The Remarkable Turnaround in US Oil Production

(This post dovetails with Murphy’s interview with Tom Pyle, president of the Institute for Energy Research, which was InFi episode 89.)

When I was growing up in the 1980s, there was a constant drumbeat that the world in general—and the US in particular—was “running out of oil.” My generation was taught that the gas lines of the 1970s proved that Americans needn’t to ditch their “addiction to foreign oil” by switching to electric cars, mass transit, or good old-fashioned bicycling.

Yet that entire narrative began to rapidly collapse around 2008. Americans are still lectured on the need to reduce their reliance on fossil fuels, but the argument has shifted away from “foreign imports” to “climate change.” I want to show two critical charts in this post to make sure Americans understand the remarkable turnaround in US oil production that hasn’t gotten nearly enough attention.

Crude Oil Output Skyrocketing

First, consider the following chart of US crude oil production:

Crude output in the United States had originally peaked in 1970 at just under 10 million barrels per day. From that point forward, it steadily fell in half by 2008, where it averaged 5 million barrels per day. Throughout this period, it seemed that the energy pessimists were right: “Peak oil” was apparently valid at least for the United States (if not the planet).

Yet that all changed in 2008, when advances in hydraulic fracturing (“fracking”) and horizontal drilling allowed for the economic recovery of previously inaccessible oil deposits. US crude output began skyrocketing, averaging 13.2 million barrels per day in 2024—an all-time record.

US Becomes Net Exporter of Petroleum Products

If we broaden the category to “crude oil and petroleum products,” we see a similar story:

Here, the US had been a net importer going back to the 1970s (at least), and the mismatch between US production and consumption had been steadily rising up until 2005. At that point the imbalance began shrinking, and in 2020 it first went negative—meaning during that year, the US was a net exporter of crude oil and petroleum products. As the chart indicates, the trend has continued, with the US’ net exports in this category growing over time.

Conclusion

When it comes to energy policy, Americans for decades have been fed a false narrative of scarcity. As the Institute for Energy Research’s North American Inventory (2024) report shows, the US and Canada have known reserves of coal, oil, and natural gas that will provide for their energy needs (at current consumption rates) of these sources for more than a century.

One of the key complaints critics raise about Bitcoin mining is the immense electricity consumption. Yet as the data in this post show, there’s no danger of the world (or even Americans narrowly) “running out” of energy sources anytime soon.

Dr. Robert P. Murphy is the Chief Economist at infineo, bridging together Whole Life insurance policies and digital blockchain-based issuance.

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