United States Now Number One in Oil Reserves

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It appears there’s a new leader in global oil reserves. And it’s us. According to a report from the Financial Times, the United States now leads the world in recoverable oil reserves. A recent estimate form Rystad Energy estimates recoverable oil in the U.S. to be 264 billion barrels, compared to Russia’s 256 billion barrels and Saudi Arabia’s 212 billion barrels.

That is, of course, good news for American consumers. It is also welcome news for the geopolitical scene, which has been influenced to a great degree by middle eastern nations that wield global power through their vast oil holdings. Perhaps even better news is that, given recent discoveries in the Permian Basin in Texas and New Mexico, America’s oil glut is likely to increase even more.

“There is little potential for future surprised in many other countries, but in the US there is,” said Per Magnus Nysveen, analyst at Rystad Energy. “Three years ago the US was behind Russia, Canada, and Saudi Arabia.”

Not all experts agree, though, on either the amount of recoverable oil in the U.S. or about what expanded reserves in the U.S. would mean globally. Other notable estimates still place the U.S. behind other nations in oil reserves. Some experts also believe that U.S. reserves are not likely to disrupt the oil market completely, mostly because of the relatively high expense of producing American oil. Richard Mallinson, of Energy Aspects in London, for example, explains that the cost of production is a huge factor in determining the significance of oil holdings.

“Reserve numbers matter but lots of other factors also determine short and long term returns from what the oil companies and nations hold,” Mallinson told Financial Times. “The rise in prominence of the US doesn’t diminish the role of Saudi Arabia or Russia, which have some of the cheapest to produce oil in the world.”

While opinions vary about how America’s oil reserves will eventually affect the global marketplace, one piece of news that is not disputed is that gas prices in the U.S. have benefitted from a drop in oil prices. In fact, the Energy Information Administration (EIA) recently reported that the retail price of regular season will average $2.04 per gallon during the summer of 2016. That is down from $2.63 per gallon last summer and also represents the lowest summer average since 2004. That means more disposable income in the hands of American consumers and lower overhead costs for many businesses.

See EIA’s Fuel Outlook Here

“Access to more domestic oil is good for America’s national security and ultimately good for consumers here at home,” says PACE Executive Director Lance Brown. “However, we have to remain committed to keeping production costs for American oil competitive. The U.S. can use its oil supplies to make our nation stronger and more independent, but that won’t be possible if we choose a path of excessive regulation and higher costs of production.”