U.S. Shale Boom Could Tip the Balance of Oil Industry Dominance

As crude oil prices have dropped by a stunning percentage since last June, the global oil industry has been in a continued state of crisis.

Traditionally, the oil industry has been dominated by the nations of the Middle East, with competition from the U.S. oil market never really comparing to the power of the Organization of the Petroleum Exporting Countries (OPEC). That might all change as the U.S. shale boom, driven by the rich shale oil fields found throughout Texas and North Dakota, continues to hit its stride that first started in 2008.

According to an April 23 New York Times article, industry experts are predicting that the U.S. might soon become the swing producer of oil that determines global oil prices, a position long held by OPEC.

American shale fields now account for nearly half of the world’s global oil supply, and shale has been proven to be much more versatile and adaptable to market fluctuations than any other production method. It’s not surprising, then, that shale oil and gas production is expected to grow to 13.6 trillion cubic feet by 2035, according to Energy Information Administration predictions.

The biggest proof of the U.S.’s new dominance of the global oil market is OPEC’s response to falling prices. The last time oil prices slumped in late 2008, OPEC was able to stabilize the market by cutting its production, which brought prices back up. During the recent downturn, OPEC has maintained its production.

“Why doesn’t Saudi Arabia think that couldn’t work again today?” Rene G. Ortiz, a former Ecuadorian oil minister who once served as OPEC’s secretary general, told the New York Times. “Because of the soaring U.S. production. Today’s OPEC is thinking about market fundamentals rather than manipulating the market because it doesn’t have the same power it once had.”

That isn’t necessarily a bad thing for OPEC, however. According to OilPrice.com, the U.S. and Saudi Arabia — undoubtedly the leading nation within OPEC — have developed highly efficient and resilient oil industries that will be able to withstand slumps in the market like the one currently taking place.

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