“If energy is going to be used as a weapon, we need to have the largest arsenal.”
Former Texas governor Rick Perry said this at a conference in Houston in 2015.
He was referencing the clout of OPEC within the global oil trade and the fact that the U.S. was beholden to the whims of the group.
The U.S. was tight in an OPEC choke-hold and there wasn’t much light at the end of the tunnel…
Two years ago we wrote about the (tiny) hope that the U.S. would lift the ban on crude oil exports…
Many thought it was a fool’s hope.
But in December of 2015 the ban was lifted…
And U.S. shale producers jumped in feet first.
Since then oil has been on a rollercoaster of ups and downs.
Last week, crude prices reached a seven-month low, currently sitting just below $43. For months, we’ve seen oil trade around $50 per barrel, desperate for support.
The question is, who can afford to produce under such low prices?
OPEC can’t.
But the U.S.? That’s another story.
The U.S. actually increased rig counts last week, to 941 active oil and gas rigs (up more than 500 from this time last year), while boosting production to more than 9.33 million barrels of oil a day.
The cost to build and operate wells in the oil-rich U.S. shale basins has decreased by millions over the past few years.
This means that certain U.S. shale producers can make a profit when crude prices are trading between $40-50 per barrel.
Just look at this chart:
The U.S. has nearly doubled oil production in the past nine years and is producing more than any other country.
From 2010 to 2016 U.S. exports more than doubled, with production in 2016 at 5.2 million b/d.
Forbes writes, “Since late last year, China, now the world’s 2nd largest but incrementally the most critical oil consumer, has ramped up imports from the U.S… Mexico is now taking about 60% of U.S. gasoline. Mexico’s crude output has dropped about 33% since 2004…”
Oil is necessary.
The U.S. can produce it, and make money from low prices.
OPEC can’t.
That’s why the future of U.S. oil exports looks so bright.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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