With an output exceeding 11 million barrels per day in the first quarter of 2014, the United States has surpassed Saudi Arabia and Russia to become the largest producer of crude oil and liquids separated from natural gas in the world, according to a report released by Bank of America Corp. on July 4, 2014. In June, the International Energy Agency also called the United States the biggest producer of oil and natural gas liquids. The United States has been the largest natural gas producer since 2010. Oil production in the United States is expected to continue to increase to 13.1 million barrels per day by 2019 before leveling off, according to the International Energy Agency, and the United States is expected to retain its status as the largest oil producer in the world until the early 2030s.
Oil production has climbed in the U.S. due to extraction at shale formations across the country through hydraulic fracturing, or fracking. “The American shale revolution has had a transformational effect on the U.S. and global economies in recent years,” said Francisco Blanch, Bank of America’s head of commodities research in New York. According to the Bank of America report, oil production in the United States has “expanded by 70 per cent since bottoming out in 2008, as has natural gas liquids (NGLs) output, while natural gas output has grown by 40 per cent since shale gas drilling picked up in 2005.”
Despite being the largest oil producer in the world, the U.S. Department of Energy reported the United States imported an average of 7.5 million barrels per day in April, making the U.S. the largest consumer of oil in the world. However, the Bank of America report also notes that as supply has grown more quickly than demand, America has shifted away from dependence on foreign fuels and now spends less than 1.5 per cent of national income on foreign oil and gas, in stark contrast to the heavy dependence on foreign fuels prior to the 2008 financial collapse.
Although oil production has increased in the United States, oil prices worldwide have remained high as this surge in U.S. supply comes at a time when outputs in other countries are endangered by civil unrest. Oil outputs from Iraq, the second-largest oil producer in Organization of Petroleum Exporting Countries, could be interrupted by the growth of an insurgency in Northern Iraq, while outputs from Libya (protests) and Nigeria (theft and sabotage) have also been reduced.