Prior to the pandemic-induced downturn in world oil production, U.S. oil production growth was responsible for 98 percent of the increase in world production in 2018 (as reported in 2019). Almost all of that growth resulted from rapid increases in shale oil production which accounted for 64 percent of U.S. production (as of 2021).
Fast forward to today when OilPrice.com has declared that “The U.S. Shale Boom Is Officially Over.” The reasons cited mostly have to do with management “discipline” regarding capital expenditure in favor of shareholder payouts and complaints about “anti-oil rhetoric” and “regulatory uncertainty.”
But there might just be another reason for the slowdown in shale oil production in the United States: There isn’t as much accessible and economical shale oil underground as advertised. Earth scientist David Hughes laid out his case for this view in his “Shale Reality Check 2021.” (For a summary of Hughes’ report, see my piece from December 2021 entitled, “U.S. shale oil and gas forecast: Too good to be true?”)
There may be other sources of oil worldwide that will somehow make up for the significantly lower growth in U.S. shale oil production. But no other source seems set to provide the kind of growth U.S. shale oil provided, that is, 73.2 percent of the global increase in oil production from 2008 through 2018.
The world has actually been getting along with less oil for some time now. World oil production proper (crude oil including lease condensate) peaked on a monthly basis in November 2018 at 84.58 million barrels per day (mbpd). In August 2022 production was 81.44 mbpd. That’s after a pandemic-induced shock that saw production fall to 70.28 mbpd in June 2020.
Neither the U.S. shale oil companies nor OPEC seem ready to increase production significantly (assuming that they can). Russia, among the world’s top three producers, is under heavy sanction and may not be able to produce more oil for export anytime soon. (Again, it is not certain that Russia can significantly increase production. Except for the pandemic-induced drop Russia has long been on a production plateau of between 10 and 11 mbpd.)
[slide-anything id=’3472166′]
No doubt some new oil savior will be announced soon whether credible or not. In the meantime, the world economy will be faced with limited oil supplies that do not simply grow to meet our fantasies of what we want. The result will be high prices, that is, higher than has been historically the case. A recession won’t change this dynamic and, in fact, may reinforce it as oil companies are likely to reduce drilling activity when demand for oil slumps. That will make it doubly difficult for those companies to supply growing demand coming out of the next recession.
This is the way things might very well be for a long time if not indefinitely. Many of us who foresaw this day said that we would only see peak world oil production in the rearview mirror. It may take a few more years to determine if November 2018 marked the all-time peak.
Photo: Oil shale mine in Estonia (2019). “Geological fieldworks, underground in the Estonian oilshale mine to study the variable mineralogical and chemical compostion and microsturcture in the different layers of the oil shale profile” by Peeter paaver. via Wikimedia Commons https://commons.wikimedia.org/wiki/File:Oilshale_mine_01.jpg
Comments
Welcome to the new Resillience commenting system!
We have moved from the former Disqus commenting system to a new system as of September 10, 2026.
We made this change because of privacy concerns regarding Disqus. It's also part of a set of changes to bring more services to the Resilience community under a single login: commenting, (coming September 2026), and online courses (coming 2027). Unfortunately, your old Disqus comments may not reliably link to your account in this new system. Please contact us if you have any questions or concerns.
According to Paul Blackburn of Bold Alliance, the US oil industry is looking to Enhanced Oil Recovery for its next source. It’s already running low on natural sources of CO2 for EOR, but the Inflation Reduction Act increased subsidies for construction of CCS equipment to the point that, in effect, taxpayers will foot the considerable bill for this buildout. Supposedly, this will vastly reduce emissions as the captured CO2 is stored in permanent underground caverns. But in reality, 90% of what CO2 has been successfully captured so far has gone to EOR, and the new sources will be no different. Why sequester it underground when you can sell it to the oil industry for a nice fee, and not have to worry about whether it will someday leak? Then, even if the CO2 stays forever in the old wells after it pushes the oil out, that oil will emit a lot of fresh CO2 when burned. So, to recap: taxpayers will foot the bill for a process that allows the oil industry to keep going when it couldn’t otherwise compete against renewables, increasing emissions, thanks to a bill supposedly about addressing climate change. But the trick, for the industry, may be getting the captured CO2 to those old depleted fields–they’ll need a lot of new pipelines, just as dangerous as oil and gas pipelines, which will engender fierce opposition. Already have, in and around Iowa, for a pipeline to collect CO2 from 34 boondoggle ethanol plants, to send it to North Dakota to “permanent underground storage” in an area with old oil wells…
So here’s where Manchin’s “permitting reform” comes in. It would streamline the permitting process, making it harder for landowners, communities and activists to fight off a proposed pipeline. If frustrated activists turn to direct action when they lose access to the courts, many states have “critical infrastructure laws” passed at the behest of industry, making it a felony to merely stand on company land with a sign.
This prognostication (in the references) is difficult to interpret. And it is fun to talk about the geopolitics of this most-fundamental energy source. OTOH, observation of rapidly-increasing climate breakdown suggest we should be hitting major non-linearities in food supply, etc., within this decade. After that, it’s anyone’s guess. Will we have gang rule in some places in CONUS? (CONtinental United States) How about food trucks being hijacked? Almost all towns/cities in the U.S. rely on trucks for food.
The recent inflation adjustments by the FED seem to be a key way the US is holding onto world-dominance. It was petrodollars decades ago, and this is undoubtedly still in-effect. We certainly have it easy in the US compared to everywhere else!