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The Department of Energy’s Energy Information Administration (EIA) released updated data today in its “Monthly Energy Review,” here are several interesting highlights from the report:
1. The top chart above shows: a) US crude oil output (blue line) and b) US net oil imports (red line), both annually from 1990 to 2012. Based on estimates for the last few months of 2012, the US produced crude oil at an average rate of 6.426 million barrels per day last year, which is the highest level of domestic crude oil output since 1997, fifteen years ago. As previously reported on CD, the 2012 increase in US oil output was the largest annual increase in the history of the domestic oil industry back to the Civil War.
By December of last year, US oil output was approaching 7 million barrels per day (bpd), and has since surpassed the 7 million bpd level this month. Therefore, we can expect further gains in US oil output this year. The EIA is currently forecasting a 14% increase in US oil output in 2013 (following last year’s 13.7% gain), with an additional gain of 8.2% next year in 2014. That would bring domestic oil production in 2014 to an average of 8 million bpd for the year, and possibly to 8.5 million bpd by year-end. In that case, we would have a phenomenal turnaround in US oil output thanks to the recent breakthroughs in drilling technologies; in just a six-year period from 2008-2014, we could see increases in US oil output that will completely reverse a 22-year, and 41% decline in US oil output that started in the mid-1980s and ended when hydraulic fracturing revolutionized domestic oil output starting in about 2008.
As a direct result of the US shale oil boom bringing domestic production to a 15-year high last year, net oil imports fell to 40.6% last year, the lowest level in 21 years, going back to 1991 when net oil imports were 39.6%. As recently as 2005, the US relied on foreign sources for more than 60% of its oil, and produced less than 40% domestically. In just 7 years, those percentages have been completely reversed, and the US now produces almost 60% of the oil required to fuel the US economy, and relied on foreign sources last year for less than 41% of the oil consumed.
In another impressive turnaround, it took 14 years to go from net oil imports of 40% in 1991 to 60% in 2005, and then only five years to reverse that trend and go from 60% in 2005 back to 40% in 2012 – again because of hydraulic fracturing and shale oil.
2. Thanks to the energy revolution that has unleashed oceans of gas and oil trapped in shale rock, the US will produce domestically 83.4% of the total energy consumed in 2012, based on EIA data through October (see bottom chart). That brings America’s energy self-sufficiency to the highest level since 1990, when the US last produced that much of its own energy. Following a 14-year period from 1991 to 2005 when America’s self-sufficiency declined from 83% to 70%, it took only 7 years to reverse that decline, bringing America’s energy produced back to more than 83% of the energy its consumed last year.
Bottom Line: Today’s energy report from the EIA provides additional evidence of America’s booming energy revolution: US oil production reached a 15-year high in 2012 with a yearly increase that was the largest in history, net oil imports fell to a 21-year low, and US energy self-sufficiency rose to a 22-year high last year. Welcome to America’s shale revolution, it’s one of the best reasons to be optimistic about America’s energy and economic futures.
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