The massive increase in oil production in the United States over the past half-decade has significantly cut into America’s dependence on oil imports.
The share of total oil consumed in the United States that came from imports peaked in 2005 at 60 percent, a dependence that fell to below 30 percent in 2014. Oil flowing from North Dakota and Texas helped to cut out the need to import oil from around the world.
However, after persistently low oil prices for the past year, U.S. oil production is falling. At the same time, cheap crude is stoking demand, as American motorists take advantage of low gasoline prices. Lower domestic supply and higher demand have put a halt to the declining import bill for the United States, which had been more or less decreasing for a decade. Related: Present Pain Leading To Future Risks In Oil Markets
U.S. oil production peaked in April at 9.6 million barrels per day, and since then oil imports have started to move up, jumping more than a half million barrels per day.
OPEC has decided on a strategy of pursuing market share, and after losing its hold on the U.S. market in recent years amid a glut of oil from U.S. shale, the oil cartel is slowly clawing back a bit of the market. U.S. oil imports from Nigeria in particular have ticked up in recent months. Related: Future Of Iraq’s Oil Industry Under Threat
Nigeria has been hard hit from the U.S. shale revolution. Nigeria produces a light sweet version of oil, which resembles the type and quality that comes from North Dakota and South Texas. The glut of light tight oil pushed out Nigerian imports. Now that U.S. production is down, America is once again turning back to Nigerian oil. Between April and July, imports of Nigerian crude more than doubled to 130,000 barrels per day.
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The shale revolution in the U.S. led to a lot of crowing in recent years about America becoming “energy independent” and even an “energy superpower.” But even at the peak of U.S oil production, it was still the largest oil importer in the world. And now that production is falling, the gains made in slashing import dependence are reversing, a trend that will be magnified if demand continues to climb.
By Charles Kennedy of Oilprice.com
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