With the political spin in hyper-drive, it’s difficult to discern reality as it relates to gas prices. The reason drought is a concern for oil operations, particularly in the U.S., is quite simple. All drilling operations involve hydraulic fracturing, which requires between two and 12 million gallons of water per operation.
Acquiring water is difficult. In some states, at the county-level there are moratoriums on water permits for oil companies. In other areas, farmers either raise the price of their water to prohibitively expensive levels or refuse to sell for any price. Industry-wide, planned wells are delayed, and those numbers will rise if the drought continues.
Although definitely affecting oil and natural gas production in many states, the U.S. drought isn’t likely to affect crude oil prices. However, drought in global regions that supply our oil could limit our supply and cause oil commodity speculation that then drives up price.
The U.S. produces six billion barrels of oil per year, but we consume 19 billion barrels. Since we import the majority of our oil from the Middle East, Canada and Latin America, prices are more likely to be affected by developments in those regions.
Yet, for the first time since the 1950s, the U.S. can see a clear road to energy independence. Although hydraulic fracturing operations began as early as the 1940s, new techniques and technologies now make it possible for us to access the vast reserves our country is blessed to possess – resources previously beyond our reach until only within the last decade.
As for our water woes, that’s up to Mother Nature to fix.
Chris Faulkner is the founder, president and CEO of Breitling Oil and Gas, an independent oil and natural gas company based in Irving, Tx.