American domestic oil production peaked in 1970, at 9.6 million barrels per day. Since then, U.S. domestic production fell by more than half, to 4.95 million barrels per day in 2008. (The United States consumes nearly 20 million barrels of oil per day.) But in the two years since then, domestic oil production increased by 562,000 barrels per day—the first domestic increase in production since 1985. (See Figure 1.) This is notable, as there have been few new oil fields developed in the country or offshore during the last two years; the increase is the result mostly of increased production from older fields from new technology, often the same technology (hydraulic fracturing) that has opened up new natural gas deposits.
This is also notable because the last time the United States experienced a rise in domestic oil production was in the early 1980s, after domestic oil prices were decontrolled and the Reagan administration emphasized opening up more federal land for oil production. Between 1979 and 1985, domestic production increased 419,000 barrels per day. Mush of this increase, however, came from Alaska, whose oil production peaked at just over 2 million barrels per day in 1988. Since then Alaskan oil production has fallen 70 percent, to less than 600,000 barrels per day today. (See Figure 2.)
This brings into sharper relief the changes occurring in the oil and gas industry right now. The recent increase was larger and faster than the increase of the early 1980s, and has occurred despite federal hostility to opening up new fields. Often it is said that the United States cannot drill out way out of our oil dependency, or do much to affect the world price. Probably this is true. But I wonder how much we might be able to accomplish if we opened up more new fields in Alaska and elsewhere. The sharp upward line of the Alaska experience in the late 1970s might well be repeated.