Unconventional Oil, Gas to Lift US Energy Exports

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The rapid rise in U.S. unconventional oil and natural gas production will help boost U.S. energy exports by around 5 percent per year through 2030, according to the September 2014 U.S. HSBC Global Connections Trade Forecast. Imports of petroleum are expected to decline from 12 percent in the near-term to 7 percent in the long-term, according to HSBC report, which highlights the global trade outlook for the United States by sectors such as energy and healthcare.

Emerging markets that don’t have refining capabilities or don’t dispose of energy reserves could represent a major opportunity for U.S. energy exporters, said Derrick Ragland, executive vice president and head of U.S. Middle Market Corporate Banking, HSBC Bank USA N.A., in a Sept. 16 press release.

Chemical plant expansions and liquefied natural gas (LNG) terminal upgrades, coupled with the opening of Mexico’s energy industry to foreign investment, are expected to result in a new export boom for Houston and to create over 55,000 new jobs, according to a May 2014 report by HSBC. The massive investment in chemical plants and LNG export terminals has fed a second boom as Houston’s engineering, construction and fabrication firms design and construct these plants.

Innovations in hydraulic fracturing and directional drilling, which have unlocked the United States’ shale resources, is behind this boom, HSBC said in the May 2014 report. Local firms that supply the chemical and energy industries also will see their business grow as clients demand more of everything they need to expand overseas operations. The United States’ rise as a major player in global energy markets is of particular importance for U.S. trade, as the rapid rise of U.S. unconventional oil and gas production cut the U.S. petroleum balance by nearly 50 percent since year-end 2008.

“While the ban on crude oil exports is unlikely to be lifted soon, exports of refined products will contribute to export growth in the years to come,” according to HSBC.  

U.S. businesses are increasingly looking to emerging markets for export growth in the short and long-term. U.S. businesses are well-positioned to take advantage of a stronger world economy, and an increasing focus on fast-growing emerging markets will prove essential, according to HSBC.

“While advanced economies – primarily in Europe – will continue to dominate the U.S. trade sector, Asia and Latin America will become more important export destinations for U.S. exporters,” said HSBC on the longer-term trade outlook.

U.S. exports are expected to grow by approximately 6 percent each year through 2030. China and India are predicted to be the best trade prospects for the United States, with U.S. export growth estimated to average 9 percent per year to each country through 2030, HSBC said.

On a global basis, trade is expected to rise by 8 percent per year starting in 2016 from 2.5 percent in 2013. Longer term forecasts indicate global merchandise trade will more than triple by 2030 from 2013 levels as businesses capitalize on the rise of the emerging market consumer and developing markets stabilize their productivity levels for the future, according to HSBC.

“A highly educated workforce, well-developed production processes and innovative technology will help U.S. businesses plug into increased trade flows, while the rise of the emerging market consumer is helping to lift demand,” said Steve Bottomley, HSBC group general manager, senior executive vice president and head of commercial banking for HSBC in North America.

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