The Energy Information Administration (EIA) predicts that crude oil production in the United States will rise next year to the highest level in nearly 50 years, while Goldman Sachs noted earlier this week that Russia’s crude oil output has risen to nearly a post-Soviet era record. Bloomberg estimates that crude oil production from Kurdistan over the next 15 months will likely increase by more than China’s increase in demand for oil over that period.
In the short run, that is having a positive impact on prices at the pump in the United States, which fell to an average of just $3.32 a gallon last week, the lowest price since February. More than half of the states have at least one gas station selling gas at less than three dollars a gallon.
If oil prices drop too far, however, production will be stymied. As Stephen Leeb, a writer at Forbes, put it, “It takes energy to get energy.” In the early 1950s, it took the energy from 20 barrels of oil to harvest 100 barrels. Today, in conventional oil fields, it takes about one barrel to produce nine.
FK – Is there anything to celebrate here? As long as gas is over 3 bucks a gallon, over 2.50 as far as I’m concerned, it’s unaffordable. Too many ‘workers’ are making 8 – 12 bucks an hour or less.