U.S. Becomes World’s Largest Oil Producer, Passing Russia and Saudi Arabia

Oil Production

Via John Burgess at Crossroads Arabia comes this from the Oil Price Newsletter:

PIRA, a leader in worldwide energy market analysis, has recently announced that the US has finally surpassed Saudi Arabia as the largest oil producer in the world, after an explosion in the use of hydraulic fracking created the largest oil boom in nearly 40 years, only beaten by the production boom in Saudi Arabia between 1970 and 1974.

The US remains the largest consumer of crude oil and liquid fuels in the world, but the plethora of cheap oil being produced domestically, of which total output has grown by 3.2 million barrels a day since 2009, has actually allowed it to begin exporting gasoline and other distilled fuels.

The constant development of the shale industry, and the vast resources buried in shale formations, mean that “the US position as the largest oil supplier in the world looks to be secure for many years.”

PIRA said that the US total liquids production, including crude oil, condensate, natural gas liquids, and biofuels, will average about 12.1 million barrels a day this year, more than the previous top producer, Saudi Arabia.

Much of this growth is thanks, of course, to the vast increase in fracking that has occurred in recent years, as well as to the highly successful, albeit little publicized, oil boom currently going on in places like North Dakota. Additionally, there has been an increase in off shore production notwithstanding the hold on permits that followed the Deep Horizon disaster in 2011. It’s quite a change from the days, not too long ago, when we were supposedly (1) running out of oil and (2) becoming too dependent on unstable regimes for our energy supplies.

FILED UNDER: Economics and Business, Quick Takes, ,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. michael reynolds says:

    Kind of plays hell with the conservative mantra of Obama as Eco-nut.




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  2. OzarkHillbilly says:

    It’s quite a change from the days, not too long ago, when we were supposedly (1) running out of oil and (2) becoming too dependent on unstable regimes for our energy supplies.

    And all those pantywaist liberals said invading Iraq was a waste of money and lives. AMUIRKA! FECKYEAH!!!




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  3. OzarkHillbilly says:

    On the more serious side, I am not so sure this is a good thing. #1, more cheap oil means more green house gasses, #2, how many people are finding their water wells poisoned beyond use? The environmental costs of this are immeasurable. Not because they are not possible to quantify, but because they are is segment of the business/political class out there actively blocking the measuring of the costs.

    @michael reynolds: Yeah, but if he does not approve the Keystone XL pipeline it will prove that he is a radical environmentalist who hates America.




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  4. ebase22 says:

    Michael, I’m pretty sure most of this happened despite any policy moves out of Washington. Sure, he hasn’t tried to ban anything outright – fine. But a natural gas boom and the backen deposits in North Dakota being developed weren”t exactly policy choices.

    Where policy has been implimented or attempted on the margin it’s inlcuded trying to block pipelines from being built, dragging feet on new leases on public lands and attempting to remove a tax preference only on oil companies while keeping it for every other industry. To the extent that there has been a coherant energy policy it has been throwing subsidized loans to alterntive energy start ups and while increasing regulatory and tax barriers for carbon fuels.

    But the giant boom in natural gas despite public policy trying to push the other way shows that market forces and technology innovation generally have a much greater impact than trying to tinker with subsidies and handing out loans to ones friends. Any large scale move to an even greener energy source going forward is going to happen becaus its becomes economically viable to do so.




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  5. Rob in CT says:

    Remember Drill Baby Drill?

    As if Obama has done squat to prevent the fracking boom.

    And yet you can find all sorts of folks who actually believe that if we could just get a businessman in there and drill, baby, drill, why the good times would roll again.

    It’s ridiculous. Even if every single barrier to domestic production were removed, we’d see only a tiny uptick (a decade hence). And that’s without considering the downside.

    But a natural gas boom and the backen deposits in North Dakota being developed weren”t exactly policy choices.

    Of course. The argument was, however, that the Democrats were somehow blocking it and preventing a boom. They haven’t. All you’ve got is a few nudges here or there. Nothing particularly significant.




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  6. john personna says:

    @OzarkHillbilly:

    but if he does not approve the Keystone XL pipeline it will prove that he is a radical environmentalist who hates America.

