Crude oil from OPEC countries to the U.S. are at their lowest levels since 1987, falling nearly 60 percent from their peak in 2008 when prices were much higher and hydraulic fracturing spurred a domestic energy boom.
Between January 2008 and October 2014 crude oil imports from OPEC nations fell from 6.4 million barrels a day to 2.6 million barrels per day — a 59 percent decline in just six years.
The 3.8 million barrel per day decrease in oil imports has been accompanied by a production increase from 5.1 million barrels per day in January 2008 to just over 9 million barrels per day in October 2014.
The news was celebrated by Mark Perry, an economist with the conservative American Enterprise Institute, who tweeted out his own analysis of the impacts of booming U.S. oil production, coupled with other factors like weaker oil demand.
CHART of the DAY: US Oil Imports from OPEC Fell in Oct. 2014 to Lowest Level Since April 1987, 59% Below 2008 Peak pic.twitter.com/rNjja5Gwej
— Mark J. Perry (@Mark_J_Perry) January 9, 2015
OPEC nations have no doubt been feeling the heat of declining U.S. oil sales, but now with oil prices collapsing to about $50 per barrel since last summer, OPEC members are feeling even more financial pain.
Many energy analysts have said falling oil prices are the result of a price war between Saudi Arabia and U.S. oil companies, with each side testing how low prices can go before the other is forced to cut production.
“In view of the ongoing price war and the resulting oversupply, we have lowered our oil price forecast for Brent in the first quarter from $65 to $45 per barrel. In the short term, a fall to $40 per barrel cannot be ruled out,” according to an analysis by Commerzbank.
But don’t think the price war will go on forever, says Commerzbank, as oil prices will likely recover somewhat by the end of the year.
“We envisage a noticeable price recovery in the second half of the year, when the low price level should curb shale oil supply and the production of oil from oil sands because current prices mean that these production techniques are no longer profitable. What is more, demand in the second half of the year is significantly higher for seasonal reasons. This should absorb the oversupply. By year’s end, we expect to see the price climb to $75 per barrel,” according to Commerzbank.
Oil price war aside, the ultimate beneficiary of falling prices is the U.S. consumer who has seen gasoline price collapse to a point where many gas stations are selling it for less than $2 per gallon. It’s also given a break to businesses who now see transportation costs decreasing.
Virtually all of the increases in U.S. crude oil production have come from hydraulic fracturing, or fracking, which involves injecting fluids into underground shale formations to extract natural resources like oil and natural gas. The well-stimulation process has come under attack from environmentalists who say it contaminates groundwater and harms air quality.
But there is little to no evidence linking fracking itself to groundwater contamination. While faulty oil and gas wells can leak if not properly sealed, even the Environmental Protection Agency and the Department of Energy have said fracking is environmentally safe.
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