Step aside OPEC — the United States of America will be 2014's top oil-producing nation.
An American flag decorates an oil refinery in Long Beach, California. (Image via Neil Kremer / flickr)
Bank of America analysts said that the U.S. is cruising past Russia and Saudi Arabia, formerly the No. 1 and 2 oil-producing nations in the world, to claim the top spot for the year, Bloomberg News reported.
U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report today. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.
“The U.S. increase in supply is a very meaningful chunk of oil,” Francisco Blanch, [Bank of America Corp.'s] head of commodities research, said by phone from New York. “The shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable.”
The extra oil is flowing from shale formations in Texas and North Dakota, where oil extraction is fueling local economic booms.
FILE - In this July 26, 2011, file photo, a worker hangs from an oil derrick outside of Williston, N.D. State data show that 1 billion barrels of oil have been produced from the rich Bakken shale formation in western North Dakota and eastern Montana. Data show that North Dakota has tallied 852 million barrels of Bakken crude, and Montana has produced about 151 million barrels. (AP Photo/Gregory Bull, File)
Despite the surge in domestic production, the U.S. still relies on foreign sources for a big chunk of oil consumption, with the Department of Energy reporting daily imports of 7.5 million barrels of crude oil.
Because of the continued American reliance on foreign oil, the domestic boom isn't dragging gas prices down — it's just keeping them from skyrocketing.
“The shale production story is bigger than Iraqi production, but it hasn’t made the impact on prices you would expect,” said Blanch. “Typically such a large energy supply growth should bring prices lower, but in fact we’re not seeing that because the whole geopolitical situation outside the U.S. is dreadful.”
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