American oil production is starting to rise again as hydraulic fracturing technology becomes more efficient, according to federal data.
U.S. oil production rose by 51,000 barrels per day in August relative to July, leading to the first significant increase in American oil production since April of last year.
Fracking, combined with horizontal drilling, has caused an unprecedented surge in U.S. oil production. American oil production in 2015 was 80 percent higher than it was in 2008. The U.S. produced an average of about 9.3 million barrels of crude oil per day in June. The process helped America surpass Russia as the world’s largest and fastest-growing producer of oil last year.
This caused U.S. oil domestic production to soar and oil imports to fall rapidly. In 2007, America imported about 60 percent of its oil, but by 2014, the U.S. only imported 27 percent of its oil — that’s the lowest level since 1985, according to government data.
Surging U.S. production has contributed to a global collapse in the price of oil. In June of 2014, the price of a barrel of oil was $104.95. The current price of crude oil is $45.24 per barrel, a drop of 56.89 percent.
Today’s low prices may be worse for major foreign oil producers like Russia, Venezuela, Brazil, and Iran than for America. These countries require the price of oil to be above $80 a barrel to balance their national budgets. However, industry experts believe that most new American oil production will be profitable at around $40 a barrel. Such a setup means the price of oil will be essentially permanently locked in at prices favorable to America.
America is even exporting crude oil to other countries, including members of the Organization of Petroleum Exporting Countries (OPEC) after repealing a ban on exports in December. Venezuela, a member of OPEC, has been forced by its failing economy to accept its first shipment of American crude oil in early February, despite having some of the world’s largest petroleum reserves.
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