On Wednesday, we told you about how a “fracking dividend” is taking hold of the U.S. economy thanks to the massive increase in U.S. fossil fuel production.
The EIA agrees.
In a new “Today in Energy” feature, the agency highlights how global oil prices have been totally subdued by fracking.
First they quantify the shale boom:
- Domestic crude oil production increased 1 million barrels a day, surpassing the combined increases in the rest of the world to reach the highest level in 24 years. It’s also the largest annual increase ever recorded.
- Production exceeded imports during several weeks for the first time in nearly two decades.
That’s helped offset production cuts in the rest of the world (some of which were in response to the massive surge coming from North America).
Here’s the chart:
As a result, London-traded Brent oil contract prices have been kept at bay.
“Rising crude oil production in the United States contributed to relatively stable global crude oil prices in 2013, at around the same annual average levels of the previous two years…The North Sea Brent spot price averaged $US109/bbl, down 3% from 2012. Brent prices came under downward pressure as rising U.S. light sweet crude oil production reduced the need for U.S. imports, thereby increasing supplies of Brent-quality crude oil available to the global market.”
The agency notes WTI prices came up a bit last year as the supply glut created by a previous lack of pipelines has eased.
Still, as you can see from this chart, the inexorable rise of oil has, for now, been reversed.
Fracking remains controversial: evidence mounts that injecting fracking wastewater into the ground causes earthquakes, and complaints about water quality have spiked in areas where the practice takes place.
But the benefits to oil consumers can now clearly be seen.
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