It’s hard to imagine that just 40 years after the 1973 Arab Oil Embargo, the U.S. is on pace to become the world’s largest energy producer by 2015, and is producing more oil domestically than it imports.
Dwindling Oil Imports
Oil imports, which represented roughly 60 percent of the nation’s domestic consumption in 2005, have fallen to roughly 35 percent – about the same level prior to the energy crisis of 1973.
According to the American Petroleum Institute, crude oil imports in January fell to the lowest level witnessed in 17 years. Furthermore, the United States met roughly 86 percent of its own energy needs in the first eight months of 2013.
Meanwhile, for the first time since 2008, fuel demand in the United States grew to over 20 million barrels a day in November 2013.
Largest Production Growth in U.S. History
According to EIA data, domestic oil production averaged 7.7 million barrels per day in October, and more than 8 million barrels of oil per day during the first week of December. This marked the highest level of oil production the U.S. has witnessed in 25 years.
In 2013, the U.S. was on pace to produce an average of 7.5 million barrels of oil per day, exceeding the 6.5 million average daily output recorded in 2012.
If this occurs, the projected gain in domestic oil output would represent the largest annual increase in oil production in U.S. history.
Furthermore, U.S. oil output is expected to reach an average of 8.54 million barrels a day in 2014, according to the EIA.
Disrupting OPEC’s Control
Energy experts predict shale oil production in North America will outpace every member of OPEC except Saudi Arabia within just two years. Furthermore, Texas is expected to produce more oil than several OPEC nations.
The shale oil and gas boom in the U.S. is putting a dent in oil producing countries’ export earnings and altering the global balance of power between new and existing producers.
For years, OPEC has been able to influence global oil prices through their powerful grip on supply, but surging oil and gas production in the United States is reshaping the global market.
The United States is shifting away from being the world’s leading importer of oil, and could even become a net oil exporter. Moreover, the IEA predicts the U.S. will become “all but self-sufficient” in its energy needs by roughly 2035.
Growing Energy Demands
Despite the improving economies, increasing energy efficiency programs and amplified environmental regulations being felt across the globe, higher living standards throughout the planet are expected to keep demand for electricity and transportation fuels growing in the upcoming decades.
According to Exxon Mobil’s annual long-term energy outlook, world energy demand is expected to rise by 35 percent by 2040. Moreover, the company expects fossil fuels to remain an integral part of the global energy mix in 2040.
Today, roughly 81 percent of the world’s energy needs are met by fossil fuels. The IEA predicts that percentage will be almost as high in 2035 under current policies, when overall consumption will be much greater.
Although energy consumption is expected to decline slightly in developed nations, improving living conditions, expanding population growth in developing nations, and the need for fuel to transport goods across the globe are the primary drivers for these predictions.
Providing a More Affordable, Comfortable Lifestyle
According to the IEA’s 2012 World Energy Outlook, over 1.2 billion people across the globe have no access to electricity. Moreover, an estimated three billion still cook and heat their homes using open fires and leaky stoves.
Although improved energy efficiency and alternative energy solutions could enhance the well-being of these populations, the economics surrounding such green energy programs are no match for the reliable, low-cost fossil fuels our industry provides.
The idea is not just to power stoves and refrigerators to enhance the lives of billions. Instead, efforts should be focused on creating a robust agriculture and manufacturing industry to help improve the lives of these impoverished regions.
As developing nation’s experience higher percentage improvements in their GDP, their citizens will benefit from the improved economic outlooks and higher levels of comfort and satisfaction.
In short, people will greatly benefit from a variety of products and economic advantages that make their lives easier, more efficient, less stressful, and provide a basis for improving their surroundings.