The United States now boasts the world’s fastest-rising oil production outside the Organization of the Petroleum Exporting Countries (Opec). That leaves Brazil’s growth trailing, while output in Mexico is falling. With big banks in particular in the political doghouse, America’s oil prowess is a reminder that private enterprises seize opportunities better than governments.
Opec ministers, meeting in Vienna next week, might take note. Free from the constraints of the production cartel, non-Opec countries with largely private-sector oil industries are ramping up output. In the two years to 2013, the United States will add close to 400,000 barrels of oil a day to its production, consultancy PFC Energy reckons. That’s a rise of about eight per cent for America and equivalent to roughly half a percent of global output. Canada, where private businesses also predominate, comes a close second with an extra 300,000 barrels a day.
The contrast with state-run energy enterprises is particularly stark across the US border with Mexico. While US entrepreneurs have managed a sixfold increase in oil production from the Eagle Ford shale in Texas over the past year, Mexico has yet to squeeze a drop from the same geological formation. Pemex, the creaky state giant south of the border, has reported a 23 per cent drop in output over the past six years and production is still shrinking.
Brazil, meanwhile, has seen plenty of hype over deep sea oil discoveries, but output growth at dominant government-controlled Petrobras has so far fallen short of expectations. Oil production is on track to increase by less than half as much as in the United States by 2013. And Russia, despite having more than twice America’s proven oil reserves, is expected to achieve barely a quarter of Uncle Sam’s expansion. Government meddling and constant changes to fiscal rules are partly to blame.
Within Opec, post-war Iraq is increasing production fast and Saudi Arabia can do so simply by opening the valves wider on its existing oilfields. US output, by contrast, is growing as new capacity is brought onstream. National champions, with their huge reserves, may yet regain the upper hand. For now, however, private sector oil explorers are setting the pace, providing a timely advertisement for the benefits of big capitalism.
