USA oil production currently stands at 13.3 million barrels per day (mbpd). A USA record. But not just a USA record. A global record – the USA is now out-producing every other nation on earth. The USA’s nearest rival – Saudi – has hit aging infrastructure limits capping its output at 11mbpd.
In 2008 US oil production was only 5mbpd. In less than two decades the USA has nearly trebled its oil output. It has done this without the oil majors and without a state-owned oil company. Even more remarkable, the USA has achieved this in an era of real-terms low oil prices. More than two dozen large, medium, and small companies have driven this oil boom through innovation and – dare I say it – classic capitalism.
By contrast, the state owned Saudi Aramco has been more concerned with geopolitical manoeuvering and supporting the Saudi government’s stategic ambitions. State owned Aramco has failed to invest in its infrastructure and consequently it has lost market share. Despite sitting on vast reserves, its output peaked in 2016 at 12.5mbpd and has declined significantly since. Reserves count for nothing if a leadfooted state controls them.
Thems are the numbers and in no way do they support the author’s assertion that the US needs a state owned oil champion “Americo”. The numbers prove quite the opposite.
The Saudis are one of the richest countries in the world with 200 years of reserves, and production costs of about 10$ per barrel, they have huge financial reserves and not much debt. They are not interested in overproduction being the major player in Opec they control the price of oil , sometimes by reducing production, other times by increasing. They are sitting on a gold mine, unlike the US which relies on fracking which taps short term reserves with very rapid depletion rates. These reserves will deplete rapidly and US will once again become dependent on foreign oil. Even in the short term oil companies will not drill unless the demand is there, overproduction is not in their interest, they want a good price for their oil and a good return because of rapid depletion rates. The drill baby drill thesis is nonsense, it’s all hype.
All of which is unchanged by a state owned “Americo” , the author’s asserted solution to allow the USA to compete with foreign companies. My point was to show in numbers that the author’s polemic is verifiable nonsense.
As for your point about reserves, the numbers don’t mean what you think they do. The USA currently has 40 billion barrels of proven crude reserves based on current technologies and market prices. That’s higher than 5 years ago and higher than 1990. Based on 1990 extraction rates, the USA should have run out of extractable crude by 2002. It didn’t. The proven reserves number us not the scientific absolute measure of all available oil, it is a measure of commercially prospected oil fields.
Huge areas of the USA don’t have the downstream pipeline infrastructure to handle crude production and so very little prospecting for tight oil has been done in these areas. When the current tight oil fields start running dry, the network of pipelines will be extended opening new areas for prospecting and drilling. Based on national geology data, the US EIA provisonally estimates at least another 190 bn barrels probably exist across the continental United States.
Is it not time for Unherd to commission a few articles from you? Your comments often make far more sense than some of the poorly reasoned offerings such as this article. You are impressively well informed and cogent.
Peter B
8 days ago
No idea what this article is driving at. The author seems to imagine that the Us needs a state oil and gas company. But why ? There’s not actually any problem to solve here.
Trump doesn’t need the US to dominate world oil and gas supply. Besides which that’s not possible. The US already produces enough for its own needs though (though still does some import and export to balance out the product mix).
Suspect the author is making the classic error of taking Trump literally but not seriously when it should be the other way round.
Well said, brother!
Yes, “dominance” or “energy independence” may have a lot of intuitive appeal, but it’s hard to make these notions make sense in a globalized market. At a given time, the US may appear “independent,” but it still faces global prices.
The same with wheat and other commodities. Australia has a bad harvest, say. Prices in the United State go up! Prices everywhere go up. Globalized market. Globalized prices.
But, the real thrust of a Trumpy energy policy is to not do what most of Europe is doing: Trading up from lower cost energy to high cost energy. And the result: Industry flees to places with lower-cost energy like China. It’s no accident, for example, that entities like Volkswagen have given up manufacturing EV’s and EV batteries in Europe and have instead set up production in China.
Alex Lekas
8 days ago
And those members of OPEC — along with their expanded group OPEC+, which was created in 2016 — are not afraid to flex its muscles.
Yet somehow, Trump is creating an oil war? He’s just taking advantage of his country’s natural resources, which sounds a lot like good business, good policy, and good politics.
