US Petroleum Production Hits Record of 18.2 Million Barrels a Day

March 24, 2020 Updated: March 24, 2020
FONT BFONT SText size

Commentary

Despite chaos from the coronavirus pandemic and a price war between Saudi Arabia and Russia, the United States set a new petroleum production record of 18.2 million barrels a day.

For the second week of March, the United States produced a record 13.1 million barrels of crude oil and a record 5.1 million barrels of gas liquids each day. According to the International Energy Association’s World Energy Outlook, the United States will account for 85 percent of all petroleum and 30 percent of all gas increases over the next decade.

There are 1,500 microbes that are sources for disease among the human population, with new mutations discovered each year. Given the probability of a global pandemic has always been high and modern economic activities cannot be sustained without continuous deliveries of food and electricity, nations should have been energy prepared.

But 35 nations, including five U.S. states, imposing obligatory shelter-in-place orders affecting an estimated 900 million people has caused a global stampede to buy food. With protein and paper items already being rationed, the crisis has exposed the existential risks to nations that are dependent on international supply chains for the fuel to distribute food and generate electricity.

Total inventories of crude oil and other liquids for the 35 most-advanced nations in Europe, the Americas, and the Pacific that make up the Organization for Economic Cooperation and Development equaled just 62.6 days at the end of February.

America launched the modern world on Aug. 27, 1859, when Ed Drake completed drilling the first successful oil well in Titusville, Pennsylvania. Fifty-one years later, the United States passed the United Kingdom as the world’s largest manufacturer. With a manufacturing input average for energy costs of 13.5 percent and 8.5 percent for labor, the United States held the manufacturing crown for a century based on cheap and abundant energy supplies.

But U.S. daily production peaked in 1970 at 9.6 million barrels of oil and 2.1 million barrels of gas liquids, and then steadily declined to bottom at 3.8 million barrels of oil and 0.8 million barrels of gas liquids in September 2005.

As the United States lost its energy cost advantage, China’s much lower labor costs and lax environmental enforcement acted as a magnet for outsourcing thousands of U.S. factories. With the Great Financial Crisis, China took the manufacturing crown in 2010.

But to continue powering its “factory to the world” over the next decade, China’s daily voracious growth saw its crude oil imports rise from 4.7 million barrels to 10.1 million barrels per day. But the shale fracking boom drove U.S. imports down from 10 million barrels a day in 2010 to zero in late 2019. The United States is a net petroleum exporter in 2020.

The Chinese economy “fell off a cliff” in the first two months of 2020, with industrial production down 13.5 percent and consumption down 20.5 percent. But China reopened its airports and harbors and ordered workers to resume operations in order to gain export market share from its foreign competitors hobbled by virus quarantines.

China was already losing manufacturing competitiveness to the United States’ regaining energy costs; now China must face serious concerns that its fast transit of people and products has proven to be a highly effective vector to spread communicable disease pandemics.

Chriss Street is an expert in macroeconomics, technology, and national security. He has served as CEO of several companies and is an active writer with more than 1,500 publications. He also regularly provides strategy lectures to graduate students at top Southern California universities.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.