Since the 1970s nothing has struck fear into the heart of the average American driver like the name OPEC. With every rise in prices at the pump came theories that once again this shadowy cartel might be using its influence to reach deeper into the pockets of the US public. However, the domestic shale revolution seems to have changed all that. The US produced 8.7 million barrels of oil per day in 2014 and that number is expected to grow to 9.2 million for this year, according to the EIA. With this surge of domestically produced oil, OPEC continues to lose leverage as a trading partner.
In fact, as the chart above shows the U.S. has run a trade surplus over the past two quarters with OPEC. Though US exports to OPEC have increased, the driving force behind this change has been a 65% collapse in OPEC imports to the US since their post-recession high in Q2 2012. This is only partially due to the recent collapse in oil prices, with EIA data showing the volume of oil imports has dropped roughly 37% over the same period. We expect this trend to continue as the U.S. demand for foreign oil continues to fall.
The U.S. Government is relaxing restrictions on crude oil exports, now allowing some exports of crude oil as well as lightly processed oil condensate to Mexico. Momentum for lifting the crude oil export ban altogether has been gaining traction in Congress. Even without lifting these restrictions, our trading relationships are changing radically. The "fracking" revolution in the US is very close to creating true energy independence. The first trade surplus with OPEC in a very long time is proof that things are changing.
To be very clear, trade deficits and surpluses don't alter our overall macro-economic outlook. And while OPEC is not selling as much oil to the U.S., they are exporting it to other countries around the world. But energy revenue to OPEC is drying up, which means revenue to a very volatile and dangerous part of the world is drying up. That's good news.