Josef Švejk
9 days ago
Thank you Michael for your usual rigour and incisiveness. This article illustrates the impotence of any one man over events in an interconnected world. Trump sees himself as the Don, but he is Quixote, soon to be perplexed by the multitude of windmills turning to drive him to true madness. Oils is oils and greed is greed, one man can never truly influence the Oil Game.
The “multitude of windmills” (intermittent, sprawling, low energy density) is one of the things driving the demand for gas (dispatchable on-demand, compact, high energy density).
Wind has, what, 30% efficiency. And also deduct transmission drag, so truly 25%. We need some other reliable source. Solar in some places, but not in the places we live and work.
We will run out of oil (in 1970 we were said to have 20 years supply left but now that is 150 years reserves), but we will run out eventually. Time to build lots of nuclear power stations yet though
Two events stand out for me from my school and student days in the 60’s and early 70’s, the oil crisis and the thrill of learning about nuclear energy while attending scientific exhibitions for schoolchildren. All that excitement. Where to did it go and why did it disappear ?
M To the Tea
9 days ago
I have been saying that capitalism works only outside a country, not within it. To support your own people, you must have socialism or communism. So, I was not wrong. In order to compete, USA would need state-owned industries to create jobs, but that would require fundamental change, which is unlikely to go over well.
Don’t shoot the messenger. I am concerned for him! He will have to poke the bear!
“foreign state capitalism won out over American-style private capitalism. Today, three-quarters of the world’s oil reserves are controlled by state-owned national oil companies”
“Instead, Trump is left with an oily irony: if he wants to secure America’s energy dominance, he’ll have to imitate every other global competitor and create a state-owned oil and gas company”
I’ve down voted because the author and you ignore the simple truth that the USA and capitalism have nearly trebled oil output in less than 2 decades and the USA now produces vastly more oil than any other nation on earth. All without a state owned company in sight.
Spot on-its a question of deregulation after which the frackers et al will continue producing as much as they can-even under “watch my lips” Biden who attempted to ban as much as he could ( and eventually had to go begging to Saudi to increase production ) tehy manage to achieve net export status.Imagine what they will do under Trump.
I see Sleepy Joe has implemented an executive order permanently banning future offshore oil and gas development in parts of the Atlantic and Pacific oceans-a true patriot!!!
My point may have lost its intended meaning due to my verbose writing. Ultimately, Trump’s challenges will revolve around two key issues: the conflict between globalism and U.S. hegemony versus China (which I believe is already a foregone conclusion), and addressing domestic issues that put pressure on globalists and financial elites while focusing on creating real, meaningful industries in the U.S. While he is supported by globalists, there is always a tension between their agenda and the broader population. If this effort fails, I’m not certain Trump wouldn’t resort to introducing state-owned companies to supercharge a new form of governance—something not necessarily aligned with what we’ve seen so far.
The only reason foriegn state capitalism can be percieved as winning out over American private capitalism is primarily simple math; the majority of the world oil reserves and potential resources occur in countries with state owned production, with most of them having authoritarian governance. Still, the US punches above its weight for several reasons, the least of which is their leadership in oil exploration and production technology. And the reason for US oilfield technology leadership is precisely because of the freewheeling capitalism and intense competition within the US oilpatch amongst both major companies and the myriad of small junior operators.
Last edited 4 days ago by Kent Ausburn
Bret Larson
9 days ago
The whole analysis is faulty. The majors still do a lot of the work. They will do the work in the us where it’s profitable for them. Government controlled oil companies are partners with them while governments siphoning off cash. Some governments use it for legitimate purposes while others find other purposes for the cash.
Suffice to say the Americans have fixed their oil problem.
Some other problems, you don’t wash oil out with water and the me and etc has 80% of the light oil. (I’ll trust your stat but I probably shouldn’t)
Alex Cranberg
8 days ago
Logic missing here..Trump needs a national oil company because….why? The only thing an Americo would do differently is reduce production and waste money. Even foreign oilfields are run by private multinationals (except in Kuwait and Saudi) and the “national oil companies” are merely regulators and revenue sharers. In that sense, the USA already has a national oil company: it’s called the Bureau of Land Management. And sure enough it does plenty to block more oil production (at least under Biden).
