By Elizabeth Martinez,
Money and Investing Writer
Over the past five years, the United States has dramatically increased oil production, which lead to a decrease in the dependence of foreign oil imports.
In fact, as of the last two years, the U.S. was one of the world’s foremost producers of oil; but alas, all great things must come to an end.
Beginning in the summer of 2015 U.S. oil producers began having difficulty staying at the top of these charts due to the falling price of oil.
In fact, looking as far back as June of 2014, the U.S. has seen a more than fifty percent drop in the price of its oil.
This opened the door for foreign producers offering consumers a cheaper price for the same product to slide back into the US economy.
The United States trade deficits were predicted to have a steep decline because of this, bringing some balance to Americas imports and exports, which have been largely skewed since the early 2000’s, the effects of which are mostly short term, as petroleum products are not the only factor at play in the United States trade deficit.
(Some other factors include the trade of motor vehicles and computer/cell phone technology.)
However, as a result of this decrease in oil production, many United States oil companies have had to take major cut backs in spending since 2014.
Some perfect examples of this would be major oil and gas producing companies such as Chevron, which cut back from twenty-seven billion dollars, to twenty three billion dollars in spending on exploration and production of petroleum products, and Exxon Mobile, which cut back from eighteen billion dollars, to sixteen billion dollars in spending on exploration and production of petroleum products.
As you can see in the depiction of the United States Distribution of Oil Production in 2013.
Texas had maintained itself as America’s largest producer of oil, but also had nine other states close behind helping to produce the vast quantities of oil which the US required on a regular basis.
Now, in 2015, the effects of this decrease in production will be felt the most and the soonest (as far as state economies go) in Texas, North Dakota, California, and Alaska, the four current, largest oil producing states in America.
Refined petroleum has been the United States’ number one export for a while now, so this may have some very serious repercussions for the general American Economy as well, as it will be losing a great part of its independence to foreign imports.
On the flip side however, the foreign trade of petroleum products is likely to improve international relations, as the number one US import is also refined petroleum, even with the previous boom in production.
This creates a greater mutual dependence between the countries involved
The effects of these lower oil costs are felt not just in the United States. But worldwide, as oil and gas companies in the Asian Pacific region have had to make steep cutbacks (almost equal to that of the United States) and the Latin American region which have had to make fairly steep cutbacks as well.
The United States Oil Industry seems to be headed down a very bumpy road, especially if oil prices continue to drop with more and more foreign producers ready and waiting to swoop in to pick up the slack.
A version of this article appeared in the Tuesday, November 3rd print edition.
Contact Elizabeth at