In a significant development for the U.S. energy sector, crude oil production saw a robust increase of 270,000 barrels per day (b/d) in 2024, reaching an impressive average of 13.2 million b/d. This surge is largely attributed to growth in the Permian region, which alone accounted for a staggering 48% of the country’s total crude oil output. For small business owners—especially those in sectors intertwined with energy markets—the implications of this rise could shape operational strategies and financial decisions in the coming months.
With the Permian Basin in western Texas and southeastern New Mexico leading the charge, production in this region climbed by 370,000 b/d compared to 2023, averaging 6.3 million b/d. The region’s ability to outperform others like the Eagle Ford and Bakken, which each contributed only 9% to total U.S. crude production, points to not just geological advantages but also significant operational efficiencies. “Producers used technological advancements such as artificial intelligence, electronic hydraulic fracturing technology, and automated drilling processes to optimize operations,” noted Naser Ameen from the U.S. Energy Information Administration (EIA).
For many small businesses, especially those in the energy supply chain or similar industries, understanding these dynamics is crucial. Higher production rates can lead to increased market supply, which often stabilizes or may lower fuel prices. As such, businesses that rely on fuel for operations—from trucking companies to manufacturing plants—could benefit from more predictable and possibly lower costs.
Key Takeaways:
- In 2024, U.S. crude oil production increased to an average of 13.2 million b/d, with the Permian region accounting for most of this growth.
- Technological enhancements have led to improved production efficiency despite a decrease in active drilling rigs.
- Small businesses may experience more stable fuel prices as production rates rise.
Financially, the average West Texas Intermediate (WTI) crude price settled at $77 per barrel in 2024, which is deemed healthy enough to promote ongoing drilling activities in the Permian region. The breakeven costs for producers in this area were approximately $62/b in the Midland Basin and $64/b in the Delaware Basin, presenting an attractive margin for producers, influencing future investment in exploration and infrastructure.
While the Permian Basin enjoys a spotlight of growth, it’s essential to recognize that the rig count there fell to an average of 308—26 fewer than in 2023. The decline in the number of active rigs signals a potential shift in strategy: producers are focusing on maximizing output from existing wells rather than expanding drilling operations. Ameen explains, “Even with the lower rig count in 2024, Permian production grew because well productivity improved.” This shift towards operational efficiency through advanced technologies can create challenges for small businesses depending on traditional energy production or those that have invested in equipment tied to higher rig counts.
The Eagle Ford and Bakken regions—though largely stagnant—provide important lessons as well. Both areas experienced minor increases in production but with declining active rigs, they might be signaling a need for innovation or a reevaluation of resource allocation among smaller and mid-sized companies that operate there. The result could affect everything from employment levels to project initiation in related industries.
As small business owners navigate these shifts, understanding the cyclical nature of energy economics is vital. Keeping an eye on regional production trends, embracing technological advancements, and developing adaptable business strategies will be keys to thriving in this evolving landscape.
For a deeper dive into the specific data and projections regarding U.S. crude oil production, read the full details on the EIA’s website here.
Image Via Envato: Angelov1
