Quick—which state produces more oil: Alaska or California? That’s easy. Alaska, du-uh. And that’s wrong. California passed Alaska in daily oil production in June last year (561,000 bbls per day for CA; 533,000 bbls per day for AK).
This isn’t because California has opened new fields or increased production from old ones. Far from it. California’s oil production continues its slow, long-term slide, down 49.1 percent from its peak production level of 1.1 million barrels per day in February 1986. But Alaska’s production has declined even more, down 74.2 percent from its peak of 2 million barrels a day in 1988 (when Alaska only briefly exceeded Texas as our leading oil-producing state).
There’s no shortage of oil in Alaska, of course. It is all located on locked-up federal lands or offshore such as in the Alaska National Wildlife Reserve (ANWR), and in a place that is strangely called the “National Petroleum Reserve,” where new drilling is being blocked through litigation and bureaucratic red tape. Meanwhile, Texas has lately reversed its long slide and has begun increasing oil production again as new fields have been opened and old fields revitalized through new technology. The difference between Texas and Alaska is that oil and gas reserves in Texas are mostly located on privately-owned land, and thus not subject to the political restrictions Alaska faces.
But the biggest story in domestic oil production is . . . North Dakota. New fields in North Dakota, also mostly on private land, have seen its oil production increase 138 percent since January 2008 to 329,000 barrels a day. North Dakota has blown by Oklahoma and Louisiana to become America’s fourth-largest oil-producing state. No wonder North Dakota’s unemployment rate is only 3.3 percent. Lesson: “brown” energy brings prosperity. Moreover, if current projections bear out, North Dakota will soon pass Alaska and California and become America’s second-largest oil-producing state, and might even surpass Texas in the fullness of time.
Figure 1 displays the oil production trends for the top four oil-producing states. The upward tails at the end of the series for Texas and North Dakota offer a vivid lesson in the difference between politically- and privately-controlled resources.