Readers of pre-millennial vintage may recall the 2008 presidential campaign when Republicans and especially Sarah Palin picked up the chant “drill, baby, drill” as a response to soaring oil prices. The theme was much derided, not least by Barack Obama, who as late as 2012 called it “a slogan, a gimmick, and a bumper sticker” but “not a strategy.” Ten years later, who was right?
The U.S. Energy Information Administration (EIA) reported Thursday that U.S. crude oil production exceeded 10 million barrels a day for the first time since 1970. That’s double the five million barrels produced in 2008, thanks to the boom in, well, drilling, baby.
The EIA summary puts it this way: “U.S. crude oil production has increased significantly over the past 10 years, driven mainly by production from tighter rock formations including shale and other fine-grained rock using horizontal drilling and hydraulic fracturing to improve efficiency.” This is the “fracking” boom our readers know well that has been driven by innovation in the private oil and gas industry.
The magnitude of the boom is remarkable. The gusher has pushed the U.S. close to overtaking Saudi Arabia and Russia as the world’s leading oil producer. In 2006 the U.S. imported 12.9 million barrels a day of crude and petroleum products. By last October that was down to 2.5 million a day. Some gimmick.
American Oil BoomU.S. monthly crude oil production, in millionsof barrels per day, January 1950-November2017Source: U.S. Energy Information Administration,Petroleum Supply Monthly
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This translates into greater energy security as the U.S. is less dependent on foreign oil sources. Donald Trump calls it “energy dominance,” which implies that the U.S. wants to husband its supplies like gold at Fort Knox. The reality is we want to produce and sell what the market will bear, including exports to willing buyers around the world.