As the price of oil continued to rise with increasing world wide demand, the United States starting to increase oil production in areas like North Dakota. By the middle of 2014, oil prices started to fall around the world on increased supply from places like the United States.
In the fall of 2014, OPEC met and decided not to decrease production in order to raise the price of crude oil. This sent the oil markets around the world in to a downward spiral and oil has settled to be around $50 – $60 a barrel. This decreased price of oil has caused a change in the world wide demand and supply, and in the process radically changed the American oil industry.
American Supply In The Future
Many analysts are torn on the how the United States will respond with its oil production in the future.
There is a set of people that believe the United States defense should be based around oil production. There is also a set of people that believe that the environment should take precedent over oil production.
There are many other variables besides the ones mentioned previously that could all impact American oil supply in the future.
However, since the price of oil has rapidly decreased over the past year the number of oil rigs in the United States has fallen. This means that future production could be decreased if the price of oil continues to be suppressed.
For years, Saudi Arabia was the largest oil producer in the world.
The oil in Saudi Arabia is very shallow beneath the surface, so it costs the country much less than others to harvest the oil. In this sense, the Saudis care much less about the total price of oil simply because their costs are so low.
There is a contingent of people that below the Saudis are keeping the price of oil suppressed on purpose in order to reduce future American production.
Russia’s Economic Problem
Russia is another country with some issues around a low price of oil. Russia’s economy is tied primarily to the price of oil, and many experts believe that the Russian economy is at the mercy of oil prices around the world. A Russian economy that is in trouble could result in a dangerous Russia.
Overall, the American oil industry is in a dynamic state. Over the past 6-9 months, the price of crude oil around the world has plummeted on increased supply, primarily from America.
The paradox the American oil industry finds itself in is that the need for increased productions goes down when the price of oil is suppressed. In that way, the American oil industry caused a lot of the issues surrounding the low price of oil. It remains to be seen if the American oil industry will continue to increase production, or lay off because of falling oil prices.