Booming U.S. oil production is wreaking havoc on the Organization of the Petroleum Exporting Countries’ (OPEC) influence of the international market.
American oil and gas companies — thriving from the country’s shale oil boom — are experiencing rapid rates of production. The U.S. experienced its largest annual increase of oil production in nearly 100 years in August. This rate is only expected to increase, with oil production forecasted to rise to 17.4 million barrels a day by the end of 2019.
America’s energy dominance puts the international oil cartel in a precarious situation. Should OPEC’s leader, Saudi Arabia, cut production and keep prices high, U.S. shale would prosper even further. At the same time, the Saudis need to make money and cannot allow prices to fall.
“The Permian will continue to grow and OPEC needs to learn to live with it,” Mike Loya, an executive for the Vitol Group, the globe’s biggest independent oil-trading house, said in a statement to Bloomberg.
This development is making it increasingly difficult for OPEC to dictate international prices. The oil cartel — which is made up of 15 member countries and works closely with other allies, such as Russia — is set to discuss the issue of booming U.S. production when they meet in Vienna on Dec. 6.
It wouldn’t be the first time OPEC members discussed their concern over the U.S. shale boom. OPEC officials circulated an internal document in October that warned of increased U.S. oil production and a seasonal buildup of oil stock that could put downward pressure on oil prices.
FILE PHOTO: The Elevation Resources drilling rig is shown at the Permian Basin drilling site in Andrews County, Texas, U.S. on May 16, 2016. REUTERS/Ann Saphir/File Photo/File Photo
Much of this growth is centered around the Permian Basin, a shale oil formation in west Texas and New Mexico that is the most productive in the U.S. Production in the Permian Basin rose from 1.9 million barrels per day in January 2016 to 2.8 million barrels per day by December 2017, according to the Energy Information Administration. Natural gas in the region also experienced a high growth rate. (RELATED: Oil Output Jumps As OPEC Opens The Spigots Following Trump’s Tweets)
The Permian Basin been able to increase production while also lowering its methane emissions — a feat developers have celebrated.
“This is good news that we should be celebrating. Our rise to energy superpower status has not come at the expense of the environment,” Texans for Natural Gas spokesman Steve Everley said in a statement.
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