The Great American Energy Boom: US oil and gas output this year will be close to the highest in US history, thanks to shale

According to EIA estimates, the US will produce a combined total of 44.51 billion BTUs of energy this year from oil (16.5 billions BTUs) and natural gas (28 billion BTUs), which will be close to the all-time record high of 44.85 billion BTUsfrom US oil and gas set back in 1971 (see chart).

shaleThe chart above helps put the fracking-induced Great American Energy Boom into perspective by displaying some US energy production data from yesterday’s early release of the Energy Information Administration’s (EIA) 2014 Annual Energy Outlook

America’s production of oil and gas this year at a 42-year high is only possible because of the breakthrough extraction technologies of hydraulic fracturing and horizontal drilling that started tapping America’s previously inaccessible oceans of shale oil and gas in 2006. Thanks to the persistent efforts of America’s “petropreneurs” who cracked the “shale code” in about 2005, the 34-year decline in US production of gas and oil that started in the early 1970s has been completely reversed in just the last seven years. By next year, the EIA estimates that America will be producing more oil and gas (46.34 billion BTUs) than ever before in US history, with annual increases expected every year of the EIA forecast period through 2040.

The dashed blue line in the chart above shows what would have most likely happened to America’s oil and gas production if we hadn’t had a shale revolution, and instead had continued drilling for only conventional oil and gas in the US. If the downward trend for US oil and gas production from 1971 to 2005 had continued, output this year would have been about 30 billion BTUs, instead of the actual amount of 44.5 billion BTUs, almost 50% above the projected conventional oil and gas trend level. Looking forward, the downward trend would have taken US production down to about 22 billion BTUs by 2040, or about 62% (and more than 36 billion BTUs) below the current EIA forecast of more than 58 billion BTUs of oil and gas by 2040.

MP: The fracking-induced shale revolution in America is one of the most remarkable energy stories in history, and the chart above helps to tell that story. Given the propitious timing of the Great American Energy Boom, which really started to take off in about 2008, it’s no exaggeration to say that America’s shale revolution saved the US economy from a much longer and much deeper recession. Just at the time when the financial crisis, the collapse of the housing market, and the meltdown in the mortgage and stock markets were crippling the US economy, we had a perfectly-timed energy-based stimulus that started providing jobs and prosperity. It’s pretty sobering to think where the US economy, job market and energy prices would be today if the production of oil and gas in the US had continued on its downward trajectory shown in the chart above, instead of increasing by more than 35% between 2007 and 2013.

Bottom Line: America’s economic prospects and energy picture today, as well as the country’s future economic and energy outlooks, all look a lot, lot brighter because of the fracking-inducedGreat American Shale Energy Boom that is illustrated in the chart above.

View the original article here: http://www.aei-ideas.org/2013/12/the-great-american-energy-boom-us-oil-and-gas-output-this-year-will-be-close-to-the-highest-in-us-history-thanks-to-shale/

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