World events that threatened global oil production and distribution are scarcely having an effect on oil prices in the United States. The current period of stability, which contrasts with historic spikes that occurred during periods of strife in other regions, is due largely to the shale revolution, according to the Energy Information Administration (EIA) in a recent report.
The price of Brent crude oil has been noteworthy for having fluctuated within a narrow range of $5/barrel (bbl) for 13 consecutive months. This was during a period of significant turmoil in Libya and Iraq. The lack of movement during that time is in sharp contrast with Brent crude oil prices for the period between early 2008 and the middle of 2013, when prices hit a high of $125/bbl in March 2012, and a low of $95/bbl just three months later, the EIA report said.
Historically, commodity prices in the United States fluctuate whenever supply is threatened or disrupted, according to EIA Brent data. However, most of the growth in supply from countries outside the Organization of the Petroleum Exporting Countries (OPEC) over the past two years has come from the United States and Canada. Supply from the two countries increased to 18.2 million barrels of oil per day (MMbopd) from 14.7 MMbopd, thanks to contributions from U.S. shale formations, the EIA said.
As tight oil production rises, the energy dependence of non-OPEC countries on imported oil is lessening significantly. This move toward more energy independence is one of the main factors in increased price stability, the EIA said in its report.
The U.S. produces about 10.4 percent of global crude oil production, according to the EIA website. Of that amount, 4.3 percent is tight oil, while the remaining 6.1 percent is produced using other techniques. In the fourth quarter of 2013, tight oil production in the United States averaged 3.22 MMbopd, out of a total production average of 7.84 MMbopd.
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