In November 2014, the Organization of the Petroleum Exporting Countries (OPEC) decided to continue oil production at its current rate, disregarding the hit it would take as the price plummeted. This price decrease also hit North American companies, affecting the industry in the U.S. — causing global layoffs and company closings.
While new drilling in America has decreased dramatically during the last year, OPEC has not gained significant ground in encouraging more imports from the U.S. Whatever OPEC thought would happen as a result of its sustained production rate, U.S. operations continue successfully in spite of the decreased drilling. Those entrenched in the industry understand that oil’s price is cyclical, and they plan for these types of lows. The three articles below show how the decision has affected production and imports and point to how OPEC is losing the oil war.
- As domestic production continues to increase from existing and newly completed wells, OPEC’s supply surplus is greater than it has been in at least a decade. Read more from Bloomberg News.
- While the U.S. is importing less oil, it currently imports almost three times as much oil from Canada as it does from all Persian Gulf countries combined. Read more from the U.S. Energy Information Administration’s (EIA) Today in Energy.
- Since 2007, U.S. natural gas production has skyrocketed, specifically in shale gas plays such as the Marcellus and Haynesville Shales. Because of this production, natural gas is at a surplus domestically. Currently in North Dakota, U.S. production of natural gas from oil reservoirs must be flared rather than sent to market. “North Dakota’s Industrial Commission has established natural gas capture targets in an effort to reduce the amount of flared gas, and [it] recently issued a revision to the flaring targets in response to gas production growth.” Read more from EIA’s Today in Energy.