US oil production tops imports

By Josh Lederman

Americans are trying to be frugal at the pump, and this is reducing the need for their country to import oil. Photo / AP
Americans are trying to be frugal at the pump, and this is reducing the need for their country to import oil. Photo / AP

FOR the first month in nearly 20 years, the US last month extracted more oil from the ground than it imported, marking an important milestone for a nation seeking to wean itself off foreign oil.

A promising sign for a still-sluggish economy, the shift could foreshadow opportunities to boost jobs in the US, lower the trade deficit and insulate the economy from foreign crises that can push oil prices up.

But it also speaks to underlying changes in the way Americans use oil, as price-conscious consumers seek to limit what they pay at the pump.

Not since 1995 has the US produced more crude oil than it imported. For several years now, domestic production has been rising while imports have been declining. But figures issued yesterday by the Energy Information Administration show the trend lines have finally crossed.

Administration officials said President Barack Obama's efforts to boost fuel efficiency for cars have been a driving factor, helping to reduce US demand for petrol and, in turn, lessening the need to import oil.

Officials said requiring auto companies to make fuel-efficient cars has gone a long way toward realising Obama's goal of curbing global warming. They also credited the president with promoting drilling on federal lands and offshore as part of his strategy to encourage more US energy production.

"Taken together, these factors not only reduce our dependence on foreign oil, but work to reduce overall carbon pollution in our communities," said White House spokesman Jay Carney.

But energy experts and the oil industry say the increasing amount of local oil is being produced despite Obama's policies, not because of them.

They say Obama has made it harder, not easier, to produce oil on government land.

The US still imports far more oil-based products such as petrol and diesel than it exports. As the world's biggest oil consumer by far, the US is still a long way from being energy-independent.

"It's a very positive sign, enormously positive," said independent US energy analyst Philip Verleger. "But energy policy has not been a help, it's been a hindrance."

Although domestic oil production has been growing since Obama took office, most of the increase has been on private and state land that the federal government does not control.

Oil analysts said high oil prices have made it lucrative for oil companies to invest in new wells, even as easy-to-drill areas become scarce and companies must resort to more expensive technology to unearth oil in North Dakota and in deep-water wells in the Gulf of Mexico.

At the same time, the after-effects of the recession and high fuel prices have left Americans looking for ways to cut costs, including by driving less and buying smaller cars.

The resulting decline in consumption has meant the US is having to buy less oil from the Middle East and elsewhere.

In the first month of his presidency, Obama started putting into effect fuel efficiency standards that his predecessor, President George W. Bush, had signed but declined to implement.

For Obama, a drive to combat climate change is juxtaposed against an economic imperative to encourage the development of American energy resources.

Lifting domestic production is unlikely to increase how much oil is burned planet-wide. But it does make it more difficult for Obama to meet his goals of lowering US emissions of heat-trapping greenhouse gases.

On the other hand, it means more American jobs removing the oil from the ground.

AP

- NZ Herald

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