A federal judge said oil companies don’t need to pay up to $60 billion in royalties for oil and gas retrieved from the publicly-owned Gulf of Mexico. And the Alabama Supreme Court threw out a $3.6 billion verdict against Exxon Mobil in another dispute over natural gas royalties.
Pretty nice for the oil companies, no? Yet somehow US oil production has fallen in each of the last six years: last year’s production of 1.9 billion barrels of crude was the US’s lowest since 1949.
All the while demand for oil in China is eventually expected to equal the entire supply from Saudi Arabia, the world’s largest oil producer. Over the last 18 months, nearly 70% of oil demand growth came from China and India alone.
Think $100 a barrel is pricey? With these trends and the US importing two-thirds of its oil, that’s starting to look like a bargain.