Domestic Production Poised to Surpass Imports
The moment has almost arrived when domestic oil production will once again exceed imports. If current trends continue, it could occur before the end of this year, according to projections released this week by the Energy Information Administration. This would be the first time output has exceeded imports since 1995.
Both declining consumption and increased output have played a part. Consumption is dipping toward 15 million barrels per day (bbl/d), which is a decline from the peak in 2008. Production is rising toward 8 mbbl/d, a level not achieved since 1988, mainly from shale deposits in North Dakota and Texas. The combination should push output past imports within the coming months.
Will this constitute energy independence? The term is very amorphous. It is probably good that we are importing some oil, otherwise we would "drain America first." We are certainly now less vulnerable to supply interruptions, since only about one-quarter of our oil now comes from the Persian Gulf. Nor are we likely to be the victims of oil cartels, since OPEC has very little leverage in setting the market price.
Despite all this, Americans are still paying historic highs for a gallon of gas. The main reason is increasing demand from the developing world, particularly China and India. China has just passed the US as the world's largest oil importer and the growing thirst in both these countries is likely to keep pushing prices higher for the foreseeable future.