Posted on 12/08/2013 9:32:19 PM PST by ckilmer
U.S. crude production rose above 8 million barrels a day in November for the first time in almost 25 years, cutting dependence on foreign oil and pushing the country toward energy independence.
Output climbed 0.6 percent, or 45,000 barrels a day, to 8.019 million barrels a day, the Energy Information Administration (EIA) said Nov. 27. That’s the most since January 1989.
“It’s a tremendous shift,” said Stephen Schork, president of the Schork Group, an energy consulting firm in Villanova, Pa. “Production will continue to grow in North America, and North America will continue to become less and less dependent on foreign sources of oil.”
U.S. oil production is growing at the fastest pace in history, boosting fuel exports and reducing reliance on foreign fuel, according to the EIA. The boom will make the country the world’s largest producer by 2015, five years sooner than last year’s forecast, the International Energy Agency in Paris said this month.
Economic impact
In the U.S., the average price of gasoline has tumbled 49 cents from its peak this year to $3.29 a gallon, putting it on track for the lowest average since 2010, according to AAA. Because many Americans have had no pay raises, whatever money they’re saving on gas has freed up a bit more for other purchases.
And history shows that when gas prices drop, consumers become more likely to splurge on dinners out. Impulse buys at the mall seem like less of a stretch. More people buy a gas-station gift card after fueling up.
Many retail analysts have forecast a ho-hum sales gain of around 2 percent this year; others predict an increase of up to 3.9 percent. But cheaper gas could send holiday sales shooting above 5.4 percent, analysts say.
“Every little thing moves the needle at this point,” said Carl Riccadonna, senior U.S. economist at Deutsche Bank. “The benefit at this time of the year certainly helps retailers, since it is not spread evenly throughout the year.”
Tom Kloza, chief oil analyst at the Oil Information Service, foresees the average price drifting down, as it typically does this time of year, to as low as $3.05 by year’s end.
For retailers, the best-case scenario would be for the national average to breach $3 a gallon, a psychological barrier that could accelerate spending.
Cheaper gas could help build on the momentum of 2 million more Americans finding jobs this year. It might also help shore up consumers’ fragile confidence in an economic recovery that’s lumbered along for four and a half years.
Dip in imports
Imported crude and petroleum products will dip to 28 percent of domestic demand next year, the lowest since 1985 and down from a peak of 60 percent in 2005, the EIA said in its Nov. 13 Short-Term Energy Outlook. Refined product exports have advanced 15 percent so far this year, EIA data show.
Advances in horizontal drilling and hydraulic fracturing, or fracking, have boosted output from dense rock formations such as the Bakken shale in North Dakota and the Eagle Ford in Texas. The techniques allow producers to bore sideways through the richest layers, then use explosives followed by a high-pressure stream of water, sand and chemicals to crack open the deposit and free the trapped oil and gas.
Domestic production will average 8.5 million barrels a day next year, according to the EIA, the statistical arm of the Energy Department.
The surge has led domestic producers such as Harold Hamm, the CEO of Continental Resources, to push the U.S. to lift restrictions on oil exports, which were imposed by Congress after the 1973 Arab oil embargo. Crude sent to Canada, which is allowed under license, reached a record 132,000 barrels a day in April, EIA data show.
Taking into account all energy sources, including natural gas, petroleum, nuclear and renewables, the U.S. met 86 percent of its needs in the first eight months of 2013, on pace to be the highest annual rate since 1986, EIA data show.
Some new refineries would be real nice. Thanks epa and “lyin’ king”.
Thanks Obama! We couldn’t have done it without you! /sarc
I'll try to locate the post and share it in the comments.
WTI is, of course, heading back up above $100, at about $98 this moment in Singapore. Brent, more importantly, never got under $100 this year and is back up to nearly $112 this moment.
North American oil has a good chance to achieve tiny increases the next few years, mostly from Canada. US production has a good chance of resuming its normal, natural decline within those same next few years, offset by Canada.
Chaotic movement in the price of WTI oil, though.
With USA production way up and the Iran sanctions being rolled back, it looked certain that we would break under $90 a barrel a few weeks ago.
Then, last week, it suddenly looked like we might break over $110 a barrel.
I would dearly love to see even one writer get it correct.
The only explosives used are used to perforate production liner (steel casing). The 'fracking' done by those explosives is incredibly minor, especially when compared to the high pressure fluids and proppants pumped through those holes in the casing for the express purpose of forcing fractures into the rock and keeping them open (what the proppants--usually quartz sand of ceramic beads--are for).
Well, one effect it says is that oil producers want to start exporting again. So is this why we want the XL Pipeline, so big oil can start exporting again? I thought it was supposed to be used here?
Goof.....
I meant $100.
Not $110.
>> I thought it was supposed to be used here?
Who cares? Oil is a fungible commodity. Just pump more; whether sold here or abroad, it will benefit all of US.
I think the Brent price has been tracking higher than the US price...ie there’sa glut here in the midwest...and the producers would rather put the oil on a ship in Houston and ship it to a refinery in New Jersey.
So my price of gas in the midwest will go up.
But no matter what, they are going to find a way to get that oil to an international market. May as well be Keystone and not shipments straight to the Chicoms.
My thought is that it’s about the only bright spot in our economy, a major part of what is keeping us afloat.
How about that timing! Just in time to pay for health insurance!
If we deal with Canada on the pipeline, they give us a discount on what we buy. And yes, we will get to buy some of the oil and refine it also.
So, more dependable supply, and lower prices.
The US already refines more oil than it uses. We export the surplus refined products.
Roger that. The http://www.eia.gov/dnav/pet/pet_move_exp_a_EPP2_EEX_mbblpd_a.htm pages show a lot of information about the export of petroleum products. Whether or not that is good or bad information, I just don’t know. Looks like the energy industry is paying a little better than minimum wages based on the price I’m paying for gas. LOL! At least we aren’t up to european prices. Yet.
Gasoline cost a lot because it is made from expensive crude oil.
The industry does pay well, but most the dollars spent at the gasoline pump pays for the crude oil and taxes, lots of taxes.
Currently we import more crude oil than we use ourselves, refine it and export the surplus products. A lot of that is refinery “leftovers” like petroleum coke and residual oil, products that cannot be economically converted to gasoline and diesel. That keeps more jobs in the US, keeps us with some surplus refining capacity and helps the trade balance.
Morning gleeaikin. Please pardon me for not answering your question. I just wanted to acknowledge your ping and thank you for the ping.
Yup. Suppose any of the 99%’rs want to go to ND and do a little oil rig work? Maybe 1 or 2. Great time of the year in ND. I’m sure even the folks they hire to clean tools make pretty good $$$. Just a small issue of finding a place to stay. I read somewhere that dorms/trailers/pre-fabs are being provided in some places to accommodate.
demand and supply are pretty finely balanced world wide right now.
even though production in the USA Canada and Iraq is increasing—production in mexico venezuela libya and a half dozen other countries is flat to down. Even though demand for oil in the USA is flat to down—demand for oil in the rest of the world is rising pretty steadily. There’s no sign any of that will change any time soon.
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