Considering all the talk about global warming, peak oil, carbon divestment, and renewable energy, you'd think that oil consumption in the United States would be on a downward path. By now, we should certainly be witnessing real progress toward a post-petroleum economy. As it happens, the opposite is occurring. US oil consumption is on an upward trajectory, climbing by 400,000 barrels per day in 2013 alone - and, if current trends persist, it should rise again both this year and next.
In other words, oil is back. Big time. Signs of its resurgence abound. Despite what you may think, Americans, on average, are driving more miles every day, not fewer, filling ever more fuel tanks with ever more gasoline, and evidently feeling ever less bad about
it. The stigma of buying new gas-guzzling SUVs, for instance, seems to have vanished; according to CNN Money, nearly one out of three vehicles sold today is an SUV. As a result of all this, America's demand for oil grew more than China's in 2013, the first time that's happened since 1999.
Accompanying all this is a little noticed but crucial shift in White House rhetoric. While President Obama once spoke of the necessity of eliminating our reliance on petroleum as a major source of energy, he now brags about rising US oil output and touts his efforts to further boost production.
Just five years ago, few would have foreseen such a dramatic oil rebound. Many energy experts were then predicting an imminent "peak" in global oil production, followed by an irreversible decline in output. With supplies constantly shrinking, it was said, oil prices would skyrocket and consumers would turn to hybrid vehicles, electric cars, biofuels, and various transportation alternatives. New government policies would be devised to facilitate this shift, providing tax breaks and other incentives for making the switch to renewables.
At that time, a growing concern over climate change and the prospect of further warming due to increased emissions of carbon dioxide from the burning of fossil fuels seemed to dim the long-term prospects for petroleum. After all, oil combustion is this country's single largest source of carbon emissions. This, in turn, clearly meant that any significant attempt to reduce emissions - whether through a carbon tax, a carbon cap-and-trade program, or other such measures - would naturally have to incorporate significant impediments to oil use. President Obama entered the White House promising to enact such a measure, and the House of Representatives passed a modified cap-and-trade bill in 2009. (It failed in the Senate and so never became law.)
The 2008 financial crisis and global economic meltdown only put oil's future in further doubt. Suddenly cash-conscious Americans began trading in their gas-guzzlers for smaller, more fuel-efficient cars, with the Obama administration adding its encouragement. When agreeing to the bailout of General Motors, for instance, the White House insisted that the reorganized company focus on the production of such vehicles. In a similar spirit, the administration's $787 billion stimulus package favored investment in electric cars, biofuels, high-speed rail, and other petroleum alternatives.
The president's comments at the time clearly reflected a belief that oil was an "old" form of energy facing inevitable decline. "The United States of America cannot afford to bet our long-term prosperity, our long-term security on a resource that will eventually run out, and even before it runs out will get more expensive to extract from the ground," he declared in 2011. "We can't afford it when the costs to our economy, our country, and our planet are so high." Not only did the country need to lessen its dangerous reliance on imported oil, he insisted, but on oil altogether. "The only way for America's energy supply to be truly secure is by permanently reducing our dependence on oil."
Obama's turnaround on oil
That was then and this is now, and Obama ain't talking that way no more. Instead, he regularly boasts of America's soaring oil output and points to all he's done and is still doing to further increase domestic production. Thanks to the sort of heightened investment in domestic output his administration has sponsored, he told a cheering Congress in January, "more oil [was] produced at home than we buy from the rest of the world - the first time that's happened in nearly twenty years." Although still offering his usual bow to the dangers of climate change, Obama did not hesitate to promise to facilitate further gains in domestic output.
In accord with his wishes, the Bureau of Ocean Energy Management (BOEM) announced on July 18th that it would reopen a large portion of the waters off the Eastern seaboard, an area stretching all the way from Florida to Delaware, to new oil and natural gas exploration. Under the BOEM plan, energy companies will be allowed to employ advanced seismic technology to locate promising reserves beneath the seabed in preparation for a round of offshore licensing scheduled for 2018.
At that point, the companies can bid for and acquire actual drilling leases. Environmental organizations have condemned the plan, claiming the seismic tests often involve the use of sonic blasts that could prove harmful to endangered sea animals, including whales. The truth is, however, that those seismic tests, by opening future fossil fuel deposits to development and exploitation, are likely, in the long run, to hurt human beings at least as much.
Here are some of the other measures recently taken by the administration to boost domestic oil production, according to a recent White House factsheet:
An increase in the sales of leases for oil and gas drilling on federal lands. In 2013, the Bureau of Land Management held 30 such sales - the most in a decade - offering 5.7 million acres for lease by industry;
An increase in the speed with which permits are being issued for actual drilling on federal lands. What's called "processing time" has, the White House boasts, been cut from 228 days in 2012 to 194 days in 2013;
The opening up of an additional 59 million acres for oil and gas drilling in the Gulf of Mexico, the site of a disastrous BP oil spill in April 2010.
In other words, global warming be damned!
In a turnaround that has gotten next to no attention and remarkably little criticism, President Obama is now making a legacy record for himself that will put the "permanent reduction of our dependence on oil" in its grave. His administration is instead on a drill-baby-drill course to increase production in every way imaginable on US territory, including offshore areas that were long closed to drilling due to environmental concerns.
What explains this dramatic turnaround?
The rekindled allure of oil
The most significant factor behind the renewed popularity of oil has been a revolution in drilling technology. In particular, this involves the use of horizontal drilling and hydraulic fracturing ("fracking") to extract oil and natural gas from previously inaccessible shale formations. These techniques include the use of drills that can turn sideways after penetrating thin underground shale layers, along with high-pressure water cannons to fracture the surrounding rock and liberate pockets of oil and gas. Until the introduction of these techniques, the hydrocarbons trapped in the shale were prohibitively expensive to produce and so ignored both by industry and the many experts predicting that "peak oil" was in sight.
Most domestic shale "plays" (as they are called in the industry) contain both oil and natural gas. They were first exploited for their gas content because of the greater ease in extracting commercial volumes of that fossil fuel. But when the price of gas collapsed - in part because of a glut of shale gas - many drillers found that they could make more money by redeploying their rigs in oil-rich shales like the Bakken formation in North Dakota and Eagle Ford in West Texas. The result has been a sudden torrent of domestic crude that has brought gasoline prices down (with a resulting increase in gasoline consumption) and created boom-like conditions in several parts of the country.
Prior to the utilization of horizontal drilling and fracking technology, US crude production was indeed facing long-term decline. According to the Energy Information Administration (EIA) of the Department of Energy, domestic crude output fell from a peak of 9.6 million barrels per day in 1970 to a low of 5 million barrels in 2008. With the introduction of fracking, however, the numbers started to soar. Total US crude output jumped from 5.7 million barrels per day in 2011 to 7.5 million in 2013. Output in 2014 is projected to be 8.5 million barrels per day, which would represent a remarkable increase of 2.8 million barrels per day in just three years.