Domestic U.S. oil production peaked in about 1970, fulfilling an outlandish prediction made back in 1956 at a meeting of the American Petroleum Institute by the Shell Oil Company geoscientist Dr. M. King Hubbert. With his stubborn personality and brilliant mind, the Texas-born Hubbert was able to see beyond the “myth of superabundance” that afflicted national thinking about natural resources back then ‚Äî and still prevails today in many quarters.
By 2008, American onshore and offshore production had been trending downward for four decades, and we were producing oil at less than half the rate we had in 1970. By 2008, we were importing six out of every 10 barrels of oil we burned.
Oil price shocks in 1973-74, 1979-80 and 2008 ‚Äî the recurrent “energy crisis” ‚Äî jolted prices or produced long lines at gas pumps, wreaked economic havoc and scared Americans that we were now at the mercy of greedy multinational corporations and hostile foreign powers: Corrupt, autocratic or fundamentalist petro-states in the Middle East and elsewhere.
Every U.S. president from Nixon onward called urgently for a national commitment and federal policies to pursue “energy independence,” yet still our production of oil and gas sagged downward.
In the meantime, largely because of historically high immigration rates, U.S. population jumped by 110 million from 1970 to 2010 (from about 200 million to 310 million), ensuring 50 percent more American consumers to compete with each other for a seemingly dwindling resource base. Not a happy prospect.
This was the dismal situation in “post-peak-oil” America just three years ago. Then, a miracle happened, or so it seemed to those inclined to believe in divine intervention. To those of a more secular persuasion but enamored of “American exceptionalism” and the entrepreneurial spirit, it was merely the genius of the marketplace at work: Higher prices stimulating technological innovation and an enlarged reserve base.
The new technologies are horizontal drilling and its companion, hydraulic fracturing, or “fracking” for short. In the former, a drill bit is turned perpendicularly from the vertical to the horizontal, so as to drill for as much as a mile within an oil or gas-bearing shale layer. Water is pumped into the well at high pressure, creating fractures in the impermeable shale, allowing the trapped oil or gas to escape. Advances in fracking techniques have resulted in tremendous increases in shale gas and oil production.
The 1,750-square-mile Monterey Shale formation in California is the largest in the country, said to contain reserves of hundreds of billions of barrels of oil, fully half of Saudi Arabia‚Äôs endowment.
The oil and gas industry was stoked with badly needed investment capital and basked in the hype heaped on it by The Wall Street Journal, in which a 2012 story under the headline, “Saudi America,” proclaimed, “The U.S. will be the world‚Äôs leading energy producer, if we allow it.”
Now, however, a recent report by the International Energy Agency (IEA) ‚Äî its annual World Energy Outlook ‚Äî has thrown some cold water on all the hype. The IEA concludes that production of shale oil (tight oil) in the U.S. and globally will offer only a brief respite from dependence on OPEC and the turbulent Middle East. Tight oil production will peak in about seven years, around 2020, and then decline rapidly. The problem is that production in fracked wells declines much faster than in conventional oil and gas wells.
Closer to home, Bloomberg reports that “California‚Äôs fracking bonanza may fall short of promise.” The culprit? That old California nemesis ‚Äî earthquakes ‚Äî which have rendered the Monterey Shale too disjointed and unpredictable to make drilling economic.
It‚Äôs a small world after all, with finite and exhaustible resources. The sooner we adjust to this geologic reality, rather than indulging in our penchant for fantasies of infinite growth, the better off we‚Äôll be.
Leon Kolankiewicz is a senior writing fellow for Californians for Population Stabilization, a wildlife biologist, and environmental scientist and planner.