With 4% of the world’s population, the United States consumes 40% of the world’s oil, due largely to its consumption of travel and shipping by its 267 million cars and trucks that are inefficient relative to other countries. The United States has substantial oil resources, accounting for about 17% of all oil ever produced in the world. Nevertheless, domestic supply could not keep pace with consumption. From the end of World War II through September of 2019, the country imported more oil than it exported.
Oil import dependence was viewed as a national security threat by Democratic and Republican administrations alike, and the issue dominated American domestic and foreign policy for 60 years. Policies included a ban on oil in electricity generation, opening federal land for oil extraction, a ban on oil exports, a quota system for oil imports, subsidies for alternative fuels, and the creation of the Strategic Petroleum Reserve, to name just a few.
A key thread to this story is the peak in United States oil production from conventional sources in 1970, and its precipitous decline. By the 1990s, the idea of “peak oil” dominated the public’s attention. Conventional wisdom had it that the world was “running out” of oil without any clear immediate substitute. Doomsday predictions were fueled by a decline in natural gas production that also began in the 1970s.
The situation was profoundly different by the late 2010s. Oil production in the United States reached record levels, it was the largest producer of oil in the world, it was a net exporter of oil, new pipelines were being planned, and new liquefied natural gas (LNG) export terminals were under construction.
What caused this historic and rapid turn of events? Fracking. The term encompasses two technologies that are used together. Horizontal drilling refers to the drilling of an oil or natural gas well at an angle to the vertical, so the well runs parallel to the geologic formation containing the oil or gas. Hydraulic fracturing involves injecting water, sand, and chemicals under high pressure into a bedrock formation via a well to create new fractures in the rock and to expand existing fractures.
Oil produced in this manner is called tight oil. Gas produced in this manner is typically called shale gas. In both cases, the oil and gas exist in geologic formations with extremely low permeability. Fracking is the key that unlocks the resource. Tight oil and shale gas resources were known for decades by the industry, but they were out of reach until fracking became a feasible and viable technology. The production also expanded due to advances in offshore deep water technology, and the ability to extract methane from coal beds.
The impact on production was astounding, and the benefits extend well beyond reduced import dependence. From 2000 to 2015, employment in U.S. oil and gas fields increased by 150% and the value of oil and gas production increased from $261 to $451 billion (constant 2012$), spurring regional economic booms in North Dakota, Texas, and Pennsylvania. Pollution and GHG emissions declined as abundant supply enabled natural gas-fired electricity generation to replace coal, although the magnitude of this substitution is difficult to measure precisely.
But fracking has also generated strident opposition due to its real and perceived health, environmental, and social impacts. A comprehensive study by the U.S. Environmental Protection Agency documents how fracking has moderate to severe impacts on drinking water resources under some circumstances.1 Wastewater disposal from fracking contributes to “induced seismicity” (earthquakes) under certain conditions. Fracking can pit neighbors against each other due to the financial winners and losers created by oil and gas extraction. A growing number of case studies document elevated health risks to people living near fracking operations, impacts that disproportionately affect households of color and low income. Finally, abundant supplies of oil and gas create an incentive for the industry to build long-lived infrastructure such as refineries and pipelines that will make it harder to achieve a carbon-neutral energy system.
1 U.S. EPA. Hydraulic Fracturing for Oil and Gas: Impacts from the Hydraulic Fracturing Water Cycle on Drinking Water Resources in the United States (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R-16/236F, 2016. https://cfpub.epa.gov/ncea/hfstudy/recordisplay.cfm?deid=332990