CHICAGO — The United States is leading the way both for the global economy and development of new sources of oil and gas.
U.S. GDP growth is expected to check in at 3-3.5 percent for the second half of 2014, IHS chief economist Nariman Behravesh said at the 2014 Global Plastics Summit, Oct. 1-2 in Chicago.
“The weather and volatility of the first half is behind us,” Behravesh said at the event, hosted by IHS and the Society of the Plastics Industry Inc. “[The U.S.] should have continued good economic growth through 2015.”
Reasons for the American rebound include increased consumer spending, income growth and lower unemployment. Household debt levels also are down, and the federal debt ratio has stabilized, he explained. Annual growth of around 3 percent can be expected for the near future.
But the economic outlook isn't as sunny in other regions of the world. The eurozone is reporting flat first-half GDP growth, as struggling southern European economies bog down healthier economies in northern Europe. Full-year eurozone growth is pegged at just under 1 percent. The region is seeing “extended financial austerity” and is at risk of deflation, Behravesh said.
Japan's economy is shrinking, largely due to a recently passed national sales tax, and Russia is struggling with economic sanctions resulting from its military aggression in the region. And while China's 7 percent GDP growth rate would be the envy of other nations, it's less than what the Asian powerhouse had been accustomed to in recent years.
“China's locomotive role is diminishing,” Behravesh said. “Its debt is exploding … but the government will use stimulus to keep the growth rate above 7 percent.”
On the energy side, IHS oil markets vice president Kurt Barrow said that U.S. oil production growth “has kept the lid” on per-barrel prices in recent years. U.S. oil production has increased by 3.5 million barrels per day since 2008.
“There's been a great revival in U.S. crude [oil], and we expect that to continue to increase,” he added. Production now stands at just under 8 million barrels per day, but the United States should be above the 10 million threshold by 2016.
U.S. natural gas production also is surging. It's now under 10 billion cubic feet per day, but should be above 25 billion by 2020.
“North American natural gas is plentiful and low-cost,” Barrow said. “Our outlook is for continued wide disparity between oil and gas prices.”
Per-barrel oil prices were near $89 on Oct. 1 but have been above $100 in recent years. Barrow expects oil prices to remain above $100 through 2040. Natural gas prices on that date were just over $4 per million British thermal units.
“Peak oil demand is on the long-term horizon because of high prices and transportation efficiencies,” Barrow added. “But longer-term cost pressures will sustain elevated prices.”