This blog recently discussed the increase in U.S. (and Texas) oil and gas production, and that it has shown few signs of slowing down in the near future. In August 2013, the American Petroleum Institute’s monthly production statistics showed that U.S. oil production was at a 25 year high at nearly 7.6 million barrels a day. This is 20.3% higher than just one year earlier. Much of this remarkable increase is due to advances in technology that allow previously unattainable resources to be tapped–technology such as hydraulic fracturing and horizontal drilling.
API’s chief economist, John Felmy, said: “August 2013 saw a continuation of trends that have been building for quite some time. The incredible rise in American energy production, helped in part by softening demand, has allowed the U.S. to dramatically increase energy exports and reduce its energy imports.” Stocks of crude oil were also high, at 361.6 million barrels in August , which is the second highest level for the end of August in 23 years. Gasoline stocks rose 8.7% compared to August a year ago.
Helping At Home
U.S. oil imports are also at their lowest levels in decades. In August 2013, the U.S. imported a little more than 9.8 million barrels a day, which is 10% less than in August 2012 and an 18 year low for August. As Mr. Felmy noted, contributing to these numbers is lower domestic demand for oil and gas products. Domestic demand has been on the low end lately, with demand for gas up slightly from July but still the third lowest August in 13 years. Gasoline is the most widely used petroleum product and in August the demand was down 0.9% from the year before, at 9.054 million barrels per day. Demand for jet fuel was also down 0.3% from a year earlier, which was the second lowest August demand in 20 years as well. Demand for oil overall was down 0.7 percent from August 2012. At the same time, exports of refined petroleum products were up 2.6% from July and 16.1% from August 2012.
The number of oil and gas rigs was also up in August, with 15 more than in July according to Baker Hughes Inc. The refinery capacity utilization rate was about 91.3%, up 3.6% from last year.
The Wall Street Journal, in discussing API’s August numbers, argued that the long term trend for the U.S. will be to use less oil and produce more of it. As we become more efficient energy users and producers, this long term trend could change the U.S. energy outlook for many years to come. It is likely that the political ramifications will be significant as well.
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