Report for API quantifies new technologies’ 2013 US economic benefits
Innovations in hydraulic fracturing and horizontal drilling that have driven the energy renaissance in the US were responsible for about 48% of the nation’s crude oil production and shaved as much as 94¢/gal off of fuel prices in 2013, according to a recent report commissioned by the American Petroleum Institute.
“For the first time in generations, surging domestic production is driving our energy security and creating large benefits for consumers,” said Kyle Isakower, API vice-president, regulatory and economic policy.
“Over the last 5 years, nearly every barrel of new US production can be attributed to the use of horizontal drilling and hydraulic fracturing technologies, and that production is reshaping global markets in a way that is strengthening the US both economically and diplomatically,” Isakower told reporters during an Oct. 30 teleconference.
The study, by ICF International, compared historical price and production data from 2008 to 2013 against a scenario without advanced horizontal drilling and fracing. Without the technologies, ICF estimated that international crude oil prices would have averaged $122-150/bbl in 2013—a $12-40/bbl increase.
The corresponding discount on gasoline and other refined products was 29-94¢/gal, the study continued. In total, US consumers saved an estimated $63-248 billion in 2013. From 2008 to 2013, their cumulative savings was $165-624 billion, it said.
Isakower said US Energy Information Administration Administrator Adam Sieminski recently estimated that 2014 had the potential to be another expensive year for US consumers, with global supply outages adding up to about 3 million b/d. “Without new American production, he speculated that prices would be about $150/bbl—consistent with ICF estimates,” Isakower said.
He noted that while most observers now credit US production with reshaping global markets, it’s important for policymakers to recognize that the American energy revolution was not a lucky accident. “It was the result of decades of American innovation aimed at unlocking our resources here at home,” Isakower said. “And it happened primarily on state and private land.”
He said, “To build that momentum and strengthen our position as an energy superpower, it’s critical that policymakers turn aside duplicative regulations on hydraulic fracturing and ensure that US consumers can benefit from energy production on federal lands that remain off-limits.”
He concluded, “We also must work quickly to solidify our role as an energy superpower by modernizing ‘70s-era trade restrictions that prevent US oil from reaching global markets.”
Contact Nick Snow at [email protected].
Nick Snow
NICK SNOW covered oil and gas in Washington for more than 30 years. He worked in several capacities for The Oil Daily and was founding editor of Petroleum Finance Week before joining OGJ as its Washington correspondent in September 2005 and becoming its full-time Washington editor in October 2007. He retired from OGJ in January 2020.
