Allegedly.

* Coal has provided half the entire growth in world energy supply over the last decade, much more than renewables.

* Total investment in oil and gas alone this year is (estimated) $619 billion. It shows the sheer scale.

* Total oil output will be less than 100 million b/d by 2035. This is not that much higher than this year at 87 million.

This is Plateau Oil in all but name, yet the industrial revolutions of China and India will continue apace, and the nuclear industry has just taken a huge blow. More coal I guess, and windmills.

The clearest message is that water shortages in large parts of the world are the chief constraint on energy and power. Cooling a coal power plant without water is not easy, and solar parks are very thirsty.

Yes, China has the world's biggest shale gas reserves at 36 trillion cubic metres, but much of it is in places like the Tarim Basin in Xinjiang with "severe water scarcity".

Some 65pc of China's water use is for irrigation, and 23pc for industry – mostly in coal production. Notice how much of the coal industry is in areas with water troubles.

Non-renewable aquifers are being depleted very fast. Under the latest five-year plan China is diverting rivers equal to the Tigris and Euphrates combined to supply the dry belt.

Water will have to be rationed much more severely by price, as will electricity. That will be an extra cost/tax, a loss of competitive advantage. Ditto for India.

It was said a couple of years ago by Cheng Siwei – then head of China's green energy drive – that the country's economic growth over recent years has been negative if you adjust for eco-damage and exhaustion of non-renewable resources. This will soon become a tangible cost.

Water-adjusted GDP may yet become a vogue term.

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