The revolution in the natural gas sector promises to fundamentally rewrite the US economy and strengthen its position in the world order, according to new analysis.
The phenomenon behind this prediction is well known. In recent years fracking, the new technique of hydraulic fracturing, has turned the US natural gas sector on its head, as it has given access to vast resources of gas trapped in shale rock at a low cost
"Energy autonomy will eventually give the US a strong strategic and political advantage," said Stephanie Kretz, a strategist at private bank Lombard Odier.
The phenomenon behind this prediction is well known. In recent years fracking, the new technique of hydraulic fracturing, has turned the US natural gas sector on its head, as it has given access to vast resources of gas trapped in shale rock at a low cost.
An unprecedented surge in supply has followed. Last year, the US mainland increased its natural gas output by 7.3pc, following growth of 3pc in 2010, according to analysts at Deutsche Bank.
This rise in production is the main reason why US natural gas prices have collapsed over the past six to seven years, from a Henry Hub spot price – the benchmark in the country – of more than $15 per million British thermal units, at the end of 2005, to around $2.30 today.
Just how this abundance of natural gas is reshaping the US energy market is already visible. Natural gas prices are so low that few of the gas producers, even in the shale gas area, are making money. Their rivals appear to be in an even tougher spot.
Since 2009, operators of coal-fired power plants have seen natural gas stealing market share from coal, as manufacturers use more of the fuel and utilities also switch to gas from pricier coal to generate power.
Last week, Barclays Capital analysts noted "something more ominous: forward margins for coal plants have now swung into negative territory for many plants in the eastern US".
That means a plant that tries to avoid the pain of weak spot markets by selling power forwards would end up locking in a future loss.
Little cause for cheer lies ahead for such operations. Due to the abundance of cheap natural gas, coal consumption for power generation by US utilities will fall 5pc in 2012, according to the US Energy Information Administration.
But while downward pressures on fuel prices are not welcome to energy producers, the implications for the wider US economy are rather more positive.
In the immediate future, an abundance of natural gas and inexpensive energy will support jobs, particularly in the chemicals and fertiliser industry which is sensitive to low gas prices, says Kretz.
It will also reduce the threat of inflation, as energy costs will be less likely to drive prices higher.
In the longer term, the implications of the revolution in natural gas look even more far-reaching.
By 2035, the US will be the world's second largest gas producer, with its output dwarfed only by Russia, according to the International Energy Agency.
Meanwhile, demand should grow as this cheap gas replaces oil in many areas, as well as squeezing out coal and nuclear energy.
This will eventually enable the US to become energy-independent and strengthen the dollar, Kretz believes.
That is because as demand for gas increases, the relative size of the US's petroleum consumption will fall.
Coupled with increased domestic oil production, this phenomenon will reduce the US trade deficit, she says, a boon for a country trying to shrink its budgetary deficit and slow the growth of its $15 trillion debt.
"Although it will take years (probably five to 10) before the US current account turns into surplus, the trend is firmly in place," she said.
What does it mean for the UK? Westminster is certainly watching the US. The Government's support of natural gas as a energy source is already clear, with the Chancellor using the Budget on Wednesday to underline his support.
"Gas is cheap, has much less carbon than coal and will be the largest single source of our electricity in the coming years," said Mr Osborne, adding that a gas generation strategy to secure investment will be unveiled in the autumn. Those looking stateside might be wise to anticipate fracking's embrace by politicians on these shores, despite the minor earthquakes caused near Blackpool by early efforts.
Tin tack Recovery in aluminium prices cut short by China's increased output
The recent tentative recovery in aluminium prices has stalled, as China increased its output of the lightweight metal.
Smelters that were shut down last year to meet the country's energy consumption targets in its five-year plan have now been restarted.
"Once again, Chinese aluminium producers have in one fell swoop managed to eradicate all the work done by other producers in cutting smelting capacity," said Nick Moore, a metals analyst at RBS.
Three-month aluminium futures in the fourth quarter of last year slumped below $2,000 (£1,260) a tonne, "a level at which more than 50pc of world aluminium smelting capacity became unsustainably cash negative", added Mr Moore.
Aluminium futures plunged to about $2,167 on Friday following the news from China.
According to data from the International Aluminium Institute (IAI), China's primary aluminium production averaged 53,400 tonnes a day in February, compared with 48,900 tonnes in January and 46,600 tonnes in February 2011.
Mr Moore noted that this was a daily output increase of 9.1pc, equivalent to an annualised production figure of 19.48m tonnes.
Analysts at RBS forecast spot aluminium prices will average $2,315 a tonne in 2012, a 4pc year-on-year fall.
Price of orange juice squeezed
After hitting a record high in January, orange juice futures traded on the ICE exchange plunged last week as supply concerns over the product eased. The price hit a three-month low last week as frost concerns in Florida eased.
Global inventories of juice are also expected to jump in the next few months.
Prices had been artificially boosted earlier in the year when the US investigated claims that a banned fungicide was present in imports.
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