Recent declines in oil and gasoline prices represent good news for U.S. consumers and many retailers, but have the potential to diminish U.S. energy production, which has emerged as a foundational element of the current economic recovery. Through late October, oil prices were down by about 25 percent from early summer and presently stand at around $80 a barrel.
But several government and private reports recently featured in the New York Times indicate that it would take a further drop of 10 or 20 dollars a barrel, to as low as 60 dollars a barrel, to slow energy production even modestly. While lower prices mean that taxes and royalties on oil production will decline, potentially impacting the finances of oil producing states like Texas, Alaska, Oklahoma and North Dakota, current levels of output are likely to be sustained in the shale fields of America in 2015.
The U.S. Energy Department recently reported that only 4 percent of shale-derived oil production in North Dakota, Texas and other states required an oil price above 80 dollars a barrel for producers to break even on their investments. The current production of 8.7 million barrels a day, the highest level in nearly a quarter century, is more than a million barrels a day higher than it was only a year ago.
