As the demand for imported oil continues to drop, new technology and methods are enabling oil drillers in the US to extract more oil from its own territories. In 2006, the US imported 60% of its oil needs, but by 2011, that had dropped to just 41%.
The disparity between supply and demand has been increasing fairly steadily due to a couple of factors. The failing economy, since 2007, has made people more conscious of how much they’re spending, including manufacturing. Petroleum derivatives, including plastics, synthetic rubber, and other chemicals, have all suffered for lack of demand.
Additionally, significant advancements have been made in fuel economy, leading to further declines in transportation costs and fuel consumption. The new Corporate Average Fuel Economy [CAFE] regulations will drive the demand for oil down even further as the end of the decade draws closer.
Right now, the US oil production averages 10.9 million barrels per day, 7% more than last year. Even the experts are surprised, as Jim Burkhard, head of oil markets research at IHS CERA, noted, “Five years ago, if I or anyone had predicted today’s production growth, people would have thought we were crazy.”
The Energy Department is forecasting 11.4 million barrels of natural and synthetic hydrocarbons by next year, just shy of Saudi Arabia’s 11.6 million. By the end of the decade, US oil production is expected to exceed 13 million barrels.
Unfortunately, this doesn’t seem to be affecting fuel prices, as world demand continues to rise. As long as fuel prices aren’t dropping, this could be good news for electric vehicle manufacturers, who tout their minimal recharging costs in the face of higher up-front pricing.