    You have captured the spirit of the times.




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  7. C. Clavin says:

    A bunch of stuff your partisan affiliation prevents you from mentioning:
    * Fracking requires a very high cost of oil to be profitable…so it’s never going to lead to more inexpensive energy costs. It is not cheap oil as your industry mouthpiece article claims.
    * North Dakota, fracking central and a boom-town people like Jenos love to point to, just experienced the largest spill ever on US soil…the largest ever…which went un-reported presumably due to the Government shut-down.
    * Youngstown Ohio never had an earthquake until a couple weeks after they started fracking…then they had over a hundred in a year…including a 3.9. I’m sure that anyone who can deny climate change can deny that causing earthquakes is a stupid thing to do…but that doesn’t make it so.
    * Burning fossil fuels is leading to climate change which has a massive cost not borne by the fossil fuel producers. This amounts to a ginourmous indirect subsidy to that industry. Lot’s of you love to whine about the Government choosing winners and losers…well the fossil fuel industry is the most blatant and egregious example of that happening today. Take away the direct and indirect subsidies to the oil industry…level the playing field…and they cannot begin to compete with other more sustainable forms of energy.

    But yeah…Team America…we’re Number 1!!!




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  8. Heisenberg says:

    That America is a net energy producer does, in fact ,mean that we’re running out of oil. Shale oil has only become economically viable because the cost of easily obtainable crude oil has increased dramatically. Why? Because we’re close to being tapped out. As supply diminishes and demand increases, prices go up.




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  9. Ernieyeball says:

    @Swami Heisenberg: we’re running out of oil.

    Since you claim to predict the future, please be more specific. I want you to provide exact dates when the oil will run out.




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  10. mantis says:

    @ebase22:

    I’m pretty sure most of this happened despite any policy moves out of Washington.

    So you admit that Washington has not done anything to hinder the boom, while ignoring what they have done to encourage it? And you think this is a strong argument? What is your argument, anyway?




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  11. Pinky says:

    Boy, talk about cultural bubbles…is there anyone who didn’t know about the oil and natural gas boom?




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  12. Pinky says:

    @mantis: Yeah, ebase, score political points for the left or the right or don’t bother posting! We don’t need additional information and analysis, we need more gut punches!




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  13. legion says:

    It’s quite a change from the days, not too long ago, when we were supposedly (1) running out of oil and (2) becoming too dependent on unstable regimes for our energy supplies.

    And as Rob notes, from the parade of Republiclowns (lookin’ at you, Palin) chanting “Drill Baby Drill”. I notice this change in our status hasn’t magically fixed the economy, driven down unemployment, or made the average American any better off. Almost as though they had no idea what they were talking about at all. Think we’ll hear any navel-gazing on Fox News about this?




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  14. Ron Beasley says:

    This will be fairly short lived:
    U.S. Shale-Oil Boom May Not Last as Fracking Wells Lack Staying Power

    Chesapeake Energy’s (CHK) Serenity 1-3H well near Oklahoma City came in as a gusher in 2009, pumping more than 1,200 barrels of oil a day and kicking off a rush to drill that extended into Kansas. Now the well produces less than 100 barrels a day, state records show. Serenity’s swift decline sheds light on a dirty secret of the oil boom: It may not last. Shale wells start strong and fade fast, and producers are drilling at a breakneck pace to hold output steady. In the fields, this incessant need to drill is known as the Red Queen, after the character in Through the Looking-Glass who tells Alice, “It takes all the running you can do, to keep in the same place.”




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  15. Pinky says:

    @legion: It’s definitely providing employment and wealth from Texas to North Dakota and along the central Appalachians. It’s also keeping fuel prices from increasing.




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  16. anjin-san says:

    Well, I am off to fill up my tank for $2 a gallon. I’m pretty sure that’s what Palin promised we would have if we would only drill baby, drill.




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  17. OzarkHillbilly says:

    @Ernieyeball:

    Since you claim to predict the future, please be more specific. I want you to provide exact dates when the oil will run out.

