Last year I suggested that the U.S. may be on the cusp of a new oil boom. Now it seems that boom is becoming a reality.
The new year is only now beginning, but the good times are already rolling for the oil industry in the United States. According to The Washington Post, crude oil production is rapidly rising thanks to new technological innovations and recent political action. Production in 2017 averaged around 9.6 million barrels per day, meaning it’s flirting with all-time record levels. It’s likely to continue increasing as we enter 2018.
American oil production peaked at just above 10 million barrels per day back in the early 1970s. The market crashed soon after that, and it’s been trying in vain to recover ever since. Daily output got as low as 3.8 million barrels per day in September 2005 and hit that level again in September 2008. Now it’s back.
“It’s a total turnaround from where we were in the ’70s,” said Frank Verrastro, senior VP at the Center for Strategic and International Studies, according to the Post. “For years and years, we thought we were running out of oil. It took $120 for a barrel of oil to make people experiment with technology—and that has been unbelievably successful.”
American companies now have new ways of extracting oil that are far more efficient. Shale oil drills are able to plunge deep into the earth, pivot and tunnel sideways. They can move for many miles at a time until they find a pocket of oil. This, along with an increase in high-pressure drilling, has helped the oil companies break open fractures and obtain pockets of oil that were once hard to reach.
The latest machinations from Washington have also played a role in increased oil production. The Trump administration approved the controversial Keystone XL pipeline in 2017 and may also consider loosening offshore oil drilling regulations. President Trump also signed the Republican tax bill into law; the bill includes permission for oil drilling in Alaska’s Arctic National Wildlife Refuge, a move that has met with opposition from conservationists.
However it comes to pass, the increased oil production “doesn’t make us independent, but now we have a lot of low-cost natural gas and low-cost oil. And we have become exporters of natural gas,” Verrastro said.