Domestic oil production outpaced imports last month for the first time since January 1997. The rapid turnaround has spooked OPEC, which has formed a committee to study how growing U.S. oil production will affect the cartel.

The United States took another big step toward energy independence last week. For the week ending May 31, the country produced 32,000 more barrels of oil a day than it imported, marking the first time since January 1997 that domestic production outpaced imports. The report from the U.S. Energy Information Administration showed that producers in the United States recovered 7.3 million barrels of oil per day last week, up 8,000 barrels per day. At the same time, oil imports dropped 549,000 barrels per day to 7.27 million.

After climbing for decades, oil imports have dropped more than 72 percent since 2005 as domestic producers have combined horizontal drilling with hydraulic fracturing to extract oil from shale and other dense rocks. Domestic oil production is up 46 percent from 2008. The industry has long known the tough rock layers contained oil and natural gas, but it was uneconomical to produce it before new techniques became widespread.

Industry leaders, politicians and others have touted an increased reliance on domestic energy as a way to boost the U.S. economy while ending or reducing the billions of dollars the nation sends to Venezuela, Saudi Arabia and other Organization of Petroleum Exporting Countries, many of whom are hostile to the United States.

Global effect

What's good news for the United States and North America may be bad news for other parts of the world. OPEC has noticed the trend. The cartel last month created a committee to study how increased U.S. oil production will affect the group.

“It is a concern,” Nigeria's Petroleum Minister Diezani Alison-Madueke told Bloomberg after an OPEC meeting in Vienna May 31. The committee will consider the effect of shale oil on the global market for OPEC crude “in the not too distant future,” she said.

Growing economies in China, India and developing countries likely will make up for at least some of the OPEC oil the United States is dispersing. But if domestic producers continue to outpace global demand growth, it will have an effect on global oil prices and policies.

by, Adam Wilmoth @ newsok.com