Jim Veenbaas
8 days ago
Almost all of this nonsense. The idea that you need state owned oil companies to drill baby drill is ridiculous, almost as silly as the idea that Trump will impose 25% tariffs on Canadian oil.
Maverick Melonsmith
8 days ago
“Forget Texaco — and bring on the age of Americo”. Sounds a bit socialist.
We already have Saudi Aramco, an entity organized by Chevron and Saudi Arabia back when Chevron was still Standard Oil of California (SOCAL). That was a long time ago, and it’s still running!
The author seems nostalgic for the 1970s
It also seems very out of touch to mention the under-siege UK oil & gas industry without mentioning Norway , where it’s an absolute boom year for drilling.
Cathy Carron
8 days ago
The header is funny: What makes you think it’s Trump? After all, Biden just curbed off-shore drilling. Trump from the get-go has always been, “drill baby, drill.”
Alex Lekas
8 days ago
And those members of OPEC — along with their expanded group OPEC+, which was created in 2016 — are not afraid to flex its muscles.
Please reconcile this with the title claim of Trump wanting to launch an oil ‘war.’ The country is full of energy resources. Are they to go unused for fear of offending OPEC?
Alex Lekas
8 days ago
why do tame comments get deleted?
G M
8 days ago
State-owned enterprises tend to become bureaucratic, inefficient and corrupt over time, especially if they have a monopoly position.
In the long-term private companies, with competition, tend to produce better results.
alan bennett
8 days ago
This column is economical with the truth.
Max Beran
8 days ago
The discussion seems to have lost sight of the UK angle. Why is Trump saying UK should drill but EU must buy lots of US LNG (or else)? Just being nice to us? Or a calculation that LNG production and export is not without limits. The former sounds out of character and the latter sounds a bit technical for Trump. Others may have more informed answers.
Andrew Fisher
8 days ago
Are some of the comments below have already said, Michael Lind’s recommendation of setting up an American state-owned oil and gas company is a crashing non-sequitur!
A bit like the arguments over rented and occupied accommodation, the transfer of assets from one category to another makes absolutely no difference to the overall capacity. I would think there’s quite a good argument for private ownership in that it’s much less likely to be subject to purely political objectives.
UK
US
USA oil production currently stands at 13.3 million barrels per day (mbpd). A USA record. But not just a USA record. A global record – the USA is now out-producing every other nation on earth. The USA’s nearest rival – Saudi – has hit aging infrastructure limits capping its output at 11mbpd.
In 2008 US oil production was only 5mbpd. In less than two decades the USA has nearly trebled its oil output. It has done this without the oil majors and without a state-owned oil company. Even more remarkable, the USA has achieved this in an era of real-terms low oil prices. More than two dozen large, medium, and small companies have driven this oil boom through innovation and – dare I say it – classic capitalism.
By contrast, the state owned Saudi Aramco has been more concerned with geopolitical manoeuvering and supporting the Saudi government’s stategic ambitions. State owned Aramco has failed to invest in its infrastructure and consequently it has lost market share. Despite sitting on vast reserves, its output peaked in 2016 at 12.5mbpd and has declined significantly since. Reserves count for nothing if a leadfooted state controls them.
Thems are the numbers and in no way do they support the author’s assertion that the US needs a state owned oil champion “Americo”. The numbers prove quite the opposite.
The Saudis are one of the richest countries in the world with 200 years of reserves, and production costs of about 10$ per barrel, they have huge financial reserves and not much debt. They are not interested in overproduction being the major player in Opec they control the price of oil , sometimes by reducing production, other times by increasing. They are sitting on a gold mine, unlike the US which relies on fracking which taps short term reserves with very rapid depletion rates. These reserves will deplete rapidly and US will once again become dependent on foreign oil. Even in the short term oil companies will not drill unless the demand is there, overproduction is not in their interest, they want a good price for their oil and a good return because of rapid depletion rates. The drill baby drill thesis is nonsense, it’s all hype.
All of which is unchanged by a state owned “Americo” , the author’s asserted solution to allow the USA to compete with foreign companies. My point was to show in numbers that the author’s polemic is verifiable nonsense.
