No matter how you feel about the public policies that influence the domestic and international oil industries, it’s impossible to deny that 2014 has seen major changes.
The state of today’s oil industry is reflective of serious expansion in the realm of shale acquisition technologies and shifting national focus from increasingly volatile global markets to our own backyard.
Analyzing Production Sources
According to many reports, we’re at a major high point in domestic oil production. While these increases didn’t occur in 2014 alone, we now produce 70 percent more crude oil domestically than we did in late 2008.
Such gains correspond with a notable decrease in imports; less than 30 percent of the oil consumed in the U.S. during the first eight months of 2014 came from foreign sources, as reported in the U.S. Energy Information Administration’s September 2014 Monthly Energy Review. The same document shows that while the total number of natural gas and oil rotary rigs in operation has lulled for the past few years, crude oil drilling has increased subtly since 2010.
It should be remembered, however, that the drive for energy independence isn’t exclusive to the oil industry. Ongoing federal tax subsidies and investments in wind and solar power are set to play growing roles in the market as time goes on. Even though these technologies currently lag well behind fossil fuel generation, widespread consumer interest stands to improve their lot.
The legacy of major environmental disasters, like the BP Deepwater Horizon oil spill of 2010, still lingered through 2014. Projects like the Keystone XL pipeline met such significant PR flak and legal backlash that they were effectively delayed indefinitely.
Another big issue in 2014 involved significant turmoil in the Middle East and Asia. Although such conflicts have always represented a source of market uncertainty, the persistence of natural gas disputes between Russia and Ukraine and outright warfare between Ukraine and pro-Russian troops following the larger state’s annexation of Crimea stand to impact fossil fuel prices throughout Europe and the entire world.
In the Middle East, the growing power of hardline political groups like ISIL resulted in the transfer of major oil resources out of politically friendly hands and even subsequent military intervention by the U.S. and Saudi Arabia, further destabilizing fuel prices.
Predicting What’s to Come
It’s highly unlikely that any of these issues will be resolved by the time 2015 rolls around, and it’s uncertain whether the limited resurgence of domestic oil production will be sufficient to offset other ongoing problems. Although many small counties in Colorado, Idaho, Nebraska and other states are seeing major economic windfalls from a confirmed shale oil boom, the distribution of such wealth is limited.
Should oil companies continue to observe their viable options dwindle, domestic oil prices will keep rising to match. Similarly, with political dithering and valid environmental concerns set to further delay major developments that could otherwise improve national ties to confirmed resources in Canada and Mexico, it may be that the current oil upswing is headed for a deceleration in the not-too-distant future.