U.S. Oil Production Keeps Rising Beyond the Forecasts

nytimes ^ | JAN. 24, 2014 | FLOYD NORRIS

[ckilmer]

OIL production in the United States rose by a record 992,000 barrels a day in 2013, the International Energy Agency estimated this week.

[ckilmer]

OIL production in the United States rose by a record 992,000 barrels a day in 2013, the International Energy Agency estimated this week.

“We keep raising our forecasts, and we keep underestimating production,” said Lejla Alic, a Paris-based analyst with the agency.

The increase left United States production at 7.5 million barrels a day, with both November and December production estimated to have been over eight million barrels a day.

American consumption of oil also rose last year, by 390,000 barrels a day, or 2.1 percent, to 18.9 million barrels a day. The agency increased its estimate of American oil use in the final quarter of the year, although it lowered its estimate of the increase in some other countries, including China. Over all, world consumption rose 1.4 percent, making 2013 the first year since 1999 that the use of oil in the United States rose more rapidly than in the rest of the world.

The agency said that demand was strong in the petrochemical industry in the United States, which has benefited from the fact that rising supply has left American crude oil prices lower than those in many other countries. The agency estimated that demand for gasoline in the United States rose as a result of increasing consumer confidence and more sales of sport utility vehicles.

American Oil Production Leaps

United States crude oil production

 

Sources: International Energy Agency, U.S. Energy Information Administration

2013 figures are estimates. 2014 figures are forecasts by the International Energy Agency.

Despite the 2013 increases, oil use in most developed countries remains well below the levels of 2007, the last pre-recession year. The United States is estimated to have used 8.5 percent less oil in 2013 than it did in 2007, while demand is down by about 25 percent in Italy and Spain, European countries that were hard hit by the euro area’s problems. Germany stands out, with 2013 usage equal to that of 2007.

In the developing world, oil use has been rising steadily. Demand in China and Brazil is up more than 30 percent since 2007, and India’s consumption is 17 percent higher.

The agency estimates that in 2014, the 34 mostly rich countries in the Organization for Economic Cooperation and Development will consume less than half the oil used in the world. That would be a first: As recently as 2004, their share was over 60 percent, and in 2013, it was estimated to be 50.5 percent.

Over the same period, the United States’ share of the market fell to 21 percent from 25 percent, while China’s share rose to 11 percent from less than 8 percent. But the American share was estimated to have risen slightly in 2013, the first annual increase since 1999.

The increase in United States production in 2013 exceeded the increase of 836,000 barrels a day in 2012. The largest increase before that, of 751,000 barrels, was in 1951, according to the United States Energy Information Administration.

In percentage terms, the 15.3 percent increase in 2013 was the largest since an 18.9 percent gain in 1940.

American oil production fell steadily from the early 1990s through 2008, but has since risen for five consecutive years, largely because of increased production of shale oil. Not since the late 1960s, when production in Texas was peaking and Alaska oil was beginning to come on stream, has there been such a string of annual increases.

As a result, United States oil production climbed to the highest level since 1989, although it remains well below the record production of 9.6 million barrels a day, set in 1970.

The agency forecast that American production would continue to rise in 2014, adding 782,000 barrels, to 8.3 million barrels a day.

If that forecast proves to be accurate, United States oil production will have increased 46 percent over the three years from 2011 to 2014. There has not been a three-year increase that large since the years 1921-24, exactly nine decades earlier.

[ckilmer]

you have to click on the NY Times article to see the graphs properly.

[Paladin2]

OMG, we’re goin’ to be saved from Bammy.

[One Name]

We would climb right out of the present recessional blues if we build the necessary pipelines and approve the attendant refineries required.

Monkeys throwing darts would be an improvement over the current regime.

“Recovery” is obviously not the goal of the obama cabal...

[doc1019]

I can see an executive order in the offing that will stop all this potential economic fuel freedom.

[mylife]

So why wont the price of gasoline drop?

[Praxeologue]

So why wont the price of gasoline drop?

There isn't enough light crude refining capacity, as I understand it.

[ROCKLOBSTER]

No, they (we) are exporting gasoline, and we are paying the global market price.

I want a big discount...like a buck.

[2ndDivisionVet]

"...agency estimated that demand for gasoline in the United States rose as a result of increasing consumer confidence..."

Sounds like he's huffing gasoline.

[ckilmer]

There’s plenty of refining capacity. However, despite the rise in production in the USA supply and demand worldwide are pretty well balanced. According to the EIA in the USA alone—oil consumption rose for the first time by “380,000 bbl/d (2.1%) in 2013” But demand also rose elsewhere around the world.
http://www.eia.gov/forecasts/steo/report/us_oil.cfm
Now production increased by almost a million barrels a day. But the extra crude just meant that overseas oil that normally is shipped to the USA for refining,,,,—was sent elsewhere. Typically the USA will refine oil into gasoline and other products and then sell overseas what’s not sold at home. There is no ban on selling refined petroleum products abroad...just the crude.

[PA Engineer]

"...agency estimated that demand for gasoline in the United States rose as a result of increasing consumer confidence..."

Sounds like he's huffing gasoline.

Yep. Lead based too.

[Praxeologue]

There’s plenty of refining capacity. However, despite the rise in production in the USA supply and demand worldwide are pretty well balanced.

Yes, gasoline moves with Brent, not WTI. But there is a light sweet crude refinery capacity issue, which will get progressively more severe as tight oil production hopefully increases over the next few years. Were it not for the capacity constraint, or if the federal government permits crude exports, practically speaking to nearby Mexican or Latin American refineries, gasoline production would increase by several millions of barrels per day. Lower transportation costs would then impact gasoline prices.

This is what got me thinking about refinery capacity and gasoline prices.

[Smokin' Joe]

Monkeys throwing darts would be an improvement over the current regime.

Left strictly to the realm of probability, the Administration would make the right decisions some of the time. The absence of such indicates either very consistent stupidity or malignant behaviour.

[Pollster1]

I’m not sure how this happened. When Sarah Palin said “Drill, baby, drill,” the far left, including NYT, assured us that it would take more than a decade for new oil to come on line. How did we get new oil so quickly just by drilling?

[thackney]

We would climb right out of the present recessional blues if we build the necessary pipelines and approve the attendant refineries required.

We still need to complete some pipelines but the US already refines more product than we use. We do not have a refinery shortage.

[ROCKLOBSTER]

There is no ban on selling refined petroleum products abroad...just the crude.

There should be.

[Balding_Eagle]

I want a big discount...like a buck.

Michelle Bachman promised gas under $2 if she became President. That was a promise that would have been met.

[nascarnation]

I want a big discount...like a buck.

The regime is committed to reducing the use of carbon based fuels and driving the populace toward (more easily controlled) public transit.

[thackney]

So why wont the price of gasoline drop?

Because global demand for crude oil has risen with the increases in global supply.

[thackney]

There is no ban on selling refined petroleum products abroad...just the crude.

There should be.

Which would mean the end of any surplus refining capacity in the US, closing of more US refineries, investment put into other countries and not the US.

Loss of jobs, worse trade balance, does that really sound like a good idea?

Now we import more crude oil than we need, sell the surplus products at a higher price than we paid for the crude oil.

The is more to economics than just the demand curve. Put more artificial barriers on the industry and you will diminish the supply.