The following is a guest article by Rod D. Martin.
Perhaps you’ve heard. The same experts who told you America and the world were reaching “peak oil” — the point at which production supposedly must drop forever — have decided we’re now at “peak fracking.”
Why? Because they lack the imagination needed for innovation. Fortunately, ExxonMobil does not. It’s shredding their argument. It’s about to blow U.S. production sky high.
Get ready. There’s a lot of opportunity in that.
For most of my lifetime, all we heard was “peak oil”, which (you benighted souls must understand) was “settled science.” The obvious arguments to the contrary — that rising prices drive innovation, and that regulation is its enemy — were laughed off.
I know: I made those arguments. Long before there was any such thing as fracking.
The “experts” saw no reason why, in 2008 when oil reached a stratospheric $147.50 per barrel, that rise wouldn’t continue to $250 and ultimately on to infinity. We would have to shift to wind power (but never nuclear!), they told us: even Russia and the Middle East would soon run dry. We would have to get used to rolling blackouts and declining standards of living. The age of energy, and with it modern civilization and population sizes, was over.
Then a funny thing happened. American entrepreneurs did what they always do when prices make innovation profitable: they blew up the “settled science.”
As I’ve been saying forever, there is far more oil, coal, and natural gas in the ground than we’ve ever used in all of human history. The constraint is not the size of God’s creation; it’s whether we’re allowed to invent the tools to use it. Fracking, as Alex Epstein says, is “very likely the single most beneficial technological development of the last 25 years,” precisely because it turned “once useless rock” into the world’s most important source of reliable energy.
First with shale gas. Then with shale oil. Then with an LNG and refining build-out that turned America from the world’s biggest energy importer into the world’s largest producer, its third largest exporter of petroleum, and its top exporter of natural gas.
Now comes a fourth turn of the wheel. Not a new field. Not some miracle discovery. Something much more transformative: turning what used to be refinery trash into an economy-altering asset.
Welcome to America’s new shale revolution.
From “Inevitable Decline” to Record Production
In 2008, going into the Global Financial Crisis, America was the world’s largest oil importer and a permanent ward of foreign producers. We “exported” $700 billion a year to our enemies, and as we saw twice in the 1970s, we lived at their mercy.
But if we get out of its way, the market solves most problems. When oil got expensive enough, innovation became profitable. “Settled science” said American production could only drop, forever. Yet between 2009 and 2019, U.S. crude production jumped from roughly 5.4 million barrels per day to over 12.3 million — an increase of about seven million barrels per day in a decade, or an average 700,000 barrels per day of new supply every single year.
In human terms, cheap shale gas alone has saved American consumers more than half a billion dollars every single day compared to the old price regime. The Gasland crowd wasn’t just wrong on the geology; they were wrong on the economics and the morality.
That’s what a real technological revolution looks like.
This piece originally appeared at RodMartin.org and has been republished here with permsision.
