U.S. Fracking Boom Stabilizes Oil Market

The U.S. fracking boom has
reduced the country’s carbon dioxide emissions as cleaner
burning natural gas replaces coal in generating electricity.
Fracking not only boosts natural gas supplies, but also petroleum
production. The result of increased U.S. oil production has been
less volatile oil prices according to a report
issued by the Energy Information Administration. From the EIA:

Record-setting
liquid fuels production growth in the United States has more
than offset the rise in unplanned
global supply disruptions over the past few years, although
differences in quality and location suggest that the substitution
may not be exactly 1-for-1. U.S. liquid fuels production, which
includes crude oil, hydrocarbon gas liquids, biofuels, and refinery
processing gain, grew by more than 4.0 million barrels per day
(bbl/d) from January 2011 to July 2014, of which 3.0 million bbl/d
was crude oil production growth. During that same period, global
unplanned supply disruptions grew by 2.8 million bbl/d.

U.S. production growth, the main factor counterbalancing the
supply disruptions on the global oil market, has contributed to a
decrease in crude oil price volatility since 2011. Over the past 13
months, the monthly average Brent price has moved within a narrow $5
per barrel range, between $107 per barrel and $112 per barrel.
In contrast, the range of monthly average Brent prices over the
prior 13-month period (June 2012-June 2013) was $21 per barrel.

Global unplanned supply disruptions averaged 3.2 million bbl/d
during the first seven months of 2014 and peaked at 3.5 million
bb/d in May 2014. The current level of supply disruptions is the
highest since the Iraq-Kuwait War (1990-91), when supply
disruptions peaked at 4.3 million bbl/d, based on data from the
International Energy Agency.

Fracking is good for the planet and pocketbooks.