The Energy Information Administration recently reported that U.S. crude oil proved reserves[1] rose for the fourth consecutive year in 2012, increasing by over 15 percent to 33 billion barrels.(i) U.S. crude oil and lease condensate[2] proved reserves on January 1, 2013 were the highest since 1976, and the increase of 4.5 billion barrels in 2012 was the largest annual increase since 1970. The increase in crude oil reserves was due to increased exploration for liquid hydrocarbons and improved technology for developing shale oil plays incentivized by relatively high oil prices. The average price of oil remained relatively constant in 2012 at an average daily spot price of $95 per barrel. Natural gas reserves, on the other hand, declined in 2012 by 7.5 percent from a very high level the year before. Lower prices for gas meant businesses were dis-incentivized from exploring and drilling for natural gas when compared to oil.