As for your point about reserves, the numbers don’t mean what you think they do. The USA currently has 40 billion barrels of proven crude reserves based on current technologies and market prices. That’s higher than 5 years ago and higher than 1990. Based on 1990 extraction rates, the USA should have run out of extractable crude by 2002. It didn’t. The proven reserves number us not the scientific absolute measure of all available oil, it is a measure of commercially prospected oil fields.
Huge areas of the USA don’t have the downstream pipeline infrastructure to handle crude production and so very little prospecting for tight oil has been done in these areas. When the current tight oil fields start running dry, the network of pipelines will be extended opening new areas for prospecting and drilling. Based on national geology data, the US EIA provisonally estimates at least another 190 bn barrels probably exist across the continental United States.
Is it not time for Unherd to commission a few articles from you? Your comments often make far more sense than some of the poorly reasoned offerings such as this article. You are impressively well informed and cogent.
No idea what this article is driving at. The author seems to imagine that the Us needs a state oil and gas company. But why ? There’s not actually any problem to solve here.
Trump doesn’t need the US to dominate world oil and gas supply. Besides which that’s not possible. The US already produces enough for its own needs though (though still does some import and export to balance out the product mix).
Suspect the author is making the classic error of taking Trump literally but not seriously when it should be the other way round.
Well said, brother!
Yes, “dominance” or “energy independence” may have a lot of intuitive appeal, but it’s hard to make these notions make sense in a globalized market. At a given time, the US may appear “independent,” but it still faces global prices.
The same with wheat and other commodities. Australia has a bad harvest, say. Prices in the United State go up! Prices everywhere go up. Globalized market. Globalized prices.
But, the real thrust of a Trumpy energy policy is to not do what most of Europe is doing: Trading up from lower cost energy to high cost energy. And the result: Industry flees to places with lower-cost energy like China. It’s no accident, for example, that entities like Volkswagen have given up manufacturing EV’s and EV batteries in Europe and have instead set up production in China.
And those members of OPEC — along with their expanded group OPEC+, which was created in 2016 — are not afraid to flex its muscles.
Yet somehow, Trump is creating an oil war? He’s just taking advantage of his country’s natural resources, which sounds a lot like good business, good policy, and good politics.
Thank you Michael for your usual rigour and incisiveness. This article illustrates the impotence of any one man over events in an interconnected world. Trump sees himself as the Don, but he is Quixote, soon to be perplexed by the multitude of windmills turning to drive him to true madness. Oils is oils and greed is greed, one man can never truly influence the Oil Game.
The “multitude of windmills” (intermittent, sprawling, low energy density) is one of the things driving the demand for gas (dispatchable on-demand, compact, high energy density).
Wind has, what, 30% efficiency. And also deduct transmission drag, so truly 25%. We need some other reliable source. Solar in some places, but not in the places we live and work.
We will run out of oil (in 1970 we were said to have 20 years supply left but now that is 150 years reserves), but we will run out eventually. Time to build lots of nuclear power stations yet though
Two events stand out for me from my school and student days in the 60’s and early 70’s, the oil crisis and the thrill of learning about nuclear energy while attending scientific exhibitions for schoolchildren. All that excitement. Where to did it go and why did it disappear ?
I have been saying that capitalism works only outside a country, not within it. To support your own people, you must have socialism or communism. So, I was not wrong. In order to compete, USA would need state-owned industries to create jobs, but that would require fundamental change, which is unlikely to go over well.
Don’t shoot the messenger. I am concerned for him! He will have to poke the bear!
“foreign state capitalism won out over American-style private capitalism. Today, three-quarters of the world’s oil reserves are controlled by state-owned national oil companies”
“Instead, Trump is left with an oily irony: if he wants to secure America’s energy dominance, he’ll have to imitate every other global competitor and create a state-owned oil and gas company”
To support your own people allow them to own their labour and make decisions on the distribution of it.
Works much better, just ask the ussr.
I’ve down voted because the author and you ignore the simple truth that the USA and capitalism have nearly trebled oil output in less than 2 decades and the USA now produces vastly more oil than any other nation on earth. All without a state owned company in sight.
