U.S. Oil Production - Commodities Market Overview

Jan 27, 2013 | by Franck Cushner, CFP®

The U.S. expanded its oil production in 2012 by the most since the first commercial well was drilled in 1859.

 

Domestic output grew by a record 766,000 barrels a day to the highest level in 15 years, as reported by the U.S. Energy Department Administration, putting the nation on pace to surpass Saudi Arabia as the world’s largest producer by 2020.

 

Net petroleum imports have fallen by more than 38 percent since the 2005 peak and now account for 41 percent of demand, down from 60 percent seven years ago, moving the U.S. closer to energy independence than it has been in decades.

America’s latest oil boom has been spurred by new technology that has made drilling faster, cheaper, and better at extracting oil from rock formations, called fracking.

 

The U.S. produced an average of 6.41 million barrels a day in 2012, a 14 percent increase from 2011, according to a report from the Department of Energy. The Paris-based International Energy Agency said that the U.S. is on track to become the top oil producer in about eight years.

 

As the nation’s stockpiles increased by a record 13 percent in 2012, U.S. refiners are paying less for crude than most of the rest of the world. This dynamic has given Gulf Coast refiners an advantage over competitors and has helped the U.S. become a net fuel exporter this past year for the first time since 1949,  and surpassing Russia as the world’s largest. Surprisingly enough, Venezuela quintupled its imports from the U.S. this past year to a record 196,000 barrels a day in September, according to Energy Department data. However, an eventual hindrance to U.S. oil exports might be rules imposed by Congress flowing the 1973 Arab oil embargo, which places requirements on national oil reserves.

 

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