In a gloomy economy, one bright spot grows: U.S. oil production has risen sharply and could increase 7 percent this year, driven by high oil prices and new drilling technology. Industry experts say they’re stunned by the new domestic oil boom. It may accelerate over the next four years regardless of White House policy.
A study released in October by the research firm IHS predicted annual U.S. “tight oil” production—oil extracted from rock formations—will increase nearly 70 percent by 2015. Hydraulic “fracking,” the same breakthrough drilling technique responsible for the recent natural gas boom, has unlocked shale oil deposits in Texas, North Dakota, and other states. The technology works by pumping sand and fluids underground at extreme pressure, cracking rock layers and releasing gas and liquid hydrocarbons.
By 2015, U.S. oil and gas production will generate $91 billion in federal and state lease and tax revenues, and add 700,000 jobs to the economy. The Energy Department predicts total U.S. hydrocarbon production (including biofuels) will reach 11.4 million barrels a day next year. That would position the United States to become the world’s largest oil producer within the next few years, unless Russia or Saudi Arabia raises its output.
The oil surge is a paradox given the Obama record: Although permit approvals to drill on federal land fell by one-third under the president, he has presided over a 20 percent increase in domestic production.
However, much of the increased oil drilling is occurring on private and state lands, which the president has little control over. “When the president sort of claims credit for the rise during his term, he’s being disingenuous,” says Kenneth P. Green, an energy policy analyst at the American Enterprise Institute.
Rather than speed up production, his administration has produced “moratoria on drilling, slower permitting, less leasing, less land being available for leasing in the first place.” The boom, spurred by expensive oil and fracking technology, is thriving in spite of those obstacles.