Did You Know That the U.S. Is the World’s Largest Oil Producer?

Did You Know That the U.S. Is the World’s Largest Oil Producer? by The Elephant's Child

December 16, 2018, 12:35 pm
Filed under: Capitalism, Domestic Policy, Economics, Economy, Election 2016, Energy, Foreign Policy, Free Markets, Freedom, Middle East, National Security, Politics, Russia, Science/Technology, The Constitution, The United States | Tags: Freedom & Fracking, Over Saudi Arabia & Russia, World's Top Oil Producer

Do most people recognize that the United States has recently become the world’s largest oil producer? We have passed both Saudi Arabia and Russia as U.S. crude production has surged 20% in a year – and nearly tripled in the past decade. For nearly sixty years, OPEC has dominated the world’s oil markets by setting production quotas among its 15 members. In 2014, OPEC flooded the market with oil to try to break U.S. drillers who were pouring cash into innovation while they were already in debt. Seems like we knew what we were doing.

As oil prices fell below $40 a barrel in 2015 and 2016, many wildcatters folded or were absorbed by larger producers. The survivors became more efficient. They put technology to work, using drones with thermal imaging to detect any leaks along the line. Productivity went up. Over just the last five years, production per rig has more than tripled in the Permian basin and actually quadrupled in North Dakota’s Bakken Shale. The Bakken rig count has fallen by 70% and yet output has increased by a third.

In late 2015, the Republican Congress expanded the market for shale oil by lifting the export ban on crude oil in exchange for Obama’s demand to extend renewable energy tax credits.The biggest constraints on U.S. production have been distribution problems, but three new pipelines are expected to come online next year, capable of delivering 2 million barrels to the gulf coast and in 2020 two more pipelines will be completed.

The big news is that the U.S. Geological survey reported recently that the Permian’s Delaware basin holds more than twice as much oil and 18 times as much natural gas as the Midland region.

Barack Obama is claiming credit for the shale boom. (Why are we not surprised?) The Tax reform last year opened Alaska’s Arctic National Wildlife Refuge, and the Interior Department scaled back unneeded protections for the sage grouse, which allows drilling on nine million acres in oil-rich states. Last month at Rice University, Obama said “You know that whole suddenly America’s like the biggest oil producer . . . that was me, people.” It must be hard to see the hated Trump administration get credit for expediting pipeline and terminal permitting and opening new federal land to drilling, but there you go. Can’t have it both ways.

OPEC countries and our own politicians should  take notice that America’s new energy prosperity comes from industry innovation, the importance of private property, and the wonders of the free market. We call it Free-Market Capitalism.

Confused by all the talk about “Fracking”? Here’s an excellent history and explanation from the oil industry.

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