    Ernie, do you really want to pretend that just because one can not predict when a non-renewable resource will run out, that that means we aren’t **running out of it**?

    (**running out of it** defined as there is less and less of it. If you want to include the qualifier of ‘accessible’ the amount is even smaller.)

    Some day soon (next few decades, maybe next year?) we will reach peak oil. Pretending that that day will never come does not change the inevitability of it




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  18. mantis says:

    @Pinky:

    We don’t need additional information and analysis, we need more gut punches!

    There was no additional information there. Just a bunch of misleading or false claims. You may find that valuable, but I don’t.




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  19. Ernieyeball says:
  20. Ernieyeball says:

    @OzarkHillbilly: Ernie, do you really want to pretend that just because one can not predict when a non-renewable resource will run out, that that means we aren’t **running out of it**?

    Now you are attributing to me things I have not said. Please stop doing that.

    As for Peak Oil, please do not read any of this as it was written by Ronald Bailey of Sneezin’

    http://reason.com/blog/2013/07/12/peak-oil-peters-out-neo-malthusian-cult

    http://reason.com/blog/2012/12/04/remembering-peak-oil-madness




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  21. john personna says:

    @Pinky:

    Boy, talk about cultural bubbles…is there anyone who didn’t know about the oil and natural gas boom?

    I believe that each time Doug or Jenos complained about the Keystone pipeline, we reminded them about the oil and gas boom.




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  22. john personna says:

    @Pinky:

    Energy policy is hard, in no small part because everyone wants cheap gas now, and energy security later.

    Those are rather hard to manage at the same time.




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  23. James Pearce says:

    @michael reynolds:

    Kind of plays hell with the conservative mantra of Obama as Eco-nut.

    Not to mention the whole “Vote for me…I’m good with oil” ploy.




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  24. anjin-san says:

    @ Pinky

    don’t need additional information and analysis

    Do you have any information or analysis to present? Your shtick seems to be pretty much right wing boilerplate presented with an air of smugness.

    Today’s conservatives remind me of 70’s liberals. They run on emotion and feelings, not reason and data.




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  25. rudderpedals says:

    I miss The Oil Drum.




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  26. Ernieyeball says:
  27. Rob in CT says:

    It’s definitely providing employment and wealth from Texas to North Dakota and along the central Appalachians. It’s also keeping fuel prices from increasing.

    It has certainly produced local booms in those areas, and it has helped keep fuel prices lower than they would otherwise be (this reailly shouldn’t be overstated, though. We’re talking about global commodities here). Those are good things. The point is that “drill baby drill” was not going to supercharge our economy, as many fools claimed. It’s a small plus. I’ll take small plusses, don’t get me wrong, but a change in federal energy policy was *never* the key to repairing our economy.

    From an environmental perspective, I’m ambivalent about fracking. I will worry a bit about the methane leakage issue. I will worry a little bit about groundwater contamination (either from leakage directly from the wells or, more likely, from surface wastewater ponds)*. I’ll worry a bit about the sheer amount of water required in the process. Natural Gas > Coal from a GHG standpoint, so that’s good. But at the same time, Nat. Gas still pumps CO2 into the atmosphere. In the best case scenario this is a short-term bridge to help get us off coal. We’ll see.

    * – this is a thing for me, since my job involves environmental insurance claims. Groundwater contamination is something I think about day in day out. Therefore, I’m… let’s say attuned to the issue.




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  28. Ernieyeball says:

    @Rob in CT: From an environmental perspective, I’m ambivalent about fracking.

    Maybe you better duck and cover…




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  29. rjs says:

    shouldnt be much of surprise to anyone who’s followed world oil production for any length of time; the Saudis, Russia and the US have been the world’s leading producers for at least 40 years

    (compare historical production for the US, for Russia, and for Saudi Arabia)




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  30. Pinky says:

    @Rob in CT: Yeah, we’re talking global commodities here, but that little blue line in the graph is a lot bigger than it used to be, and that has a global impact. And don’t discount the little plusses. Economic growth is rarely about a big plus – think gold from the New World, or the demand for weaponry in the early 1940’s. Especially as an economy advances, it’s a large number of little plusses that contribute to economic growth. I’m thinking of computers in the 1980’s – a growth market, certainly, but far more important in their ripple effects. An improvement in energy costs can have a similar effect. Millions of potential ideas for wealth creation become a little more attainable.