Spot on-its a question of deregulation after which the frackers et al will continue producing as much as they can-even under “watch my lips” Biden who attempted to ban as much as he could ( and eventually had to go begging to Saudi to increase production ) tehy manage to achieve net export status.Imagine what they will do under Trump.
I see Sleepy Joe has implemented an executive order permanently banning future offshore oil and gas development in parts of the Atlantic and Pacific oceans-a true patriot!!!
My point may have lost its intended meaning due to my verbose writing. Ultimately, Trump’s challenges will revolve around two key issues: the conflict between globalism and U.S. hegemony versus China (which I believe is already a foregone conclusion), and addressing domestic issues that put pressure on globalists and financial elites while focusing on creating real, meaningful industries in the U.S. While he is supported by globalists, there is always a tension between their agenda and the broader population. If this effort fails, I’m not certain Trump wouldn’t resort to introducing state-owned companies to supercharge a new form of governance—something not necessarily aligned with what we’ve seen so far.
The only reason foriegn state capitalism can be percieved as winning out over American private capitalism is primarily simple math; the majority of the world oil reserves and potential resources occur in countries with state owned production, with most of them having authoritarian governance. Still, the US punches above its weight for several reasons, the least of which is their leadership in oil exploration and production technology. And the reason for US oilfield technology leadership is precisely because of the freewheeling capitalism and intense competition within the US oilpatch amongst both major companies and the myriad of small junior operators.
The whole analysis is faulty. The majors still do a lot of the work. They will do the work in the us where it’s profitable for them. Government controlled oil companies are partners with them while governments siphoning off cash. Some governments use it for legitimate purposes while others find other purposes for the cash.
Suffice to say the Americans have fixed their oil problem.
Some other problems, you don’t wash oil out with water and the me and etc has 80% of the light oil. (I’ll trust your stat but I probably shouldn’t)
Logic missing here..Trump needs a national oil company because….why? The only thing an Americo would do differently is reduce production and waste money. Even foreign oilfields are run by private multinationals (except in Kuwait and Saudi) and the “national oil companies” are merely regulators and revenue sharers. In that sense, the USA already has a national oil company: it’s called the Bureau of Land Management. And sure enough it does plenty to block more oil production (at least under Biden).
Almost all of this nonsense. The idea that you need state owned oil companies to drill baby drill is ridiculous, almost as silly as the idea that Trump will impose 25% tariffs on Canadian oil.
“Forget Texaco — and bring on the age of Americo”. Sounds a bit socialist.
We already have Saudi Aramco, an entity organized by Chevron and Saudi Arabia back when Chevron was still Standard Oil of California (SOCAL). That was a long time ago, and it’s still running!
I read this remark as sarcasm.. probably you should, too.
Sarcasm or not, it sounds a bit socialist.
The author seems nostalgic for the 1970s
It also seems very out of touch to mention the under-siege UK oil & gas industry without mentioning Norway , where it’s an absolute boom year for drilling.
The header is funny: What makes you think it’s Trump? After all, Biden just curbed off-shore drilling. Trump from the get-go has always been, “drill baby, drill.”
And those members of OPEC — along with their expanded group OPEC+, which was created in 2016 — are not afraid to flex its muscles.
Please reconcile this with the title claim of Trump wanting to launch an oil ‘war.’ The country is full of energy resources. Are they to go unused for fear of offending OPEC?
why do tame comments get deleted?
State-owned enterprises tend to become bureaucratic, inefficient and corrupt over time, especially if they have a monopoly position.
In the long-term private companies, with competition, tend to produce better results.
This column is economical with the truth.
The discussion seems to have lost sight of the UK angle. Why is Trump saying UK should drill but EU must buy lots of US LNG (or else)? Just being nice to us? Or a calculation that LNG production and export is not without limits. The former sounds out of character and the latter sounds a bit technical for Trump. Others may have more informed answers.
Are some of the comments below have already said, Michael Lind’s recommendation of setting up an American state-owned oil and gas company is a crashing non-sequitur!
A bit like the arguments over rented and occupied accommodation, the transfer of assets from one category to another makes absolutely no difference to the overall capacity. I would think there’s quite a good argument for private ownership in that it’s much less likely to be subject to purely political objectives.