U.S. may become top oil producer IF price of oil stays high

[Emily]

http://theadvocate.com/news/business/4227015-123/us-may-become-top-oil

By JONATHAN FAHEY

AP energy writer

October 31, 2012
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NEW YORK ? U.S. oil output is surging so fast that the United States could soon overtake Saudi Arabia as the world?s biggest producer.

Driven by high prices and new drilling methods, U.S. production of crude and other liquid hydrocarbons is on track to rise 7 percent this year to an average of 10.9 million barrels per day.
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Whether the U.S. supplants Saudi Arabia as the world?s biggest producer will depend on the price of oil and Saudi production in the years ahead. Saudi Arabia sits on the world?s largest reserves of oil, and it raises and lowers production to try to keep oil prices steady. Saudi output is expected to remain about flat between now and 2017, according to the International Energy Agency.

But Saudi oil is cheap to tap, while the methods needed to tap U.S. oil are very expensive. If the price of oil falls below $75 per barrel, drillers in the U.S. will almost certainly begin to cut back...

http://dailyreckoning.com/oil-booms-and-busts/

Oil Booms and Busts
By Byron King | 04/17/07
[snip]
Let?s discuss that oil bust. There were a lot of reasons for that oil price crash of the 1980s. Among them were that the high oil prices of the late 1970s, caused by the loss of oil output from Iran after the fall of the Shah and the Iranian Revolution, led to a worldwide recession. The recession reduced demand for oil and allowed prices to fall. Also, a number of then new oil provinces of the world were coming on line, and oil output grew rapidly from nontraditional locales such as Alaska, the North Sea and Mexico. And one critical reason for the fall in the price of oil was purely geopolitical, in that the Saudis maximized oil production to drive the price down and hurt the economic interests of the Soviet Union, which had invaded Afghanistan in 1979. By reducing the price of oil, the Saudis indirectly deprived the Soviets of a key source of hard currency, from the sale of Soviet oil for U.S. dollars. As the Mogambo Guru likes to say, ?Everything is connected to everything else.?

Read more: Oil Booms and Busts http://dailyreckoning.com/oil-booms-and-busts/#ixzz2B0vSfl8f