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  31. C. Clavin says:

    Economic growth is rarely about a big plus – think gold from the New World, or the demand for weaponry in the early 1940′s. Especially as an economy advances, it’s a large number of little plusses that contribute to economic growth.

    Of course then there is the Industrial Revolution which led to the Gilded Age which led to the Great Depression.
    But don’t bother the Brain with that sort of thing, Pinky.




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  32. stonetools says:

    The problem with this article is that it feeds into a narrative of “technology and the free market wins again over the peak, oil world of scarcity pessimists”-a narrative beloved by libertarians like Doug. Here is commentary that pours cold water on that narrative:

    So what happened was NOT that we switched to something better than oil. We switched to something worse than conventional oil: unconventional oil, which is more expensive to extract and/or to refine into usable products. This has left us permanently poorer than we would be if conventional oil hadn’t hit global supply constraints. Filling up your gas tank is twice as expensive now, in real terms, as it was two decades ago. And that looks unlikely to change. In the wider economy, increased transportation fuel costs may be a main driver of the Great Stagnation, which manifests most clearly in the stagnation of transportation technology since the 1970s.

    Basically, what happened is this: Scarcity attacked humanity, and Human Ingenuity battled back. Through heroic efforts, doomsday was averted. But Ingenuity did not win a smashing victory, as it did when we switched from wood to coal, or from whale oil to oil. Instead, humanity was forced into a fighting retreat, with Ingenuity executing a brilliant rear-guard action and forcing Scarcity to call off its pursuit…for now. But humanity has lost ground.

    And Scarcity may not wait very long before launching another attack. Future increases in shale oil production (including tight oil and oil shale) is likely to be a lot more expensive than the low-hanging fruit we have picked thus far. Coupled with continued rises in developing-country oil demand and continued decline in conventional oil fields, this could cause another rise in oil prices

    RTWT. And that doesn’t even go into the environmental costs(fracking, global warming, etc.). The increase in US oil production is good, but its not unalloyed good, IMO.




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  33. Pinky says:

    @C. Clavin: I’m not sure what you mean. I wasn’t trying to list all possible examples. Also, it’s a little broad to say that the Industrial Revolution led to the Great Depression.




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  34. Davebo says:

    Much of this growth is thanks, of course, to the vast increase in fracking that has occurred in recent years, as well as to the highly successful, albeit little publicized, oil boom currently going on in places like North Dakota.

    No Doug, fracking has little to do with it and those in the industry will tell you the “frack boom” is a pipe dream perpetrated by wildly optimistic production estimates over the life of the wells.

    The oil patch is booming no doubt especially on the OCS in the gulf. Ultra Deepwater is going crazy with Korea pumping out drill ships like a lego factory. But take the complete output of West Africa and not just one country there and combined you’ll see that’s where most of the action is these days. Nigeria, Angola even Chad.

    And Saudi production estimates are no more accurate than tracking projections.




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  35. Davebo says:

    @john personna:

    There is no such thing as energy security. If you’ll take a look at America’s state owned oil company you’ll see that we don’t have one.

    At least 80% of the oil coming off Alaska’s north slope goes to Asia. It doesn’t matter where to oil is produced other than transportation costs.




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  36. Tyrell says:

    @OzarkHillbilly: There’s no guarantee that gas prices will decline. Gas prices depend on a lot of factors.
    1973: the time of the gas “shortage” in the US: long lines, rationing, closed stations, higher prices. The country almost came to a standstill. The biggest fraud ever perpetrated on the American people.




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  37. An Interested Party says:

    Kind of plays hell with the conservative mantra of Obama as Eco-nut.

    Reality itself plays hell with just about every conservative mantra of the President…




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  38. bill says:

    @michael reynolds: he really is ineffective then? i doubt if the dems will be chest bumping over this happening with their guy in the white house- but maybe they’ll find a way to take credit for it?




