By Velda Addison, Hart Energy

With Thanksgiving about a week away, U.S. consumers have something to be thankful for at the pumps as gas prices have fallen well below $3 per gallon.

This comes thanks to a combination of contributing factors—falling oil prices, the annual switch from summer to the cheaper winter gasoline, a relatively quiet hurricane season for the Gulf of Mexico, slowing demand and a glut of U.S. crude oil. Crude oil and lease condensate production hit its highest level since 1986, according to a recently released report from the U.S. Energy Information Administration (EIA).

Using information from the latest Petroleum Supply Monthly report, based on production figures from August 2014, the EIA said that crude oil and condensate production in the U.S. surpassed 8.6 MMbbl/d. Of that amount, the majority came from three basins. The Permian Basin in Texas and New Mexico produced 1.66 MMbbl/d; the Western Gulf Basin’s Eagle Ford Shale in Texas produced 1.57 MMbbl/d; and the Bakken Shale in North Dakota’s Williston Basin produced 1.13 MMbbl/d.

“Domestic production has increased dramatically over the past four years, increasing from 5.4 million bbl/d in January 2010 to its current level, driven by increasing production from shale and other tight formations,” the EIA said. “During 2014 alone, 10 states [the three states previously mentioned in addition to Oklahoma, Colorado, Wyoming, Utah, Ohio, West Virginia and Pennsylvania] have set monthly production records since 1995 and accounted for more than 64% of total U.S. production during August.”

Increased U.S. production, which continues to rise as people speculate on whether OPEC will cut production, also comes as U.S. operators drill more efficiently, utilizing horizontal rigs and techniques such as multistage fracturing and multiwell pad drilling. More than 1,900 rigs were actively drilling in August, the EIA said, noting, however, that the rig count was down from 2,031 rigs in 2008. The most common type of rig is horizontal, with 1,330 drilling for August compared to 374 vertical and 210 directional rigs.

“Higher rig counts, along with improvements in drilling productivity, are expected to increase U.S. liquids production to nearly 9.7 million bbl/d by December 2015,” the EIA continued. “U.S. oil production has been increasing monthly at an average of 62,000 bbl/d since 2010. EIA forecasts that previous production highs set in the 1970s will be surpassed before the end of 2015."

In addition to production gains from unconventional reservoirs such as the Eagle Ford, Wolfcamp, Bakken-Three Forks, Spraberry and Bone Springs formations among others, the EIA pointed out that new production capacity is also coming from discoveries in the southern parts of Alaska’s Cook Inlet.

Bloomberg reported that the U.S. is producing oil at the fastest pace in more than three decades, and growth in demand is slowing as fuel prices drop. This has prompted a sell-off of U.S. benchmark West Texas Intermediate (WTI) oil futures.

“WTI has plummeted 29 percent since June 30 and lost 28 cents to $74.33 a barrel at 11:17 a.m. Singapore time,” the news agency reported.

This may not be good news for oil and gas companies that are cutting back on spending and others who depend on high oil prices to add revenue to budgets. But Christmas has come a little early for U.S. consumers at the pumps.

Contact the author, Velda Addison, at