2015 U.S. Oil Output Highest Since 1972
By Burt Carey
Americans are enjoying inexpensive gasoline these days, and it doesn’t look like the party is ready to slow down.
That’s the news from the Energy Information Administration, which points to several factors that are keeping fuel prices low for consumers.
Oil industry companies, which have shed tens of thousands of jobs in the past 18 months, have adjusted pumping regimens with market needs, a job made all the more difficult by OPEC-member countries that have flooded the global market with excess oil.
With all of that going on, it may come as a surprise to learn that the U.S. pumped more oil in 2015 – 9.43 million barrels per day – than at any time since Richard Nixon occupied the White House. The country’s oil drilling increased 89 percent from 2008 to 2015.
Those figures make the United States one of the world’s largest oil producers, behind only Saudi Arabia and Russia. Saudi Arabia is leading the OPEC charge in oil production, an attempt to maintain its strong market share around the globe by pinching U.S. shale oil producers whose extraction costs are about three times as high.
But even with falling numbers of active wells and drill sites, U.S. oil companies have been able to increase production (up 8 percent in 2015) even though crude prices remained at their lowest levels in a decade. Government-owned Russian oil companies haven’t fared as well, and the Russian economy is suffering for it.
The Energy Information Administration sees virtually no change for the foreseeable future. “Low crude oil prices have more than offset high wholesale gasoline margins, contributing to retail regular gasoline prices falling to an average of $1.95 (per gallon) in January,” the EIA reported.
Monthly average regional gasoline retail prices for January ranged from a low of $1.69 per gallon in the Gulf Coast region to a high of $2.57 a gallon on the West Coast, where refinery issues have added to the cost of gasoline. The EIA expects the U.S. regular gasoline retail price to average $1.82 per gallon when February numbers come in, which would be the lowest average monthly price since January 2009.
Edward Jones senior analyst Brian Youngberg said shale production has been more resilient than anyone thought it could be. That’s due, in part, to improved production efficiency and because oil companies were quick to pare off ancillary businesses and remain true to their core assets.
Smaller companies and those with high debt folded in recent months, leading to a 379 percent increase in oil and natural gas companies filing for bankruptcy in 2015. Still, the remaining oil companies pumped oil at a rate of 9.26 million barrels per day as late as December 2015, indicating that the OPEC stranglehold on low-priced crude oil has not yet decimated domestic energy production.