America’s Oil Industry Is Necessary

December 30, 2020

Less than one year ago, America’s natural gas and oil industry was continuing its rapid growth. In fact, in February, U.S. production hit an all-time high point of 13 million barrels a day. Then came a pandemic that was in no country or company’s emergency plans, plummeting oil demand and causing storage tanks to overflow.

Daniel Yergin, vice chairman of IHS Markit, writes in the Wall Street Journal:

The rebound from negative prices and the stabilization of the market was made possible by unprecedented production cuts by the group that calls itself OPEC-plus…That U.S.-brokered agreement got oil prices up into the $40 to $50 range of Virus Alley, blocked at one end by the virus and at the other by the uncertain prospect for vaccines.

A complete rebound from this unprecedented adversity will not be easy, but there is hope. One case study of a post-Covid country is China. For the last several months, their oil consumption has been even higher than it was in 2019. Demand for motor fuel is also currently higher than it was last year in Brazil and India. It is encouraging to see that demand will likely return to its previously high levels. But, even now, America’s current level of production is crucial.

U.S. production going into 2021 is about 11 million barrels a day—two million lower than the astonishing high point of 13 million registered in February. Still, it is more than double the production level of 2008, when the shale oil revolution was about to begin. The U.S. remains the world’s largest oil producer, well ahead of Russia and Saudi Arabia.

Maintaining our current position as the world’s largest oil producer, and subsequently our energy independence, is absolutely necessary. Not only does our natural gas and oil industry provide over ten million American jobs and generate billions in revenue, which we need now more than ever, but it also allows us greater political leverage with our adversaries on the international stage.

American shale is no longer a disruptive technology. Rather, it is one of the major foundations of world oil supply, with all the attendant energy-security, economic and political benefits.