The United States has overtaken Saudi Arabia to become the world’s biggest oil producer as the jump in output from shale plays has led to the second biggest oil boom in history, according to leading U.S. energy consultancy PIRA.
U.S. output, which includes natural gas liquids and biofuels, has swelled 3.2 million barrels per day (bpd) since 2009, the fastest expansion in production over a four-year period since a surge in Saudi Arabia’s output from 1970-1974, PIRA said in a release on Tuesday.
It was the latest milestone for the U.S. oil sector caused by the shale revolution, which has upended global oil trade. While still the largest consumer of fuel, the rise of cheap crude available to domestic refiners has turned the United States into a significant exporter of gasoline and distillate fuels.
I’m sure Obama’s defenders will be rushing to credit him for this while his detractors will be rushing to … I don’t know, claim the numbers are skewed. But Obama’s primary role in this has been to stand out of the way. The truth is that this revolution has been more than a decade in the making as rising oil prices spurred innovation and made shale oil economically viable.
The thing is that this is exactly what conservatives and libertarians predicited. When oil prices spiked many years ago, the usual suspects blamed evil Arabs, evil oil companies, evil oil refineries, evil government and the evil Bush Administration with its evil ties to Big Evil Oil. Had we pursued the path of price controls, the result would have been shortages instead of a boom. People who understand economics pointed out that this was simply a surge in demand and that the demand would create new supply — either through new oil resources or energy tech innovation. That’s exactly what happened. And considering that the energy industry is the only thing propping up our economy, the Great Recession would still be going on had we listened to the naysayers.
I’ve quoted Lee before on this subject but it’s always worth repeating his insight:
Oil will never run out. Ever. There is too much money to be made in the technology industry for the world to keep relying solely on oil. We don’t need nightmares, we don’t need screaming histrionics, we don’t need end of the world scenarios. What we need are smart people taking the problem seriously, and finding workable, reasonable solutions to transition the world from a petroleum economy into the next generation.
One day, the oil industry will die. We probably won’t run out — proven reserves are gigantic (and that’s not even including natural gas and methane clathrate). But oil will fade because we’ll make some breakthrough on nuclear fusion or vacuum energy or whatever that makes cracking open the Earth to extract a mineral slime un-economical. When that happens, we’ll be fine. Fossil fuels are a fraction of our economy. But petro-states like Saudi Arabia will collapse.
In the meantime, technological progress is producing an economic goldmine. Mainly because we let it do so.