There have been many changes in the oil and gas industry throughout the past decade, mainly due to the nature of the challenges faced by businesses within this sector. Many have had to adapt in order to stay relevant, and to continue providing the world with affordable energy.
One of the main instigators of change has been technology, which has evolved at a startling rate over the past ten years and has impacted almost every industry in the world. However, there are other notable differences between the sector in 2004 and in 2014 – here we discuss what they are and how they manifested.
Gas Prices in the US
Many would argue that gas prices are currently extremely high in the United States, particularly in comparison to what they were at pre-2003, when it was deemed extortionate as they hit record levels of $1.75 a gallon. It was unclear how people would cope with such a high amount, but today we see prices of $2.93 per gallon.
As a result, vehicle owners have struggled; however, it has not been as bad as many anticipated. This may be a result of the fact that a barrel today would cost approximately $100, which is a decrease on the $147 people were paying in 2008 in the midst of the financial crisis.
Shale Extraction
With increasing costs to deal with, and the fact that the majority of energy was being imported from foreign regions – such as the Middle East – the oil and gas industry needed to adapt. Companies ran the risk of pricing their customers out of fuel if they couldn’t reduce costs. The answer, as devised by smaller firms in the south of the US, was shale extracting – or “fracking”.
New technology allowed the experimentation of new techniques, which involved drilling horizontal holes underground and injectingwater, sand and chemicals through at high-pressure, in order to extract gas from subterranean rocks. This quickly took off and is now a huge market in its own rights.
Reliance on Foreign Oil
In 2008, the US was producing just 5 million barrels of crude oil per day, hence whyit was relying so much on imports. However, with fracking becoming a more prominent force in the energy market that has since changed.
The average in October last year was around 7.7 million barrels per day, the highest it has been in 25 years. This means that more than half of the oil and gas consumed by America was sourced domestically – a huge step in breaking away from the previous reliance on foreign energy.
Around the World
Despite the fact that gas prices have increased in America over the last ten years, it was and remains significantly cheaper than other areas of the world; particularly Europe and the Far East. In Japan for example, costs have been as high as $18 per MMBTU, and in Germany it has reached $12 per MMBTU.
It may be a viable option for these countries to also enter the fracking industry in the future, in order to drive down costs for consumers.
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