We’re only a week into the new year, and already it seems like we’re seeing more encouraging signs for the United States’ energy concerns. Let’s start with energy industry jobs, which according to the Bureau of Labor Statistics just posted their first monthly rise since September 2014. Reuters reports:
“Probably around August to September last year we started to see an increase in the amount of need out there from companies that are looking to hire and that continued through the holidays, which is rare,” said Jeff Bush, President of oil & gas recruiting firm CSI Recruiting in Texas. “I think we’re going to see a very busy year for hiring in oil and gas here in the United States.”
But the good news doesn’t stop there. According to the Energy Information Administration (EIA), the average American gas price last year hit its lowest level since 2004:
U.S. regular retail gasoline prices averaged $2.14 per gallon (gal) in 2016, 29 cents/gal (12%) less than in 2015 and the lowest annual average price since 2004. Lower crude oil prices in 2015 were the main cause of lower gasoline prices. In 9 of the 10 cities for which EIA collects weekly retail price data, gasoline prices did not exceed $3.00/gal.
The EIA correctly identifies bargain oil prices as the primary driver behind this drop in gasoline prices, but let’s go one step further and identify American shale production as the biggest reason why crude prices collapsed in the first place. Burgeoning U.S. production in recent years, driven largely by shale companies, has produced a global glut that in turn has helped bring down oil prices. This is having some very positive knock-on effects for American drivers, who are enjoying our country’s cheapest gas prices in more than a decade.
Of course, as nice as it’s been for consumers, the bearish crude market has had a negative effect on companies in the business of selling oil. Shale operations are relatively expensive, and as a result they’ve been particularly vulnerable to sliding oil prices over the past two and half years, falling from a high of more than 9.6 million barrels per day (bpd) in June of 2015 down below 8.5 million bpd in October 2016. But over the past three months, America’s oil output has been steadily rising, buoyed by an uptick in prices (a market rebound that comes courtesy of the fact that petrostates will be cutting their production in 2017). In fact, for the tenth week in a row, the number of American oil rigs in operation just increased. Reuters has more:
Drillers added four oil rigs in the week to Jan. 6, bringing the total count up to 529, the most since December 2015, energy services firm Baker Hughes Inc said on Friday. That was the first time the current rig count topped the year ago level since January 2015. A year ago, there were 516 active oil rigs. It was also drillers longest weekly streak of adding rigs since August 2011.
This week’s solid performance makes it 29 out of the past 32 weeks that the U.S. rig count has increased, and is yet more evidence of the increasingly solid footing our energy producers are finding themselves on in 2017. Whatever metric you want to use—whether its jobs, gas prices, or drilling rigs—America is on the precipice of another stellar shale-powered year in energy.