Gas prices in the United States may be high, but they would be downright obscene without the current oil glut produced by shale oil extracted through hydraulic fracturing.
Fracking, as the practice is commonly known, has officially made the United States the world’s largest oil producer, according to a new report from Bank of America.
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The country has even surpassed OPEC giant Saudi Arabia in oil production. The milestone comes four years after the United States became the world’s largest natural gas producer, also thanks to shale extraction.
Without shale oil, which is obtainable largely due to fracking and horizontal drilling, another innovative oil and gas extraction technique, "prices at the pump would be completely unaffordable," one of the report’s authors told Bloomberg News.
U.S. production of crude oil, along with liquids separated from natural gas, surpassed all other countries this year with daily output exceeding 11 million barrels in the first quarter, the bank said in a report Friday. The country became the world’s largest natural gas producer in 2010. The International Energy Agency said in June that the U.S. was the biggest producer of oil and natural gas liquids.
"The U.S. increase in supply is a very meaningful chunk of oil," Francisco Blanch, the bank’s head of commodities research, said by phone from New York. "The shale boom is playing a key role in the U.S. recovery. If the U.S. didn’t have this energy supply, prices at the pump would be completely unaffordable."
Oil extraction is soaring at shale formations in Texas and North Dakota as companies split rocks using high-pressure liquid, a process known as hydraulic fracturing, or fracking. The surge in supply combined with restrictions on exporting crude is curbing the price of West Texas Intermediate, America’s oil benchmark. The U.S., the world’s largest oil consumer, still imported an average of 7.5 million barrels a day of crude in April, according to the Department of Energy’s statistical arm.