America Likely to Be the World’s Largest Oil Producer in 2 Years

America will surpass Saudi Arabia and Russia to become the world's largest petroleum producer by 2015, according the Paris-based International Energy Agency's annual report.

IEA says America's declining energy costs, especially for natural gas, will give the country a significant economic advantage. It warns that Europe and Japan where electricity is twice as expensive and imported gas costs are three and five times as high, respectively will suffer an increasing energy cost burden.

The report blames high energy prices in some markets on "pervasive" fossil-fuel subsidies that incentivized $544 billion (€405 billion) in wasteful consumption last year.

The agency says two-thirds of the economic potential for energy efficiency will remain untapped by 2035 unless such subsidies and other market barriers are overcome.

The report forecasts that worldwide energy demand will jump by one-third by 2035, mainly because of growth in Asia. China is the region's primary driver today. But IEA predicts India and ASEAN will emerge as the biggest growth engines there in the next decade.