The US has taken Russia’s crown as the biggest oil and natural-gas producer in a demonstration of the seismic shifts in the world energy landscape emanating from America’s shale fields.
US oil production rose to a record last year, gaining 1.6 million barrels a day, according to BP’s latest statistical review of world energy. Gas output also climbed, putting America ahead of Russia as a producer of the hydrocarbons combined.
The data showing the US’s emergence as the top driller confirms a trend that’s helped the world’s largest economy reduce imports, caused a slump in global energy prices and shifted the country’s foreign policy priorities, Bloomberg reported.
The other major shift BP’s report shows is China’s energy demand growing at the slowest pace since the Asian financial crisis of the late 1990s as the economy slows and the country tries to reduce its reliance on heavy industry.
“Growth in some of China’s most energy-intensive sectors, such as steel, iron and cement—which had thrived during China’s rapid industrialization—virtually collapsed in 2014,” Spencer Dale, BP chief economists, said.
Economic Change
In the US, the boom in oil and gas production has started to change the economy profoundly. Cheap fuel has seen manufacturing return to the US as the country produced about 90% of the energy it consumed last year.
Last year, imports equaled 1% of GDP, according to BP’s data. In 2007, just before the financial crisis, US energy imports accounted for about half of the current account deficit of 5% of GDP.
Shale drillers from Exxon Mobil Corp. to Chesapeake Energy Corp. spent about $120 billion last year in the US, more than double the amount five years earlier. The surge in output and a slowdown in global demand have pushed crude oil prices down about 40% in the past year. The US increase in oil output last year, helping it to overtake Saudi Arabia as a crude producer, was the first time a country has raised production by at least one million barrels a day for three consecutive years, BP said.
Among other producers outside the Organization of Petroleum Exporting Countries, Canada and Brazil also reported record production last year, prompting OPEC’s policy shift of ditching price support for defending market share.
On the demand side, countries outside the Organization of Economic Cooperation and Development accounted for all of the net growth in global consumption of 0.8 million barrels a day, or 0.8%, last year. Chinese consumption growth, though slower, still jumped 390,000 barrels a day, the biggest increase in the world.
Oil consumption in developed nations dropped 1.2%, the eighth decrease in the past nine years. World natural-gas consumption grew 0.4% last year, compared with the 10-year average of 2.4%.
