The United States reached a historic milestone of global relevance: it achieved energy independence for the first time in 70 years.
In fact, in September the world’s largest economy exported 89,000 barrels of oil more per day than it imported.
Although it had previously recorded weekly surpluses in the oil balance, the data published at the end of November by the Energy Information Administration showed that for the first time the monthly surplus was reached.
Since 1949 this milestone, so desired by previous White House administrations especially after the 1973 energy crisis, was not reached.
Businessmen and analysts highlight the policies promoted by President Donald Trump that allowed the market to experience an unprecedented rise in oil production.
“This is a big milestone and one the Trump administration should be proud to usher across the finish line,” said Alfredo Ortiz, president and CEO of Job Creators Network, a nonpartisan organization founded by entrepreneurs.
In recent years oil companies have innovated to extract crude from previously economically unviable formations.
The refinement of fracking, horizontal drilling techniques and hydraulic rock fracturing coupled with a context of high oil prices for much of the preceding years were largely the basis for companies to begin experimenting with extracting oil from shale rock formations located at great depths in different parts of the United States.
“But how did we get here? The same approach America has capitalized on since our founding: free market innovation,” Ortiz argued in a Fox News column.
Currently, thousands of wells producing up to 3.2 million barrels are operated from the Permian region of Texas and New Mexico to the Bakken in North Dakota and the Marcellus formation in Pennsylvania, according to government data.
This revolution allowed the United States to displace Saudi Arabia as the world’s first producer since 2013, but it was not until September 2019 that the United States became, in fact, a net oil exporter.
This scenario opens up a new panorama at a global level since, historically, Saudi Arabia exercised the role of “swing producer,” that is, it had a notable influence on international oil prices (since it has an enormous amount of reserves and idle production capacity that allow it to alter crude oil production according to its convenience).
US is the new swing producer?
The U.S.’s brand new energy independence has led some operators and analysts to argue that the world market could have a new swing producer.
Indeed, despite the fact that production costs in the United States are considerably higher than those in Saudi Arabia, there is no doubt that U.S. energy independence represents a paradigm shift in which the Middle Eastern country and its partners in the Organization of the Petroleum Exporting Countries (OPEC) cannot move the market as easily as before.
Market specialists highlight President Trump’s qualities in exploiting America’s potential.
Joe McMonigle, an oil analyst at Hedgeye Risk Management and a former member of the U.S. Department of Energy, had told Bloomberg,“Trump is making America great again,” when in 2018 the country had registered a week of energy independence.
At the time, Bloomberg also interviewed Michael Lynch, president of the Center for Strategic Economic and Energy Research, who stressed that while “the change is gradual,” OPEC now has to take this new situation into account when analyzing whether to lower oil production to increase its price.
“We are becoming the dominant energy power in the world,” he said.