This article was published by The McAlvany Intelligence Advisor on Wednesday, July 4, 2018:  

Scott Sheffield, the Chairman of Pioneer Natural Resources, was interviewed by CNNMoney on June 20. At that moment in time, according to the U.S. Energy Information Administration (IEA), the U.S. oil industry was pumping 10.3 million barrels a day (bpd). By the time the interview ended and the article was published, the latest report for that week on U.S. crude oil production showed Sheffield and CNNMoney already dreadfully out of touch: U.S. production that week topped 10.9 million bpd, with little to keep new records from being set on a weekly basis going forward.

Sheffield, the head of an oil company with revenues exceeding $5 billion and assets in recoverable oil reserves approaching $20 billion, went on to say that he expects U.S. crude oil production to surpass 11 million bpd “within the next three or four months.” It looks like that milestone will be exceeded this month. He went on to predict that, “We’ll be at 13 [million bpd] very quickly” and could jump to 15 million bpd “within seven or eight years.” A glance at the latest report (see Sources below) shows Sheffield might understate achievement of that milestone by at least five years.

Already American crude oil producers are out-producing Saudi Arabia and Russia, and consequently making much of the conversation in the mainstream media about the current price of oil and gasoline silly and irrelevant.

The MSM has reported that excessive angst over cuts in production in Libya, where the ongoing conflict there has taken 850,000 barrels a day of crude off the world markets; in Venezuela, where the economic implosion there has removed nearly a million barrels a day over the last year; in Iran, where U.S.-imposed sanctions are expected to take more than a million bpd off the world market starting in November; and in Canada where a power outage at its Syncrude facility in Alberta has taken 360,000 bpd off the world market; pushed the price of crude above $75 a barrel. During its reporting, the MSM has had precious little to say about the revolution in oil production taking place under their collective noses right here in the U.S.

At the same time OPEC decided to increase its production of crude due to the scuttling of its production cut agreement, Russia stated that it intends to add another 100,000 bpd to the equation. These developments pushed crude oil prices down sharply. OPEC, in anticipation that that agreement would end in Vienna in late June, raised its production by 320,000 bpd in May with the goal of adding between 600,000 and 700,000 bpd by the end of the year. And the Canadian oil refinery is expected to be back in full production by the end of this month.

All of which caused the price of crude oil for August delivery to drop intraday on Tuesday by two dollars a barrel before rebounding by the close. That drop portends further declines as investors come to understand that Saudi Arabia and OPEC (and Russia) are nearly maxed out, while American producers are just getting their second wind.

This bodes well for American motorists, who have seen the price of gas at the pump rise to nearly $3 a gallon, costing the average household an estimated $440 a year that it wasn’t expecting.

As members of the OPEC cartel – and non-members like Russia – reach their outer limits of production, they will discover their worst fear being realized: America is not only in the driver’s seat as the world’s largest energy producer, but is likely to remain firmly in that seat for years to come. And there’s nothing they can do about it.


Sources:

Background on Pioneer Natural Resources

CNBC.com: Oil tops $75 for first time since 2014 and then rolls over

OilPrice.com: This Is How Much U.S. Households Lose As Gas Prices Rise

MarketWatch.com: U.S. oil turns lower, Brent pares gains as traders weigh supply prospects

MarketWatch.com: U.S. oil prices take sudden turn lower after a report over Saudi Arabia’s ‘readiness’ to boost output

US oil field production chart

Money.CNN.com: Shale exec: US will be the world’s biggest oil producer by the fall

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