The US has expanded its domestic oil production this year by its largest amount since the first commercial well was drilled in 1859, dispelling the belief that Americans were hooked on foreign crude.
US government data shows that domestic output has soared growing to a record 766,000 barrels a day rising to the highest level for 15 years. The sector has grown so much that it is on course to surpass Saudi Arabia in 2020 as the world’s biggest producer. Petroleum imports have dropped by more than 38% since 2005 moving the world’s only superpower into a position of energy independence.
“The U.S. has a huge lead in the 21st century in maintaining its superpower status,” said Ed Morse, global head of commodities research at Citigroup Inc. in New York. “There was absolutely no way to anticipate the level of growth in the oil supply.”
The U.S. oil boom began back in 2004 with a North Dakota well completed by Continental Resources Inc., which confirmed that a combination of two technologies could unlock profitable amounts of crude in pockets deep underground.
Continental paired horizontal drilling, in which the well is bored at an angle to run lengthwise along the richest slice of rock, with hydraulic fracturing. Better known as fracking, the process forces a high-pressure stream of sand, water and chemicals underground to crack apart the rock and free the crude. Since then, North Dakota’s oil production has increased to 728,000 barrels a day, surpassing Ecuador, an OPEC member.
The new techniques and supply is set to give the US economy a massive boom over the next few years as OPEC members struggle to keep up with the pace of change. As the oil industry gets larger the Dollar is sure to strengthen as well. Of course the US congress has to approve a deal regarding the ‘fiscal cliff’ first.
The Pound to Euro exchange rate is currently trading at 1.2272
The Pound to US Dollar exchange rate is currently trading at 1.6296
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The Euro to US Dollar exchange rate is currently trading at 1.3274
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