The United States has “likely” become the largest crude oil producer in the world, surpassing Russia and Saudi Arabia, a new government report states.
“In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades,” the U.S. Energy Information Administration (EIA) states in its September 2018 Short Term Energy Outlook (STEO) report. “In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.”
“EIA estimates that U.S. crude oil production averaged 10.9 million barrels per day (b/d) in August, up by 120,000 b/d from June,” the report states. “EIA forecasts that U.S. crude oil production will average 10.7 million b/d in 2018, up from 9.4 million b/d in 2017, and will average 11.5 million b/d in 2019.”
Gives Credit to Fracking
EIA credits the hydraulic fracturing (“fracking”) revolution for increased U.S. domestic oil and natural gas production. With the widespread use of fracking, U.S. oil production has increased 84 percent and natural gas production has increased 39 percent over the last decade.
“Much of the recent growth has occurred in areas such as the Permian region in western Texas and eastern New Mexico, the Federal Offshore Gulf of Mexico, and the Bakken region in North Dakota and Montana,” says the EIA report.
All of the growth areas mentioned in STEO, except offshore, are areas where fracking operations are producing oil, notes Isaac Orr, a policy fellow with the Center of the American Experiment.
“Because of fracking, the United States of America has become the largest producer of energy in the world, full stop,” said Orr. “Producing more oil than Russia or Saudi Arabia helps eliminate the danger of being too dependent on foreign countries for vital natural resources.
“Oil and gas had been trapped in shale formations for millions of years before Americans finally figured out how to unlock these resources,” Orr said.
Role of Property Rights
That fact that mineral rights are largely privately owned in the United States is why the fracking revolution began here, says Orr.
“The reason this technology was invented in the United States, rather than elsewhere, is mostly a matter of incentives,” said Orr. “The United States is the only country in the world where normal people privately own mineral rights.
“This provides a powerful incentive for developing new technology to access the resources we depend upon every day,” Orr said.
Jordan McGillis, a policy analyst for the Institute for Energy Research, says private companies have used fracking to overcome government interference in the energy market.
“When we look at the long arc of American energy policy, this moment should stand as a watershed,” McGillis said. “Just one decade ago, the United States was bound by a fear of dependence on foreign oil.
“Those fears have been put to rest, not because of, but despite, the federal government’s policies,” said McGillis. “Rather than schemes like the Renewable Fuel Standard and Corporate Average Fuel Economy, it has been enterprising energy firms that have resolved this issue through the deployment of hydraulic fracturing and directional drilling. It’s a remarkable story attesting to the power of the market.”
Jobs, Economic Growth
Numerous studies show the increase in oil and gas production brought about by the widespread use of fracking has contributed to job growth and improved economic performance in the United States.
A 2015 Harvard Business School/Boston Consulting Group study estimates fracking supported 2.7 million U.S. jobs in 2014, with the potential to grow to 3.8 million jobs by 2030. A PricewaterhouseCoopers report prepared for the American Petroleum Institute estimates the oil and natural gas industries supported 10.3 million jobs in 2015, an increase of about 500,000 since 2011.
The RAND Corporation projects fracking-related industries will support 1.9 million jobs above what the nation would have experienced without fracking by 2035. By that same year, fracking will have created 3.5 million jobs, a 2012 IHS Markit study estimates.
A 2016 Chamber of Commerce study says if the fracking revolution of the previous decade had not occurred, 4.3 million jobs would not have been created, the U.S. economy would be $500 billion smaller, and residential natural gas prices would be 28 percent higher.
Timothy Benson ([email protected]) is a policy analyst with The Heartland Institute.
Tim Benson, “Research & Commentary: Fracking Has Turned United States Into World’s Leading Oil Producer,” The Heartland Institute, September 19, 2018: https://heartland.org/publications-resources/publications/research–commentary-fracking-has-turned-united-states-into-worlds-leading-oil-producer