When the International Energy Agency reported nearly a year ago that the United States would become the world’s largest producer of crude oil within 10 years and be completely energy independent by 2035, we all rejoiced, but it was one of those ephemeral pieces of good news because many of us assumed it would be years before we actually would see the benefit of the increased production.
That has not been the case because U.S. energy production fueled by the shale gas and oil revolution is here, and thank goodness because other supply sources have been less reliable.
“The U.S. is now producing the most oil [it has] in 22 years,” says Phil Flynn, senior market analyst at Price Futures Group. “It is changing the face of the global energy market. Look at the situation in Syria; if the U.S. was not producing the amount of oil [it is], we would have seen a much more significant spike in the price of oil. Instead of going up $10 a barrel, it would have gone up $30.” (See “Ramping up production,” below)
Protec Energy Partners co-founder Todd Garner adds, “From a U.S. standpoint, it is obvious that we are pretty well supplied, and we are getting ready to go in[to] a refinery turnaround period. Stocks have drawn down pretty hard in [August. Early September was] the first week that we have had a build in crude oil stocks and most of that came from a build in the Gulf [of Mexico]” (see Trader Profile, page 46). Garner thought crude was headed lower based on fundamentals when the Syrian situation and reduced production in Libya pushed it back up.
The United States also has been a reliable replacement source for gasoline and diesel during recent global supply disruptions. “We now export more refined products than we import in the United States,” says Dominick Chirichella, founding partner at Energy Management Institute. “It is a big change.”