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The End of Expensive Oil?
Policy Brief

Published By

Stanford Institute for Economic Policy Research

March 2015

The shale oil and gas revolution in the United States (U.S.) has led to a more than 4 million barrels per day increase in domestic oil production since 2008. Combined with an almost 1 million barrel per day increase from the Alberta tar sands, the surge in North American oil production has significantly reduced the region’s demand for imported oil. Increased production of shale gas in North America and the significantly lower dollar per million British thermal unit (BTU) price of natural gas versus oil have caused a number of sectors of the U.S. economy to shift away from consuming oil to natural gas. Consequently, China, rather than the United States, is now the world’s largest oil importer, purchasing more than 7 million barrels per day from the global market. Figure 1 shows domestic production of oil in December of 2014 approaching the historical high of slightly more than 10 million barrels per day in November of 1970.
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