The chart above helps to illustrate the significance of America’s shale oil and gas boom by showing the combined domestic output of US oil and gas (in quadrillion BTUs, EIA data here). After production of conventional oil and gas peaked around 1970 at almost 45 quadrillion BTUs, there was a gradual, steady decline that continued until about 2005, when combined production had dropped to a 43-year low of 31.85 quadrillion BTUs, the lowest level since 1962. If that trend had continued, the US would now be producing only about 30 quadrillion BTUs of oil and gas (or less), which would have put us back to the production level of the late 1950s.
But then on the way to an era of increasing energy scarcity, a fortuitous series of technological drilling and extraction technologies emerged, thanks to the efforts of a dedicated group of American “petropreneurs,” and those technologies pumped life back into the country’s oil and gas production. By tapping into previously inaccessible reserves of tight oil and gas trapped in shale rock formations miles below the Earth’s surface, US drillers increased domestic production of oil and gas by 40% between 2005 and 2013, bringing America’s output up to the highest level (44.11 quadrillion BTUs) last year since 1973, and just shy of the all-time record of 44.85 quadrillion BTUs in 1971. Last year’s output was also 17.7 quadrillion BTUs above the estimated output level that would have prevailed if the declining trend in conventional oil and gas resources through 2005 had continued. Based on the current pace of production increases, I estimate that combined oil and gas production in the US will reach 47.7 quadrillion BTUs this year and set a new all-time record that will be three quadrillion BTUs (and more than 6%) above the previous 1971 record.
As I have said before, the Great American Energy Boom that has allowed us to access oceans of shale oil and gas is at the forefront of America’s economic recovery and provides the best reason to be optimistic about our country’s economic, energy, and geopolitical future. The chart above helps to put that energy-based economic optimism into perspective graphically.