The President of the United States, Joe Biden, wants to end the use of fossil fuels to safeguard the planet Earth from the drastic effects of climate change. The stark reality is that the United States is producing oil at an extremely rapid pace and is on the verge of becoming the largest producer of oil any country has ever been in human history.
As per the US Energy Information Administration, last month, the weekly oil production touched 13.2 million barrels per day (mbpd). It is thinly above the record set by Donald Trump’s administration of 13.1 mbpd right before the Ovid pandemic, which sent prices and production tanking.
A report published by the S&P Global Commodity Insights showed that the United States is on track to produce 13.3 million bpd of crude and condensate in the last quarter of this year.
The majority of the United States oil output is led by the shale oil wells from Texas and New Mexico’s Permian Basin. It has started pumping so much oil that it is participating in the international market and holding a cap on crude and gasoline prices. S&P mentioned that the United States is now exporting crude oil, refined products, and natural gas liquids in equivalent amounts to what Saudi Arabia or Russia produces.
The humongous amount of United States oil output has surprised analysts and experts. Analysts from Goldman Sachs have reduced the oil prices forecast for 2024. They state the reason for the United States oil supply that is slightly less than being termed as oversupply. The anticipated fear of meeting the record-high forecasted crude demand next year can be easily met by American supplies.
OPEC+, mainly led by Saudi Arabia and Russia to some extent, had imposed stringent output reductions to stop oil prices from falling, but the abundance of US production is shattering all of their efforts. Other non-OPEC oil producers like Canada and Brazil are also pumping record amounts of oil than ever before.
Good for the US economy
The insane production output has kept oil prices stable after it surged above $100 a barrel. Since then, it has cooled down to a range of $70 to $75. Oil prices have risen this week due to BP suspending its shipments via the Red Sea amidst security concerns.
Domestic gas prices have come close to a crucial level of $4 per gallon in September. Since then, prices at the pump have significantly decreased to release a lot of pressure on the United States economy. The national average per gallon of regular gas was $3.08 early this week.
Oil production is beyond Biden’s control
McNally, a former energy official to ex-President George W. Bush, said that there is not much that the POTUS can do about United States oil production apart from some emergency actions. She added that it is not like President Biden has a say in the Oval Office to increase or decrease oil production.
The United States is an independent decision-maker in terms of making oil output decisions, not like the OPEC+ cartel. Its supplies mainly depend upon the demand and supply statistics of the free market.
The jump in the United States output is fueled by smarter and more efficient operations by oil companies. Energy companies have managed to pump more oil out of the wells without increasing drilling operations.
The White House was forced by sky-high oil prices to change their stance on fossil fuels from a climate-friendly to a neutral ground. Last year, when gasoline prices went above $5 a gallon during the Ukraine war, it set off a panic among the public. The Biden administration then decided to release 180 million barrels of oil from the Strategic Petroleum Reserve and asked producers to pump more oil, contradicting the demands of climate activists.