IRONY: How OPEC Is Now Guzzling American Oil, in One Chart
For the first time in recent history, low oil prices have ensured OPEC countries purchased more from Americans than they sold.
The American trade deficit with OPEC countries has flipped, according to data from the Census Bureau. The primary reason for the switch in the balance of trade is increasing American oil production from hydraulic fracturing, or fracking.
Cheap oil has OPEC in a state of disarray and a near economic civil war between its member nations. Most OPEC members and other major oil producers such as Russia need oil prices to stay above $80 a barrel to balance their budgets. These days, oil prices are hovering around $30 a barrel.
OPEC member Venezuela was even been forced by its failing economy to buy American crude oil in February, even though the country has some of the world’s largest petroleum reserves. Venezuela is buying American oil to supplement its own supply as the country faces total economic and social collapse.
To make matters worse for OPEC, the U.S. surpassed Russia in early 2015 as the world’s largest and fastest-growing producer of oil. America is now a major exporter of crude oil after effectively repealing the 1975 Energy Policy and Conservation Act in December.
The original purpose of the act was to reduce the impact of potential oil embargoes by OPEC. Exporting oil is expected to boost U.S. gross domestic product (GDP) by $38 billion, reduce the trade deficit by $22 billion and add 300,000 new jobs by 2020, according to another study by ICF International and the American Petroleum Institute.
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