U.S. on pace to be world’s top oil pro­ducer

Yuma Sun - - OPINION -

The U.S. is on pace to leapfrog both Saudi Ara­bia and Rus­sia and re­claim the ti­tle of the world’s big­gest oil pro­ducer for the first time since the 1970s.

The lat­est fore­cast from the U.S. En­ergy In­for­ma­tion Ad­min­is­tra­tion pre­dicts that U.S. out­put will grow next year to 11.8 mil­lion bar­rels a day.

“If the fore­cast holds, that would make the U.S. the world’s lead­ing pro­ducer of crude,” says Linda Ca­puano, who heads the agency, a part of the En­ergy De­part­ment.

Saudi Ara­bia and Rus­sia could up­end that fore­cast by boost­ing their own pro­duc­tion. In the face of ris­ing global oil prices, mem­bers of the OPEC car­tel and a few non-mem­bers in­clud­ing Rus­sia agreed last month to ease pro­duc­tion caps that had con­trib­uted to the run-up in prices.

Pres­i­dent Don­ald Trump has urged the Saudis to pump more oil to con­tain ris­ing prices. He tweeted on June 30 that King Sal­man agreed to boost pro­duc­tion “maybe up to 2,000,000 bar­rels.” The White House later clar­i­fied that the king said his coun­try has a re­serve of 2 mil­lion bar­rels a day that could be tapped “if and when nec­es­sary.”

The idea that the U.S. could ever again be­come the world’s top oil pro­ducer once seemed pre­pos­ter­ous.

“A decade ago the only ques­tion was how fast would U.S. pro­duc­tion go down,” said Daniel Yer­gin, au­thor of sev­eral books about the oil in­dus­try in­clud­ing a his­tory, “The Prize.” The re­bound of U.S. out­put “has made a huge dif­fer­ence. If this had not hap­pened, we would have had a se­vere shortage of world oil,” he said.

The United States led the world in oil pro­duc­tion for much of the 20th cen­tury, but the Soviet Union sur­passed Amer­ica in 1974, and Saudi Ara­bia did the same in 1976, ac­cord­ing to En­ergy De­part­ment fig­ures.

By the end of the 1970s the USSR was pro­duc­ing one-third more oil than the U.S.; by the end of the 1980s, Soviet out­put was nearly dou­ble that of the U.S.

The last decade or so has seen a revo­lu­tion in Amer­i­can en­ergy pro­duc­tion, how­ever, led by tech­niques in­clud­ing hy­draulic frac­tur­ing, or frack­ing, and hor­i­zon­tal drilling.

Those in­no­va­tions — and the breakup of the Soviet Union — helped the U.S. nar­row the gap. Last year, Rus­sia pro­duced more than 10.3 mil­lion bar­rels a day, Saudi Ara­bia pumped just un­der 10 mil­lion, and the U.S. came in un­der 9.4 mil­lion bar­rels a day, ac­cord­ing to U.S. govern­ment fig­ures.

The U.S. has been pump­ing more than 10 mil­lion bar­rels a day on av­er­age since Fe­bru­ary, and prob­a­bly pumped about 10.9 mil­lion bar­rels a day in June, up from 10.8 mil­lion in May, the en­ergy agency said Tues­day in its lat­est short-term out­look.

Ca­puano’s agency fore­cast that U.S. crude out­put will av­er­age 10.8 mil­lion bar­rels a day for all of 2018 and 11.8 mil­lion bar­rels a day in 2019. The cur­rent U.S. record for a full year is 9.6 mil­lion bar­rels a day in 1970.

The trend of ris­ing U.S. out­put prompted Fatih Birol, ex­ec­u­tive di­rec­tor of the In­ter­na­tional En­ergy Agency, to pre­dict this spring that the U.S. would leapfrog Rus­sia and be­come the world’s largest pro­ducer by next year — if not sooner.

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