In 1975 the United States was in the midst of an energy crisis characterized by low oil production, perceived natural resource scarcity and a lack of control over its energy future. With an oil embargo imposed by OPEC and rising gasoline prices, the government reacted by imposing a ban on crude oil exports in an effort to keep that small amount of American supply at home.
Forty years later, this age of perceived scarcity is behind us, thanks to technological gains in horizontal drilling, well completions and other drilling technologies that make possible the recovery of previously inaccessible resources. The results have been outstanding. The U.S. Energy Information Administration (EIA) estimates U.S. total crude oil production averaged 8.7 million barrels per day in 2014, an increase of 1.2 million bpd from 2013 and the largest volume increase since recordkeeping began in 1900. And now, the United States is the world’s largest oil producer – a title thought inconceivable during the Arab oil crisis of the 1970s.
Adding to the good news is a new report released this week by EIA that definitively reconfirms this abundance. The report’s main conclusion is that we have considerably more technically recoverable oil than we thought. From the report:
“In 2014, U.S. crude oil and lease condensate proved reserves increased to 39.9 billion barrels—an increase of 3.4 billion barrels (9.3%) from 2013. U.S. proved reserves of crude oil and lease condensate have risen for six consecutive years, and exceeded 39 billion barrels for the first time since 1972.”
As the chart above indicates, proved reserves have increased considerably in recent years, as has production. This increase in production, combined with the fact that U.S. refineries are not configured to refine all of the domestic oil economically, has resulted in record crude stockpiles. According to EIA, crude oil in storage has exceeded 90 percent capacity and remains at 80-year highs. The United States is producing more oil than at any time in the last forty years and our storage levels are at record highs. Clearly, in this age of American energy abundance, the crude oil export ban has outlived any practical use.