Oil is hovering around $US60 a barrel, a 40% decrease in price since the height of summer. This is widely thought to be a supply issue, with the US producing far more oil than it traditional has, and OPEC refusing to cut production to stabilise prices.
US Trust’s chief market strategist Joseph Quinlan sent out a note this week showing just how much US energy production has expanded in the last five years.
The ingredients of the U.S. energy revolution were threefold: (1) Pro-market policies at the state and local levels, combined with (2) revolutionary technologies like horizontal drilling and hydraulic fracturing, and (3) good old American entrepreneurship and risk taking that upended the energy patch. By combining the three, the United States became the largest natural gas producer in 2013 and is on its way to becoming the world’s leading oil producer.
Here are six key charts showing how this is unfolding:
This is the four-week moving average of total US production (in thousands of barrels per day). Note the steep slope in the last two years.
Here are America’s shale super fields since 2011. North Dakota’s Bakken and south Texas’ Eagle Ford are both now producing more than 1 million barrels a day, up from practically nothing just a few years ago.
Natural gas production has increased along with oil. From US Trust: “According to the EIA, more than 50% of new wells in production in 2011 and 2012 produced both oil and natural gas. In 2012, of the number of wells drilled nationwide, 56% produced both oil and gas; the comparable figure in 2007 was 37%.”
This new production has driven down the cost of energy in the US. Here’s how the cost of natural gas has changed since 2006 (it’s indexed such that 100 = January 2006) in the US, Germany, and Japan.
This is how much crude oil production changed between 2008 and 2013. The US is way out front, disrupting the global oil game.
Finally, the US is moving closer to energy independence. This chart shows the net imports of crude and petroleum products as a percentage of consumption.
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