The U.S. Energy Department said oil production has reached a 14-year high thanks in large part to a boom in North Dakota, Texas and the Gulf of Mexico. The Obama administration has shrugged off Republican criticism of its domestic energy policy by pointing to historic trends in oil production. While some of that increase is because of policies enacted by the previous Republican administration, a 6-percent growth rate over six months does not reflect policies that could be described as burdensome. Nevertheless, GOP leaders continue to bang the oil drum in an effort to get more land opened for exploration. Either they're out of energy ammunition to lob at Obama ahead of November, or Democratic leaders are correct in their assessment that the GOP is in cahoots with big oil.
The U.S. Energy Department's Energy Information Administration reports that, for much of last year, crude oil production in the United States held steady at around 5.6 million barrels per day. The Obama administration, in a 217-page policy agenda published in November, said it wanted to cut the amount of oil imported into the United States by around 30 percent by 2025. As if on cue, the EIA reported that oil production during the fourth quarter of 2011 passed 5.9 million bpd and moved past 6 million bpd by the first quarter of 2012. Domestic oil production, the EIA states, hasn't been this high since 1998.
The EIA, in its assessment, attributed much of the increase to an oil production boom in Texas, North Dakota and the U.S. federal waters of the Gulf of Mexico. Oil, natural gas – and even retail gasoline prices – are declining in part because of high inventories and weak consumer demand in a sluggish economy. High prices during the first quarter of the year sparked renewed concerns about major economic calamity worldwide. Most of that was triggered less by physical market conditions than psychological concerns about Iran. With a July embargo deadline fast approaching, however, IEA Executive Director Maria van der Hoeven said there was "a lot of extra oil" on the market. U.S. oil production, presumably, is contributing to that glut.
Yet, to hear Republican leaders on Capitol Hill explain it, the United States still has its work cut out for it in terms of oil production.
"As gasoline prices continue to strain the pocketbooks of American families, we need more access to our American energy resources to insulate ourselves from the unstable foreign energy market," said Rep. Doc Hastings, R-Wash., chairman of the House Natural Resources Committee, in a statement.
House leaders passed a series of measures last week they say would not only provide security against foreign market turmoil but expand the job prospects for American workers. Most of the legislation calls for more oil and natural gas production on federal lands. Striking, however, is that retail gasoline prices are, on average, 16 cents lower than they were this time last year in the United States. In terms of demand, the EIA said it expects summer demand for gasoline to be at the lowest level in 11 years. While some of that is a reflection of first-quarter prices, the EIA said higher fuel efficiency for consumer vehicles is contributing as well.
So from where does GOP criticism derive? The Obama administration claims oil production is at historic highs and the record-keepers have the numbers to back that up, including international bodies like the IEA. In the age of the super PAC, it's hard to tell who holds the purse strings in the U.S. political theatre, especially in a presidential election year. Without taking partisan sides, perhaps there's a slight peak behind the proverbial curtain on the other side of the aisle, however.
"Instead of sending a thank you note to President Obama for increasing oil production and decreasing our foreign oil dependence through his ‘all of the above’ energy strategy, House Republicans are sending a love letter to the oil industry in the form of another oil-above-all scheme," said Rep. Ed Markey (D-Mass.), the top Democrat on the Natural Resources Committee.
By. Daniel Graeber of Oilprice.com