For America, 2013 Was The Year of Energy

United States oil production has passed yet another milestone, reaching its highest level in 25 years. According to the EIA, the oil industry produced 8.075 million barrels per day in the first week of December, the most since October of 1988. This increase in production is largely occurring on state and private lands and has been a rare bright spot for an otherwise struggling economy.

Technological strides in hydraulic fracturing and horizontal drilling have made it possible and economical for oil producers to tap into America’s vast shale resources. North Dakota is one of the states leading the way. Development of the Bakken shale play, which covers much of the western part of the state, has transformed North Dakota into one of the nation’s top oil producing states. This past October, North Dakota’s oil production reached a record high of 941,000 barrels per day and state officials believe that production will surpass one million barrels per day early in 2014. This dramatic increase is remarkable, especially given that the state produced just 124,000 barrels per day in 2007.

Texas, already America’s biggest oil producer, has also been a key contributor to the domestic shale revolution. The Lone Star State saw its oil production skyrocket from 1,072,000 barrels per day in 2007 to 2,726,000 barrels per day in September 2013, a 154 percent increase.  These record setting increases have put America on pace to surpass Saudi Arabia as the world’s leading oil producer in 2015.

The surge in oil production has not only put the U.S. on a path toward greater energy security, but it has also created a new frontier for Americans looking for work. From 2007 to 2012, the oil and gas industry added 162,000 jobs, a forty percent increase, compared to just a one percent increase in total private sector employment. The largest job growth has been in the support sector, which includes exploration, excavation, and well construction. The support sector alone has added 102,000 jobs since 2007, employing a total of 286,000 people by the end of 2012.

The areas where this increased production is occurring are enjoying low unemployment compared to other areas of the country. Once again, North Dakota is the most striking case of this, as the state is enjoying a 2.7 percent unemployment rate.

Although the Obama administration has taken credit for the uptick in production and jobs, this has actually occurred in spite of the administration’s policies. As an IER study shows, the amount of oil and natural gas currently being blocked from production by the federal government is staggering. According to the report, unlocking federal lands and waters to energy development would result in the following:

• A GDP increase of $450 billion annually in the next 30 years.
• $14.4 trillion cumulative increase in economic activity over the next 37 years.
• Nearly 2 million jobs annually over the next thirty years.

In other words, the U.S. is just scratching the surface of its energy production potential. Opening up federal lands and waters to energy production would spur true economic growth, and not just in the energy sector. As the chart below demonstrates, domestic energy production is the catalyst for job creation throughout the economy.

This most recent milestone demonstrates once again that America is a world leader in energy production. On top of this milestone, the U.S. recently surpassed Russia as the world’s top producer of oil and natural gas. This energy renaissance has created hundreds of thousands of jobs and brought affordable energy to the American people, but it is just a glimpse of the U.S.’s energy potential. Unfortunately, as long as the Obama administration keeps federal lands and waters under lock and key, the U.S. will not fully reach that potential.

IER Press Secretary Chris Warren authored this post.