The People of America's Oil and Natural Gas Indusry

Domestic Oil Production and the ‘Teachable Moment’

Mark Green

Mark Green
Posted January 9, 2013

The U.S. Energy Information Administration’s Short-Term Energy Outlook released this week contains two important crude oil stats:

  • U.S. domestic production is expected to continue growing rapidly over the next two years, from an average of 6.4 million barrels per day (bbl/d) last year to 7.3 million bbl/d in 2013 and 7.9 million bbl/d in 2014. Much of the production growth will come from drilling in tight plays in the Williston (North Dakota and Montana), Western Gulf and Permian basins (Texas).
  • U.S. liquid fuel imports, including crude oil, are expected to decline to an average of 6 million bbl/d by 2014. EIA says the net import share will average 32 percent in 2014 “because of continued substantial increases in domestic crude oil production.”

As the Washington Post’s Brad Plumer notes, the projected level of imports would be the lowest since 1987 – and just half as much liquid fuel as the U.S. was importing in 2005 (12.5 million bbl/d). Plumer:

"It’s a massive shift. … New drilling techniques such as hydraulic fracturing for shale have helped companies access “tight oil” in places like North Dakota and Texas. The EIA expects that to continue for the foreseeable future … Now, it’s worth being clear about precisely what sorts of benefits this will bring. Lower imports do help shrink the U.S. trade deficit. And a booming domestic oil industry can certainly bolster the U.S. economy — the oil and natural gas industries directly contributed about $481 billion to the economy in 2011, according to a recent estimate from PriceWaterhouseCoopers."

More perspective from energy blogger Mark J. Perry:

"Thanks largely to the recent significant increases in the domestic production of fossil fuel energy (oil and natural gas), the U.S. was more energy self-sufficient in 2012 than at any time in the last two decades.  Based on data for the first nine months of 2012, the U.S. last year produced more than 83% of the energy it consumed for the first time since 1991."

Perry’s chart, showing what the steep climb to 83 percent looks like:

These numbers show what’s possible when there’s access to oil reserves (as well as natural gas), technological advances – thanks, hydraulic fracturing and horizontal drilling – and an industry that will make the investments to get the energy while creating jobs and lifting the economy in the process.

What does it mean? The Institute for Energy Research calls the energy boom in North Dakota’s Bakken formation a “teachable moment” for federal policymakers, citing these indicators among others:

  • The Bakken’s unemployment rate is 1.8 percent, compared to 3.5 percent in the rest of North Dakota and 7.8 percent nationwide.
  • Average weekly wages increased 19 percent in the Bakken from the second quarter of 2011 through the first quarter of 2012. That compares to 4 percent in the rest of North Dakota and basically zero growth nationally during that period.
  • New businesses have grown by almost 50 percent in the Bakken since 2009, compared to 5 percent for the rest of North Dakota and 3 percent nationally.

The Bakken numbers, as well as the trend lines noted by EIA suggest the energy opportunity now beckoning the United States – an historic opportunity, really. And that is to reckon our country’s vast oil and natural gas resources by advancing pro-development policies that will let the oil and natural gas industry make America’s energy potential work for Americans.

It’s the central theme of API’s annual State of American Energy report released this week, sketched out in an address by API President and CEO Jack Gerard:

"Our energy supply is no longer limited, foreign and finite, but is now American and abundant, greatly enhancing our national security. We have a game-changing opportunity to make the U.S. the global leader in energy. If we seize the opportunity now, we will be positioned to lead for decades and realize the economic and energy security benefits of that leadership.”

Industry’s investments – fostered by increased resource access, common-sense regulation and policies that encourage more energy development – will come with the right leadership and the right policies. The time for both is now.


Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.