If analysts’ predictions hold true, the U.S. is positioned to become the worldwide leader in oil and gas production within the year. With global energy, dominance comes enhanced domestic security, enhanced global security and stable pump prices - to name just a few of the benefits.
Energy Department forecasts see U.S. production hitting 10.3 million barrels per day (mb/d) in 2018, the highest annual average production in U.S. history, and investors have their sights set on this new frontier.
U.S. Bound for Record Oil Production
In tried and true form, U.S. energy companies and investors responded to global market turbulence with advances in exploration and drilling technology. These advances allowed us to tap vast supplies of previously untouchable shale resources, doubling our oil and gas production in a mere 10 years.
Horizontals and hydraulics combined with digital enhancements have enabled American oil and gas companies to cut costs while simultaneously boosting production. In 2017, as prices rose to above $60 per barrel, the national rig count increased by 33% - taking domestic oil production to around 9.3 mb/d on average.
The International Energy Agency (IEA) predicts the United States will overtake Saudi Arabia as the global oil leader, estimating average production levels of 10.3 mb/d this year, the highest annual average production in U.S. history (previous record set in 1970 at 9.6 mb/d). IEA further estimates that U.S. production will increase to an average 10.8 mb/d in 2019, surpassing 11 mb/d in November 2019.
U.S. Energy Independence Enhances Domestic Security
Enhanced U.S. production is quickly eliminating the need to import supplies from Africa and the Middle East. American imports from OPEC countries fell 20% in 2017. As our nation enters energy independence and global energy dominance, we gain domestic security. Disagreements between Saudi Arabia and Iran no longer force the U.S. to take military action. Other nations depend on our continued success to thrive.
American Oil and Gas Exports Enhance Global Energy Security
Not only does increased production enhance security on our own turf, but it also augments global energy security. Rapidly growing U.S export contributes generously to global demand. Since lifting the 40-year export ban three years ago, U.S. oil export has increased to around two mb/d. U.S. natural gas export surpassed Russia last year.
We are providing resources for ever-growing demand in Indian and Chinese markets, and could soon garner the ability to sanction Venezuelan or Iranian producers without a massive impact on the global economy.
U.S. Energy Dominance Buffers Crude and Gasoline Prices
The U.S. Department of Energy predicts that the price of Brent crude will hover around $60 per barrel on average this year and $61 per barrel next year. American energy dominance means crude prices no longer skyrocket with global unrest and unpredictable disasters. Instability in Nigeria, Venezuela, and Libya no longer threatens supplies, significantly lessening pressure on pump prices.
The U.S. now sets the max price. Saudi Arabia and allies have limited production and export over the past three years in an attempt to thwart price instability, and OPEC leaders are now considering extending production cuts into 2019.
Dramatic production increases, higher oil prices, funding improvements and an increased availability of capital are starting to drive the U.S. dollar. As the world’s fastest-growing oil and gas producer, continued industry support from U.S. policymakers and innovative investment avenues can mean big things to come for the U.S. as a global energy leader.