The Oil Industry and US Economy

The extraction of natural gas and oil from the oil shale has decreased the oil reserves of the United State (US). The import of crude oil is contributing to the US economy in the forms of growth, investment, and jobs. Production and exploration of oil are also important for US industries. In the earlier 21st century US was struggling under declining domestic production of oil and the US economy needed to import more oil. In the middle of 2000 US evolved new technologies that permit companies to draw natural gas and oil from shale deposits. Once, these shale deposits were considered exhausted because the extraction cost would be unfeasible. In 2020, the oil prices were collapsed due to coronavirus slowing down the US economy.

The price of oil also affects the cost of doing business. Oil prices affect the cost of manufacturing as well as production throughout the USA. For example, the cost of flights and gasoline directly affect the transportation cost of goods and people. The reduction of oil prices is passed on to the consumer. From the consumer, large discretionary income can further stimulate the economy. Now, the production of oil is increasing in the US that can hurt the oil-producing companies and it can also affect the domestic worker of the oil industry.

The production and exploration of oil reserves have been a good source of jobs. The hydraulic fracture wells tend to have shorter oil production life. So, every country tries to explore new oil deposits. All these activities require labor that includes truck drivers, drilling crews, diesel machines and loader operators. It also supports many other businesses like car dealerships, restaurants and hotels. In these ways the oil companies and price of oil contribute to the US economy.

The price of oil in the open market depends on supply and demand. In the spring season of 2020, OPEC increased their oil production at a very high level and the consumption of oil in the world was very low. The oil prices in the international markets got down to negative because of the high supply of oil that hurt the US economy. According to the EIA, 1n 2019, the production of oil by the US was approximately 19.5 MBPD (million barrels per day). It made the USA the world's largest oil-producing country followed by Russia and Saudi Arabia. But Saudi Arabia (a member of OPEC) is the largest country for oil production followed by Russia and Iraq that export 60% of total oil export. 

By Muhammad Qusain S. Of Dorchester, Canada

https://www.upwork.com/o/profiles/users/~016eeb415613350c80/

References 

https://www.investopedia.com/articles/investing/081315/opec-vs-us-who-controls-oil-prices.asp

 

https://www.investopedia.com/articles/investing/032515/how-oil-prices-impact-us-economy.asp