U.S. oil production is stabilizing global prices

June 1, 2014 

Tom Hudson's May 24 column in the Herald ("Two words you won't hear from oil companies: lower prices") claimed U.S. oil production has failed to reduce energy prices, but it ignored the global impact that expanded American production is having.

For example, Fitch Ratings concluded earlier this year that "all oil-consuming countries benefit from the stabilizing effect of increased U.S. output on world oil prices."

A report from the Center for New American Security concluded that "new U.S. oil supplies have helped to cap the price spikes caused by severe global supply disruptions and to moderate oil prices for consumers."

The New York Times wrote last year that it was "overwhelmingly clear" that U.S. production -- coming increasingly from shale, thanks to fracking and horizontal drilling -- is stabilizing global oil prices.

"The development of America's shale resources," the Times concluded, "is providing a level of supply security and price regularity for the global oil market, which means it's also preventing the types of price spikes that ultimately harm American consumers."

AAA has noted that U.S. oil production has kept gasoline prices about 40 cents lower than they would be otherwise.

"Without the surge in domestic crude oil production and expanded refinery capacity," AAA spokesman Michael Green said last month, "it is likely that drivers in most parts of the country would be paying at or near $4 per gallon this spring for gasoline."

Record U.S. oil production is creating jobs and benefitting American consumers through more stable and even lower fuel prices than what they would be otherwise. The fact that prices are set on a global market is an indication of just how vast America's energy resources are.

Steve Everley, Energy In Depth, Independent Petroleum Association of America Washington, D.C.

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