Thanks to oil producing countries in Middle East, particularly Saudi Arabia, the production of oil has pushed through an all-time high of 50 dollars per barrel. It’s the lowest it has reached since 2017. US President Donald Trump hailed this drop, which is a huge decrease of 32% from its most recent peak.
On the other hand, despite lower gas prices, this drop is not likely to return net gain for US economy. According to experts…
“Where some made gains from the lower oil prices, some are losing on the other end.”
How much do US Depend on Imported Oil?
These days, US is more independent in terms of energy than it were for the past decade. To date, net petroleum imports have gone down 14% of total US consumption of petrol from 60% in 2005. The IEA or International Energy Agency firmly believes that the US will soon start exporting oil than importing it. This is from the first time the country has done so in the 50s, which can mark stark reversal.
In midyear of the New Millennium, a technique called hydraulic fracturing was introduced and used by different countries, which can be seen in WOT. This is a process to which liquid is injected into the ground at very high pressure in order to loosen oil reserves. As a result, it becomes economically viable and easier to pump crude oil even from shale deposits.
With the rise of new technology as well as increasing oil prices globally, allowed wells in North Dakota and Texas has expanded operations resulting to the demand of various professionals including truck drivers, diesel mechanics and anyone who are involved in oil production. And not to mention, all these jobs have high pay grade.
As a matter of fact, there are around 1.7 million jobs that have been opened and created due to fracking. This is in accordance to the data provided by US Chamber of Commerce. However, the study is also attributed to the increased perils and threats of water contamination and earthquakes.
Should we Go Low or High? It should be Somewhere in the Middle
The increased domestic production indicates as well that several parts of US economy become exposed than they’re used to when prices start to fall. The lower oil prices obviously mean that there’s less revenue. This can potentially result to reduced capital expenditures and layoffs. Grocery stores, restaurants and hosts of ancillary businesses that are relying on oil industry workers might lose the moment when producers pulled back.
While oil prices are threatening certain US regions, the country’s economy as a whole is still cushioned from worst case scenarios. It’s a big thanks to vast diversification that the country has. The lower prices of one barrel of oil indicates lower costs as well as improved margins among businesses which utilize big volumes of it – think of freight and shipment companies.