America is a powerhouse and I mean that literally as well as figuratively. CNN Money reported Wednesday that Texas is set to become the world’s number three oil producer thanks to a boom in production:
Plunging drilling costs have sparked an explosion of production out of the Permian Basin of West Texas. In fact, Texas is pumping so much oil that it will surpass OPEC members Iran and Iraq next year, HSBC predicted in a recent report.
If it were a country, Texas would be the world’s No. 3 oil producer, behind only Russia and Saudi Arabia, the investment bank said.
“It’s remarkable. The Permian is nothing less than a blessing for the global economy,” said Bob McNally, president of Rapidan Energy Group, a consulting firm…
“The industry cracked the code on fracking,” said McNally.
Texas is producing so much oil that it will soon be bumping up against pipeline capacity. Some producers are already selling at a discount because of the limitations. Another problem is a shortage of labor, though that will likely be good news for the state and for people moving to Texas to find work.
The boom in Texas is one reason the U.S. is set to become the world’s number one oil producer. Last week, U.S. production reached an all-time high of 11 million barrels per day:
ANOTHER HISTORIC ENERGY MILESTONE: Daily US Oil Output Reached 11M Barrels Last Week for the First Time, Setting a New All-Time Production Record at 2X the Output of 5.5M bpd in 2010. @EnergyTomorrow Carpe Oleum #shale pic.twitter.com/AcH7xZgAXj
— Mark J. Perry (@Mark_J_Perry) July 18, 2018
Reuters reports that if these preliminary numbers are confirmed, the U.S. is currently the second largest producer in the world, just behind Russia:
U.S. crude oil production last week hit 11 million barrels per day (bpd) for the first time in the nation’s history, the Energy Department said on Wednesday, as the ongoing boom in shale production continues to drive output.
The gains represent a rapid increase in output, as the data, if confirmed by monthly figures, puts the United States as the second largest producer of crude oil, just behind Russia, which was producing 11.2 million bpd in early July, according to sources.
“Eleven million would have made us the biggest producer in the world; but actually Russian production in June was above 11 million. So, this is kind of like the space race,” said Sandy Fielden, director of research in commodities and energy at Morningstar.
But we won’t be behind Russia for much longer. The U.S. Energy Information Administration predicted last week that production would near 12 million barrels a day by next year:
EIA forecasts total U.S. crude oil production to average 10.8 million b/d in 2018, up 1.4 million b/d from 2017. In 2019, crude oil production is forecast to average 11.8 million b/d. If realized, the forecast for both years would surpass the previous record of 9.6 million b/d set in 1970. Crude oil production at these forecast levels would probably make the United States the world’s leading crude oil producer in both years.
Of course, gasoline prices are still up a bit thanks to problems in Venezuela and sanctions on Iran. But fracking has made the U.S. the world’s energy powerhouse and that should continue well into the 2020s. This is data the Trump administration should continue to cite as a sign America is resurgent.