Jul 19, 2018

The consequences of the U.S. crude oil boom

Drilling rigs in North Dakota. Photo: Ken Cedeno/Corbis via Getty Images

U.S. crude oil production reached a new milestone — averaging an estimated 11 million barrels per day last week for the first time ever — and the surge will keep going as America has again become a crude powerhouse.

Why it matters: The number, which is from preliminary data from the Energy Information Administration, is a symbolic threshold that underscores the scale of the U.S. oil boom from shale resources.

  • Shale has basically fueled a doubling of the country's output over the last decade to allow the U.S. to join Saudi Arabia and Russia as the world's biggest producers.

Yes, but: The eye-popping U.S. production data in recent months and years arrives amid reminders that for all the White House bravado about achieving energy "dominance," the U.S. remains tethered to OPEC and Russia — and global markets generally — in fundamental ways.

  • Consider that this summer, President Trump joined the list of U.S. presidents who have pled with the Saudis to boost production to help with U.S. needs (a topic we explored here).

Between the lines: Right now, despite the U.S. surge, Trump needs more barrels on the market from the Saudis and others to meet his foreign and domestic political priorities.

  • He's trying to drive down Iranian exports with new sanctions, but wants greater output elsewhere to prevent gasoline price spikes that could hurt Republicans politically.

The big picture: EIA expects the U.S. to average 12 million barrels per day of crude production in 2019, becoming the world's largest producer.

  • The International Energy Agency sees oil output from shale formations, which now represent about two-thirds of U.S output, plateauing at well over 11 million barrels in the mid-2020s.

The bottom line: The U.S. surge isn't going away, but it's hardly a panacea.

To be sure: Those weekly EIA estimates are rounded to the nearest 100,000 barrels and very preliminary. But they're also directionally right, even if more precise data will arrive later.

One level deeper: Reuters unpacks the 11 million figure here, noting that if confirmed by subsequent data, it would put the U.S. just behind Russia as the largest producer right now.

A practical question at this point: "This report comes amidst worries that infrastructure bottlenecks, which make it difficult for producers to get their oil to market, could soon start curtailing output," per Reuters.

Go deeper

Bernie Sanders wins Nevada caucus

Democratic presidential candidate Sen. Bernie Sanders waves to supporters at a campaign rally on Friday in Las Vegas. Photo: Mario Tama/Getty Images

Sen. Bernie Sanders is projected to handily win the Nevada Democratic primary caucus, becoming the clear frontrunner among 2020 Democratic presidential primary election candidates.

Why it matters: Nevada is the first state with a diverse population to hold a nominating contest, highlighting candidates' abilities to connect with voters of color — particularly Latino voters.

Go deeperArrowUpdated 1 hour ago - Politics & Policy

South Korea and Italy see spikes in coronavirus cases

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens.

The novel coronavirus has spread to more nations, and the U.S. reports a doubling of its confirmed cases to 34 — while noting these are mostly due to repatriated citizens, emphasizing there's no "community spread" yet in the United States.

The big picture: COVID-19 has now killed at least 2,362 people and infected more than 77,000 others, mostly in mainland China. New countries to announce infections recently include Israel and Lebanon, while Iran reported its sixth death from the virus. South Korea's confirmed cases jumped from 204 Friday to 433 on Saturday and Italy's case count rose from 3 to 62 by Saturday.

Go deeperArrowUpdated 2 hours ago - Health

America's rundown roads add to farmers' struggles

Illustration: Sarah Grillo/Axios

American farmers are struggling to safely use the roads that cut through their fields; decades of neglect and lack of funding have made the routes dangerous.

The big picture: President Trump has long promised to invest billions in rural infrastructure, and his latest proposal would allocate $1 trillion for such projects. Rural America, where many of Trump's supporters live, would see a large chunk of that money.