The US Energy Information Administration recently published its monthly report with good news about the increasing supply of domestic petroleum. For the third consecutive year, total field production of petroleum rose. From 7.5 million barrels per day in 2010, it has risen to 8.5 million in 2012, nearly a 12 percent increase. Net imports of petroleum have fallen by 29 percent in the same period.
The downward slide in domestic energy production that began over fifteen years ago has finally turned around, and the US is more energy secure today because of it. As this blog has detailed in the past, the US is headed toward a far more secure energy future. Some might have thought that greater security was due entirely to the increase in the availability of natural gas from hydraulic fracturing, or “fracking.” But in fact, domestic petroleum production has increased as well. The US is now on target to go from 8.5 million barrels a day to 15.6 million barrels per day by 2020.
The development of domestic crude oil wells hit its lowest point in 1999 when fewer than 5,000 wells were drilled. Despite some yearly fluctuation, the last four years have seen a 15.5 percent increase in number of wells drilled, and more than 15,000 wells were developed in 2010, the most recent year for which the US Energy Information Administration reported.
Why then have US gasoline prices not fallen in line with increased domestic oil production? The answer is rising global demand for oil, which I discussed in an earlier blog. World demand for energy and petroleum products such as gasoline determines price, not merely domestic supply and demand. The October report from the US Energy Information Administration reports rising world crude oil production – and with it rising demand of course. Since the early eighties, annual production has risen almost steadily. With an average of more than 75 million barrels per day in the last seven months of 2012, worldwide crude oil production has risen almost 4 percent from 72.8 million barrels per day just five years ago.
Globally we are an energy consuming people. As developing countries increase their desire for lifestyles like those familiar to Europeans and Americans, demand will increase. It is not surprising that renewable energy supply, along with more traditional carbon fuels, is also increasing. And the speed with which renewables are increasing is becoming steeper. Between 2006 and 2011, renewable energy production increased 27 percent.
The good news on US energy availability is that both renewables and more traditional forms of energy generation are increasingly available domestically. While the US cannot contain rising gasoline prices, it can benefit in energy security from the apparent domestic increase in both traditional and renewable sources of energy.