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Saudi America: US Is Turning Into World’s Largest Oil Producer

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Mark J. Perry, AEIdeas

The rise of the US to become the world’s largest petroleum producer in November is another important milestone in America’s new era of energy abundance, and reflects the importance of the breakthrough, revolutionary extraction technologies (hydraulic fracturing and horizontal drilling) that have brought a true shale energy revolution to “Saudi America.”

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The Energy Information Administration is reporting today that “Saudi Arabia was the world’s largest producer and exporter of petroleum and other liquids in 2012, producing an average of 11.6 million barrels per day (bbl/d) and exporting an estimated 8.6 million bbl/d (net).” The United States (“Saudi America”) was the No. 2 petroleum-producing country last year with an average output of just over 11 million bbl/d (see bottom chart above).

However, based on international monthly oil production statistics from the EIA currently available through November 2012, the United States surpassed Saudi Arabia’s petroleum output in November (see top chart above). Thanks to the significant increases in shale oil production in North Dakota and Texas, total oil output in the US expanded by more than 7% between August and November, while output in Saudi Arabia fell by 4% during that period. Those trends brought “Saudi America’s” petroleum output in November (11.65 millions bbl/d) above Saudi Arabia’s production (11.25 million bbl/d) by 400,000 barrels per day, and is the first time in more than ten years (since August 2002) that the US has produced more petroleum products than Saudi Arabia. Although there are certainly variations in oil production that could mean that the US won’t continue to out-produce Saudi Arabia in every month, the upward trend in US oil output will continue, and the EIA predicts that the US will be the world’s largest petroleum producer within the next few years. The EIA forecasts that US petroleum production will continue to increase from the current level of 11.65 million bbl/d by another 11.5% to about 13.0 million bbl/d in the 2018-to-2020 period.

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