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Booming US oil is rare advert for big capitalism
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 says Christopher Swann
June 7, 2012 3:58 by Reuters
TheUnited Statesnow boasts the world’s fastest-rising oil production outside the Organization of the Petroleum Exporting Countries. That leavesBrazil’s growth trailing, while output inMexicois 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 inViennanext 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, theUnited Stateswill add close to 400,000 barrels of oil a day to its production, consultancy PFC Energy reckons. That’s a rise of about 8 percent forAmericaand 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 theU.S.border withMexico. WhileU.S.entrepreneurs have managed a sixfold increase in oil production from the Eagle Ford shale inTexasover the past year,Mexicohas yet to squeeze a drop from the same geological formation. Pemex, the creaky state giant south of the border, has reported a 23 percent 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 theUnited Statesby 2013. AndRussia, despite having more than twiceAmerica’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-warIraqis increasing production fast andSaudi Arabiacan do so simply by opening the valves wider on its existing oilfields.U.S.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.
By Christopher Swann