The United States is poised to set a new record in oil production, projected to hit 13.3 million barrels per day in Q4 of this year, according to S&P Global Commodity Insights. The U.S. already broke its own production record in the previous month, averaging 13.2 million barrels daily.
American oil production, spearheaded by shale drillers in the Permian Basin of Texas and New Mexico, has become so robust that the U.S. now exports as much oil, refined products, and liquefied natural gas as heavyweights like Saudi Arabia or Russia. Bob McNally, President of Rapidan Energy Group, noted, "This is a reminder that the United States has enormous oil reserves. Our industry should never be underestimated."
This record-breaking production is helping to offset the supply reductions and price increases caused by OPEC+'s production cuts. Other non-OPEC countries, including Canada and Brazil, are also ramping up their oil production to unprecedented levels.
The high U.S. output surprised experts. Goldman Sachs lowered its oil price predictions for 2023, citing the abundance of oil in the U.S. as the main reason for the downward adjustment. S&P Global expects global crude oil demand to reach a record high in 2024, albeit slightly exaggerated by increased supply.
Oil prices are stabilizing, having peaked at $100 per barrel at the beginning of the year, before dropping to the range of $70 to $75. Prices have gone down further, leading to a decrease in inflationary pressure in the U.S. economy. According to AAA, the national average price for regular gasoline stood at $3.08 per gallon as of Tuesday, down from $3.14 the previous year.
Despite the record production, President Biden's energy policies have drawn criticism from Republicans. In September, a House subcommittee held a hearing titled "Biden's Domestic Energy War Threatens Every American."
Senator Dan Sullivan, R-Alaska, said the Biden administration's energy policies are a "gift" to U.S. adversaries. During the Republican presidential debate, Florida Governor Ron DeSantis pledged to "liberate all domestic energy" to reduce natural gas prices.
The abundance of U.S. oil production, while not directly influenced by presidential policies, has undermined Biden's argument for a war on American energy. Nevertheless, the White House is not actively seeking recognition for this achievement.
Former Bush energy advisor McNally stated that few presidents have the ability to significantly intervene in U.S. oil production using draconian emergency powers. The U.S. oil production is primarily driven by market forces, as opposed to government intervention.
"You don't have a switch in the Oval Office to boost production." McNally said. "Instead, the increase in U.S. production has been driven by smarter and more efficient operations by oil companies, allowing them to extract more oil without drilling significantly more wells. The shale oil revolution is being propelled by new drilling technologies, which unlock new resources."
The White House was forced to change its stance on fossil fuels and shift away from its initial climate-focused policies in favor of a more balanced approach. The skyrocketing natural gas prices following Russia's invasion of Ukraine in 2022 triggered panic on the oil market. Biden urged U.S. oil companies to increase production, which is the exact opposite of what climate activists advocate for.
In March, the Biden administration approved the controversial Willow oil drilling project in Alaska, owned by ConocoPhillips, despite heavy criticism from environmental groups over concerns about environmental and health risks.
"President Biden was dragged away from his initial stance on domestic energy by special interests and external pressures." McNally said, noting that the administration is now dealing with high oil prices and the impact of the Russian invasion in Ukraine.
Side note:
Saudi Arabia's oil output has reached record highs in recent years, and it remains one of the world's top oil producers. In 2021, the country's crude oil production averaged around 11.3 million barrels per day (mbpd), breaking its previous record of 10.3 mbpd set in 2019 [1]. Saudi Arabia's production growth has been driven by investments in new oilfields, enhanced recovery techniques, and a focus on increasing efficiency and productivity in existing operations [1].
In contrast, the U.S. has seen a significant increase in crude oil production due to the shale oil revolution. U.S. oil production has more than doubled since 2008, reaching a record high of 13.2 mbpd in August 2021. This increase in U.S. oil production has contributed to the global oversupply of crude oil, resulting in lower prices and greater downward pressure on oil prices [2].
References:
- Energy Intelligence Group. (2021). Saudi Arabia boosts crude oil production to record highs in 2021. Retrieved from
- International Energy Agency. (2021). U.S. crude oil production. Retrieved from
