Maybe the United States can finally be free of Middle Eastern oil after all.
A new report is out from the Organization of the Petroleum Exporting Countries (OPEC), and it states some bad news for OPEC but good news for Americans.
Report. The report shows that OPEC lost $76 billion in 2016. From The Daily Caller:
EIA’s report estimates that in 2016, OPEC earned about $433 billion in net oil export revenues. That’s 15 percent lower and $76 billion less than the $509 billion the cartel earned in 2015. This is the lowest earnings posted by OPEC since 2004.
EIA notes that OPEC’s relative losses were largely due to a decrease in the average annual crude oil prices during the year, and to falling net oil exports. New American oil production is the reason OPEC’s efforts to increase global prices have failed. OPEC wants the price of oil to be between $50 and $60 per barrel, but current prices are hovering around $47 a barrel. As recently as June 2014, the price of a barrel was almost $109.
Fracking. Another statement in the report blames U.S. fracking for the losses:
OPEC’s report published Friday blames the U.S. fracking, in particular for its losses. Fracking has greatly increased U.S. oil production, leading to a lengthy period of very low oil prices.
OPEC’s plea. According to CNN Money, OPEC is asking the U.S. and others in the market to stop producing so much oil so they can see an increase in prices per barrel:
OPEC has asked a favor of other major producers: Please stop pumping so much and help us balance the market.
The unusual plea was issued Thursday in the cartel’s closely-watched monthly report, which found that global markets are still suffering from too much supply.
The report said that balancing the market would “require the collective efforts of all oil producers” and should be done “not only for the benefit of the individual countries, but also for the general prosperity of the world economy.”
Why this matters? It shows that the U.S. can independently produce the oil necessary to fulfill the needs of Americans. The less the U.S. is reliant on foreign entities for oil, the better.
It’s interesting that OPEC seems to be losing the control they’ve had for so many years. That’s definitely a good thing.