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Brooks Wilson's Economics Blog: Drill Baby, Drill

Wednesday, December 2, 2009

Drill Baby, Drill

It's amazing what the expectation of higher prices will do for oil exploration; people do respond to incentives. Sarah Wolfe writes for Energy Digital in "US crude oil production could see largest increase in four decades, says Platts analysis," that

According to a recent analysis from Platts , a leading global provider of energy and metals information, the United States is primed to see its largest one-year increase since 1970 in crude oil production.

The US averaged 5.268 million barrels per day through the month of October. With this amount, this year’s overall gain is the highest since the country produced 9.637 million barrels per day in 1970, according to Platts’ summary of data released by the US Energy Information Administration.

According to Platts, if the 5.2687 million barrels per day output continues through the end of December, there could be a 6.4 percent jump over 2008’s 4.95 million average. This year would then rank as the best in US oil production since 2004, when the average output was 5.419 million barrels per day.

A major cause for the oil production increase is more activity in the Gulf of Mexico. The industry has bounced back in the region since last year’s hurricane season and a group of new deepwater fields are emerging.

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  1. dr wilson this is a great blog you are obviosly very inteligent and know alot about economics. i dont know that much about economics but i enjoy reading your blog.

    Chavis smith

  2. Hurricanes occur less in this year than last year for as long as I could remember. No surprise that it helps the oil production increases and this drive the gas prices down a little bit. As a driver, cost of transportation is part of my financial layout. It's good to hear such a report.

  3. Ryan Mezynski3/12/09 6:40 PM

    With an expectation of higher oil prices, the oil companies will want to find more oil to sell so they will see an increase in revenues. Although if the oil companies increase their supply there will an excess of oil, which will result in a decrease in demand. Therfore resulting in a decrease in price. This will do the opposite of what the oil companies wanted by selling a lot of oil at low prices, which is great for me and others. So keep up the production.

  4. Laura Ehlers3/12/09 11:07 PM

    It is good to read about our country producing its own oil. We must reduce our dependency on foreign oil. Of course when Americans see some lower gas prices, then we will see more of those gas guzzlers polluting our roadsides again. Hey, maybe we could start building some more Hummers and get our car industry back in the black! Will Americans ever learn to conserve our limited resources?

  5. Responding to incentives…
    It is pretty amazing how our country will respond to incentive. The oil fields grow in the Gulf of Mexico and engineers and exploration teams jump on the opportunity to drill more oil and have a chance to jump ahead in oil production. Although this is a quick fix to our nation’s environment problems it will help us to receive more time until the alternative energy plans become more available.

  6. Hopefully this will help solve our oil problem, or at least get us heading in the right direction.