Is the US oil boom coming to an end?(Read article summary)
Though US oil production is experiencing steady expansion, Graeber writes, it's starting to slow down and with it potentially goes the revenue on which Paul Ryan's budget plan depends.
The United States is expected to lead the pack among non-OPEC members in terms of oil supply growth for 2013. That's the assessment from this month's market report from the Vienna-based cartel. OPEC said it projected U.S. oil supply growth of around 600,000 barrels per day in 2013, with most of that coming out of tight oil formations in the country. For the U.S. Energy Department's Energy Information Administration, that means oil imports should fall to their lowest level since 1985. Republican leaders in the House of Representatives said more energy development is the key to a balanced budget, a sentiment enforced by EIA predictions of 7.9 million U.S. bpd by 2014. OPEC, however, said it may need to revise its figures because a possible slowdown in the U.S. oil boom.
House Budget Committee Chairman Paul Ryan, R-Wisc., unveiled a 91-page plan that he says would balance the budget in 10 years without raising taxes. The congressman said the Obama administration was over-subsidizing renewable energy programs to the detriment of the fossil fuels industry. With that policy, Ryan said the administration is standing in the way of the country's true energy potential.
"Our country has 163 billion barrels of recoverable oil and enough natural gas to meet the country’s demand for 90 years," his agenda states. (Related article: China Set to Become the World’s Largest Oil Importer)
The EIA, in its latest report, said it estimates 2012 oil production averaged around 6.5 million barrels per day. The average for November and December, however, was 7 million bpd, the highest volume recorded in twenty years. By 2014, that level should reach 7.9 million bpd. For EIA Administrator Adam Sieminski, that means the United States is relying less on foreign markets to meet its energy needs. By next year, foreign imports should fall to 32 percent of consumption, putting the United States on the road to the energy independence envisioned by House Republicans.
OPEC finds that tight oil production, coupled with modest growth from the Gulf of Mexico, meant most of the supply growth from non-members would come from the United States. For Ryan, expanding that growth to potential on federal lands, now off-limits, could add another $14.4 trillion in cumulative economic activity during the next 30 years. House Natural Resources Committee Chairman Doc Hastings said that's reason enough to embrace fossil fuels over tax increases.
"(Ryan's budget) recognizes that expanded American energy production is one of the best ways to raise new revenue, bolster the economy, lower gasoline prices, and put Americans back to work at good-paying jobs," he said. (Related article: U.S. Oil Production Tops 7 Million Barrels-Per-Day)
OPEC, in its forecast, said U.S. oil supply growth is projected at 600,000 bpd this year. That figure, however, is 40,000 bpd less than the previous year. The Vienna-based cartel said U.S. oil growth could go either way for 2013, but noted growth from tight oil developments in states like North Dakota is expected to slow down. While improved drilling technology may offset some of that decline, OPEC said that factors like price issues may dampen the oil boom in the United States. In 2009, the EIA found that opening more land could add another 500,000 bpd to the market, but once OPEC adjusts, the economic impact may be muted. OPEC is already adjusting, saying it expects the world will need about 29.7 million bpd of its oil in 2013, a decline from last year.
The White House said it believes Ryan is sincere in his effort to address ongoing budget issues. Apart from entitlement reforms and spending issues, however, its emphasis on domestic energy may be more of a platform issue. Though U.S. oil production is experiencing steady expansion, it's starting to slow down and with it potentially goes the revenue for which Ryan's plan depends.