Al Bhatti
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July 06, 2014
Saudi is no longer world’s largest producer of oil, nor is Russia
American oil production has expanded by 70 per cent
America is now the world’s leading producer of oil and gas, overtaking Russia and Saudi Arabia in the past six months, a new report reveals.
According to the Global Energy Weekly published by the Bank of America-Merrill Lynch, oil & gas investments in the US are at the highest levels ever, and domestic US natural gas prices have stayed at a fraction of international cartelised prices on the back of the shale boom.
Even then, benefits to the North American industrial sector have been mixed, with some areas like light manufacturing seeing only modest gains. On a state-by-state analysis, the BofA-ML report observes a strong relationship between US employment gains and oil production growth during the last 5 years.
It also notes that wage gains have been strongest in states with large oil output gains during the same period.
The report maintains that the American shale revolution has had a transformational effect on the US and global economies in recent years. American oil production has expanded by 70 per cent since bottoming out in 2008, as has natural gas liquids (NGLs) output, while natural gas output has grown by 40 per cent since shale gas drilling picked up in 2005.
As a result, states the report, America has overtaken Russia and Saudi Arabia to become the largest producer of crude and other liquids in the past six months. Similarly, the US outpaced Russia as the world’s largest producer of natural gas in 2010.
What this means is that the US is no longer as dependant on external sources of oil as it once used to be. “With supply vastly outpacing demand growth, seaborne liquid natural gas imports (LNG) into the US have collapsed and crude oil imports have mirrored the vast increases in domestic production. Consequently, America has moved from being heavily dependent on foreign fuels heading into the financial crisis in 2008 to spending less than 1.5 per cent of national income buying foreign oil and gas,” the report highlights.
“In contrast, Japan, Europe or China have all struggled to cope with high international energy prices, experiencing a possibly unsustainable increase in foreign energy dependency,” it adds.
The report sees low energy prices as playing a major role in a sustained economic recovery in the US. “Not surprisingly, low energy prices have become a tremendous edge for North America. For example, the energy input cost into manufacturing has remained steady during the last five years in America, but it has increased massively relative to the US across a broad range of developed and emerging economies alike, such as Japan, Italy, France, and Germany,” it illustrates.
“This competitive edge has proven to be particularly marked in the natural gas market, where transportation, storage, and price arbitrage is difficult across regions. So while US prices have remained anchored at around $4/MMBtu, Europe has faced average prices of $12/MMBtu and some Asian buyers have experienced prices north of $16/MMBtu,” the report demonstrates.
Low input costs have been a driving force behind employment and wage gains. “The oil and gas investment drive has also boosted service sector jobs. After all, most jobs waiting tables or constructing homes in North Dakota, America's fastest growing state last year, can be traced back to the shale oil boom in the state’s Bakken reservoir,” it says.
“In our state-by-state analysis, we observe a strong relationship between employment gains and oil production growth during the last 5 years. Similarly, wage gains have been strongest in states with large oil output gains,” the report states.
Saudi is no longer world’s largest producer of oil, nor is Russia - Emirates 24/7
Saudi is no longer world’s largest producer of oil, nor is Russia
American oil production has expanded by 70 per cent
America is now the world’s leading producer of oil and gas, overtaking Russia and Saudi Arabia in the past six months, a new report reveals.
According to the Global Energy Weekly published by the Bank of America-Merrill Lynch, oil & gas investments in the US are at the highest levels ever, and domestic US natural gas prices have stayed at a fraction of international cartelised prices on the back of the shale boom.
Even then, benefits to the North American industrial sector have been mixed, with some areas like light manufacturing seeing only modest gains. On a state-by-state analysis, the BofA-ML report observes a strong relationship between US employment gains and oil production growth during the last 5 years.
It also notes that wage gains have been strongest in states with large oil output gains during the same period.
The report maintains that the American shale revolution has had a transformational effect on the US and global economies in recent years. American oil production has expanded by 70 per cent since bottoming out in 2008, as has natural gas liquids (NGLs) output, while natural gas output has grown by 40 per cent since shale gas drilling picked up in 2005.
As a result, states the report, America has overtaken Russia and Saudi Arabia to become the largest producer of crude and other liquids in the past six months. Similarly, the US outpaced Russia as the world’s largest producer of natural gas in 2010.
What this means is that the US is no longer as dependant on external sources of oil as it once used to be. “With supply vastly outpacing demand growth, seaborne liquid natural gas imports (LNG) into the US have collapsed and crude oil imports have mirrored the vast increases in domestic production. Consequently, America has moved from being heavily dependent on foreign fuels heading into the financial crisis in 2008 to spending less than 1.5 per cent of national income buying foreign oil and gas,” the report highlights.
“In contrast, Japan, Europe or China have all struggled to cope with high international energy prices, experiencing a possibly unsustainable increase in foreign energy dependency,” it adds.
The report sees low energy prices as playing a major role in a sustained economic recovery in the US. “Not surprisingly, low energy prices have become a tremendous edge for North America. For example, the energy input cost into manufacturing has remained steady during the last five years in America, but it has increased massively relative to the US across a broad range of developed and emerging economies alike, such as Japan, Italy, France, and Germany,” it illustrates.
“This competitive edge has proven to be particularly marked in the natural gas market, where transportation, storage, and price arbitrage is difficult across regions. So while US prices have remained anchored at around $4/MMBtu, Europe has faced average prices of $12/MMBtu and some Asian buyers have experienced prices north of $16/MMBtu,” the report demonstrates.
Low input costs have been a driving force behind employment and wage gains. “The oil and gas investment drive has also boosted service sector jobs. After all, most jobs waiting tables or constructing homes in North Dakota, America's fastest growing state last year, can be traced back to the shale oil boom in the state’s Bakken reservoir,” it says.
“In our state-by-state analysis, we observe a strong relationship between employment gains and oil production growth during the last 5 years. Similarly, wage gains have been strongest in states with large oil output gains,” the report states.
Saudi is no longer world’s largest producer of oil, nor is Russia - Emirates 24/7
