Gregg Laskoski is a senior petroleum analyst for GasBuddy.com
If the United States should indeed surpass Saudi Arabia as the world's largest oil producer, as the Associated Press reports, shouldn't that mean lower gasoline prices for Americans? Don't be too quick to make that bet—palatial casinos are built on such odds.
AP reports that the United States is on track for a 7 percent increase in oil production this year to an average of 10.9 million barrels per day. And the U.S. Department of Energy is forecasting that U.S. production of crude and other liquid hydrocarbons will average 11.4 million barrels per day in 2013. AP says that would be a new record and would fall just below Saudi Arabia's output of 11.6 million barrels per day.
More bullish forecasts come from Citibank, whose analysts say U.S. oil production could reach 13 to 15 million barrels per day by 2020. But—here comes the rain on the parade—the United States is still expected to continue to import plenty of oil in the years ahead because we're consuming 18.7 million barrels per day.
Regrettably, AP reminds us that the increase in production hasn't translated into cheaper gasoline and it's not likely to, either. They say U.S. gas prices are expected to remain relatively high because of growing demand for oil in China, India, and other developing nations. We've already been down this road and obviously it's frustrating to learn that we might produce more oil than Saudi Arabia and we still can't catch a break.
It's critical to remember that U.S. oil production is inherently tied to global oil production and the delicate balance that is created by the see-saw of peaks in increased oil production driven by higher global crude oil prices, and valleys that slow down production when crude prices fall too low.
Ultimately, gains in U.S. oil production can and will be beneficial to the U.S. economy if achievable gains reduce imports from the Middle East and also soften global crude oil swings in the process. The vision of U.S. autonomy and energy independence, which has been the rhetoric and wishful thinking of every American president since Harry Truman, is now a foreseeable reality.
Hopefully, the U.S. Department of Energy and other government offices will support the new era of production, reduce obstacles, and encourage greater transparency so that refineries might refrain from artificially manipulating gasoline production, supply, and prices.