The United States’ policy of becoming a nation independent from foreign oil imports is set to become a reality within the next couple of years. According to the U.S. Energy Information Administration’s monthly energy outlook issued today (as reported by The Financial Times), the U.S. is well on its way to becoming a consistent net petroleum exporter by late 2020. This marks an astonishing shift in the countries energy policy as domestic crude oil production continues to surge.
The report estimates that by September 2020 the country will be shipping out more crude oil and liquid fuels than it imports, with net exports by that point estimated to surpass 1 million barrels a day. It’s an announcement that raises the stakes for the OPEC cartel and related producers as they struggle to stabilize oil prices amidst the prospect of another competitor joining the international energy exporting scene.
The forecast from the EIA said that US crude oil production would increase to 12 million barrels per day by the end of 2019 and eventually 12.9 million in 2020 before ending that year with a 13.4 million estimated output. At the same time, the US will continue to import close to 5 million barrels a day more oil than it exports. As for natural gas, the EIA said that US gross exports will increase by over 50 percent in the same time period, growing from 3 billion cubic feet a day to 6.8 billion thanks to new liquefaction terminals being opened along the coast of the Gulf of Mexico.
“Steady growth from non-OPEC countries, including the United States, headlines the forecast for global crude oil production through 2020. We expect the United States to remain the world’s largest producer,” said EIA administer Linda Capuano. She added that “According to the January outlook, the Permian region of Texas and New Mexico will continue to push U.S. production into record territory over the next 24 months, approaching 13 million barrels per day sometime in 2020.”
Back in November, the U.S. reported one solitary week where it became a net petroleum exporter, a first in decades. If the EIA report is to be believed, then this would be a normality for the country instead of a rare occasion. Additionally, the EIA expects that natural gas will provide 37 percent of the nations electric power as opposed to 35 percent in the previous year. The report also estimates that coal’s share of electric power is expected to drop from 28 percent down to 24 percent during the same period.
While oil markets didn’t fluctuate much to the announcement, yesterday saw oil prices dip 2 percent due to poor results from Chinese import data. With the prospect of a slowing Chinese economy on the horizon, many commodities were impacted negatively as a result of these fears. While the previous couple of weeks have seen oil prices enjoy a several day bull run not seen for almost a decade, much of 2018 has seen oil prices decline as a result of global oversupply and weak demand concerns. The recent China data could indeed be a sign of this occurring as many analysts agree that the U.S. is entering into a contraction phase.
