After having to import massive amounts of foreign energy for most of its modern history, the US became energy independent in 2019, thanks to the fracking and shale revolution. Domestic oil and gas production dipped briefly during the pandemic as global demand collapsed, but it quickly bounced back.
Today, the US is the largest crude producer in the world by a long shot, pumping out over 13 million barrels per day and accounting for nearly 20% of the world’s total oil production. Indeed, the US is now producing more oil than any country in history.
It’s a similar story for US natural gas production, which has also been setting record highs since recovering from the pandemic in 2021. As of 2022, the US exported far more natural gas than it imported – the bulk of which has been converted to liquified natural gas (LNG) and gone to Europe to ease the energy shortage created by the cutoff of Russian supplies following Putin’s invasion of Ukraine. Last year, the US overtook Australia and Qatar as the world’s largest exporter of LNG with the country’s export capacity set to continue growing.
Source: Chart Advisor, Investopedia
Meanwhile, the US continues to deploy renewables, such as solar power and battery storage, at a significant rate. Together, these sources are expected to make up 81% of all new electric-generating capacity in the country this year. Such growth is thanks to the decline in the cost of these technologies, and expectations that they are going to get even cheaper as they get deployed further, in turn boosting adoption, getting more competitive, in a virtuous cycle.
In short, the US has become the world’s top energy superpower.
America’s growing market share deprives Russia, Saudi Arabia, Iran, and other petrostates of pricing power and geopolitical leverage, lowering energy prices and boosting geopolitical stability. US oil supply growth has also kept oil prices relatively low in the face of Organization of the Petroleum Exporting Countries (OPEC) production cuts designed to prop them up.
Even with the “OPEC+” additions, the cartel currently controls less than half of the global supply of oil (and shrinking). Lower energy prices stimulate the global economy and help ease inflationary pressure.
US energy abundance could usher in a new era of US technological advancement and productivity growth that increases living standards. If this seems like tremendous news for America, that’s because it is. Perhaps yet another reason for US stock markets to be at record highs.
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