As U.S. oil production hits its highest level in 31 years, Americans are using energy differently, and petroleum prices are falling despite a strengthening economy, according to a recent article in Businessweek.
“As the U.S. moves closer and closer to energy independence, greater fuel efficiency, changing demographics and an increase in renewables are altering the dynamic that in the past would have seen demand for gasoline climbing,” the article states. Gross domestic product grew at a 2.4 percent pace in the third quarter, but oil consumption fell 0.3 percent, government data show.
“Oil demand and GDP growth used to go hand in hand,” Christopher Knittel, a professor of applied economics at Massachusetts Institute of Technology’s Sloan School of Management, told Businessweek. “Now, they’re in some ways almost independent of each other because of investments in fuel economy that tended to break the link.”
The shale boom has driven U.S. output to the highest on a weekly basis since 1983, with oil production up 65 percent in just five years and the country supplying 89 percent of its own energy in 2014, according to Businessweek.
“It is a great success story that we are now producing oil in the quantity that we are,” U.S. Treasury Secretary Jacob J. Lew told CNBC. “The independence that we’ve developed in the energy sector, it is a clear positive if you look at the impact on our economy.”
One factor driving down demand is the migration of younger Americans to urban areas. “The population in downtown areas grew at more than double the overall rate of U.S. metropolitan areas from 2000 to 2010, according to the Census Bureau,” the article states. “More people living in city centers means more people who can get around without cars.”
Higher production has allowed the U.S. to import the least oil in almost two decades, build more chemical plants and increase fuel shipments abroad to 3.6 million barrels a day, the most in the world, according to Businessweek. Combined with lower prices, rising output has spurred calls for the government to lift restrictions on most U.S. crude exports.
To read the Businessweek article, click here.