The US is set to become the world’s leading oil-producing nation, overtaking Saudi Arabia and Russia for the first time since 1975. That’s according to a new report from the Norwegian independent oil and gas consultancy Rystad Energy.
The company released a statement in late December announcing US crude oil production capacity had hit an average of 10 million barrels per day by the end of 2017. On Wednesday, they predicted production would continue to increase, growing a further 10 percent over the course of the year.
This would take production in the US up to a staggering 11 million barrels per day. To put this into perspective, a decade ago the US was producing less than half that amount – 5.1 million barrels per day, to be precise.
So, what can we credit (or blame, depending on your politics) for this increase? The biggest factor here is shale oil.
“The market has completely changed due to the US shale machine,” said Nadia Martin Wiggen, Rystad’s vice president of markets, reports CNN Money.
A move towards shale oil and fracking (the hugely controversial process involved in the production of shale oil) has meant that US reliance on foreign oil has dropped substantially. Basically, oil imports are down while oil exports are up.
Another point to consider is the role of the Trump administration, which has been notoriously pro-oil and anti-EPA. The US has been ramping up its fossil fuel production while other oil-producing nations are winding down theirs, despite the fact that there are more jobs in solar energy than oil, gas, and coal combined.
There have been some doubts over these forecasts, however. Vice chairman of Blackstone’s (BX) private wealth solutions group Byron Wien, who has been casting new year’s predictions since 1986, has said fracking production in 2018 will be “disappointing”.
Meanwhile, the US Energy Information Agency (EIA), which, like Rystad Energy, envisions US oil production will reach a “record high” in 2018, admits that the demand for oil is unlikely to grow alongside a growth in oil production. It might be just as well because this increase in oil production could be very short-lived. In 2017, oil discoveries were at their lowest since the ’40s.