US Now Produces More Oil and Gas Than Russia and Saudi Arabia

Hugh Pickens DOT Com writes "Claudia Assis writes that the US will end 2013 as the world's largest producer of petroleum and natural gas, surpassing Russia and Saudi Arabia with the Energy Information Administration estimating that combined US petroleum and gas production this year will hit 50 quadrillion British thermal units, or 25 million barrels of oil equivalent a day, outproducing Russia by 5 quadrillion Btu. Most of the new oil was coming from the western states. Oil production in Texas has more than doubled since 2010. In North Dakota, it has tripled, and Oklahoma, New Mexico, Wyoming, Colorado and Utah have also shown steep rises in oil production over the same three years, according to EIA data. Tapping shale rock for oil and gas has fueled the US boom, while Russia has struggled to keep up its output. 'This is a remarkable turn of events,' says Adam Sieminski, head of the US Energy Information Administration. 'This is a new era of thinking about market conditions, and opportunities created by these conditions, that you wouldn't in a million years have dreamed about.' But even optimists in the US concede that the shale boom's longevity could hinge on commodity prices, government regulations and public support, the last of which could be problematic. A poll last month by the Pew Research Center for the People and the Press found that opposition to increased use of fracking rose to 49% from 38% in the previous six months. 'It is not a supply question anymore,' says Ken Hersh. 'It is about demand and the cost of production. Those are the two drivers."'"

Re:Well, there we have it

[afidel]

I just paid $3.17 last night, just 5% over your $3 target so I'd say we're getting close. What I don't get is why LSC is still at $109 a barrel, with US production up this much and global demand still slightly below 2007 levels we should be under $80, probably around $75. The only thing I can think of is inflation and speculation, and no other metric shows a 25% inflationary factor for the dollar so it has to be down to speculation and manipulation by the financial players, can we please limit their interaction with the commodities market please so the rest of the broader market can reap some of the benefits of this cheaper fuel.

Re:Importation

[Grey Geezer]

You may be forgetting that (we are told that) oil price is set in the global marketplace. "American" oil does not stay in America. This "fact" is always used to explain price increases. Increased "American" oil production will only effect oil prices in the context of global supply. "Drill baby Drill would have only marginal downward presure on prices. So it follows that "Hoard baby Hoard" would also have only marginal upward presure on oil prices. All this talk about increased American production being a boon to Americal consumers is mostly nonsense. Same applies to the argument that the Keystone pipeline would be a boon to consumers here in America. These are con jobs designed to make a very small handful of already very wealthty Americans even more wealthty. Most Americans will/would see very small price changes at the pump.

Re:Importation

[ColdWetDog]

Not necessarily - depends on the reason for the stockpile. The Strategic Petroleum Reserve is designed to alleviate short term fluctuations such as in an embargo or war. It's oil you can get out by flipping a switch. Leaving it in the ground would be a longer term stockpile. However, it's not like you can just punch a hole in the ground and set up a tap and collect the dollars. Wells cost a lot of money so sinking them and leaving them to produce at some unknown time in the future is not an economically viable proposition unless you plan on nationalizing the oil companies.

The economics of oil production are complex and odd. Public companies pretty much have to drill constantly as their stock prices depend mostly on proven reserves rather than actual production. And you don't know what you have until you've got it.

Further, there are tragedy of the the commons issues - if you don't drill out the reservoir you've already spent time and money developing, that clown on your right just might beat you to it.

So 'efficiency' is a poor, nebulous metric. Given the private ownership of oil companies in this country a long term holding strategy isn't going to happen. It's not rational and it's not in the societies best long term interest, but it's what we've got.