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  39. Jenos Idanian #13 says:

    @michael reynolds: Kind of plays hell with the conservative mantra of Obama as Eco-nut.

    Apparently you have conveniently forgotten the Obama administration’s attempt to permanently ban offshore oil drilling after the BP oil spill. It was appropriate to impose one temporarily to see if any other potential Deepwater Horizons were brewing, but in the spirit of “never let a crisis go to waste,” they tried to make it permanent. And even after a judge said they couldn’t, folks had to go to court a second time to tell the Obama administration that no, they can’t do that and yes, the court really meant it.

    As noted, the boom has happened despite Obama, and continued despite his efforts to choke it. And he’s also trying to carry out his pledge to bankrupt the coal industry.




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  40. anjin-san says:

    So Obama does not want to let oil companies cause mass destruction in the ocean (something our species kind of needs to survive)

    Bastard!

    Say Jenos, enjoying those low, low gas prices you were promised if we would only drill baby, drill? What kind of mileage does the MirthMobile get anyway?




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  41. Rick DeMent says:

    Peak oil was never about “running out of oil” it was about running out of cheap oil and that has come to pass. The peak oilers were dead nuts, balls on, right. 100 dollars a barrel is the new 80 dollars a barrel, which was the new 40 dollars a barrel, which was the new 25 dollars a barrel.

    The 80’s economic boom was way less about Reagan tax cuts then it was about a complete collapse in the oil market. The current recession has a lot to due with 100 per barrel oil as the economy struggles to adjust to 660 million in increased cost of energy per day. Imagine the GOP freak out at who the economy would go into full tilt melt down if Obama proposed additional taxes of 234 billion per year. Yet that;s about (giver or take) what the higher cost of energy has added to our ability to keep the machine running.




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  42. john personna says:

    @Rick DeMent:

    Peak oil was never about “running out of oil” it was about running out of cheap oil and that has come to pass. The peak oilers were dead nuts, balls on, right. 100 dollars a barrel is the new 80 dollars a barrel, which was the new 40 dollars a barrel, which was the new 25 dollars a barrel.

    Peak Oil had a sizable contingent of “doomers”. They shaped the community, and not just a little. They were there at every Peak Oil conference, talking about how to deal with the approaching Apocalypse.

    Now, if you know Peak Oil, you also know that Daniel Yergin and his “rolling plateau” was the enemy, and stood against every warning of imminent disaster.

    It turns out Yergin was right.

    So … as much as some commenters at The Oil Drum might have been right in parts, the movement, as an apocalypse cult, is dead.




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  43. john personna says:

    See also the works, fictional an non, of James Howard Kunstler, and say World Made by Hand:

    Kunstler explores themes of local and sustainable living. In interviews, Kunstler describes his imaginary world as an “enlightened nineteenth century.” The overarching premise, however, is a stark look into the future at the dire consequences of the poor American system of urban planning, and the complete lack of workability the contemporary suburban arrangement possesses without the continuous input of inexpensive and abundant energy to maintain its infrastructure. This has been the core theme of Kunstler’s nonfiction works, including the Geography of Nowhere (1993) and The Long Emergency.




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  44. john personna says:

    Or recall that some Peak Oil staff were very enamored of The Archdruid Report and John Michael Greer’s idea of Catabolic Collapse.

    That contingent, not insignificant, were “into” Peak Oil because it was going to bring the death of western society that they’d been so long predicting.




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  45. bill says:

    @Ron Beasley: true, every boom winds up a bust- now if we could store and utilize the nat gas……that’s something!




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  46. john personna says:

    @bill:

    Here in the socialist paradise of Orange County California, our buses and trash trucks run on natural gas. Much better than diesel, both in health and reduced stink.

    Cheaper too.




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  47. anjin-san says:

    @ bill

    now if we could store and utilize the nat gas……that’s something!

    Natural gas is the second most widely used energy source in California.

    http://energyalmanac.ca.gov/naturalgas/




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  48. Matt says:

    Hell there’s natural gas powered buses here deep in the heart of Texas. Not sure on the actually percentage but there’s a decent amount of them.




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