U.S. Oil Production Today Same as in 1948

by: Mark Perry July 31, 2008 | about stocks: DBO / OIL / USO    

Mark J. Perry, Ph.D.

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According to data from the Energy Information Adminstration for crude oil field production in the U.S., our current annual domestic production of about 1.873 billion barrels of crude oil (5.132 million barrels per day) is about exactly the same as oil production 60 years ago, back in the 1947-1949 period (see graph above). Real GDP today is about 7.2x higher than it was in 1948, and yet we're producing the same amount of domestic oil.

Bottom Line: Don't blame the speculators for high oil prices, blame restrictions on domestic oil production. Let's drill, drill, drill.

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This article has 46 comments:

  •  
    Jul 31 08:07 AM
    where you going to get all the drill rigs charlie? you will have to round up some qualified drill rig workers too.
    > jack
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  •  
    Jul 31 09:14 AM
    All the oil is in the Gulf (which is already allowed for unlimited drilling) and in Alaska. See here: www.mms.gov/revaldiv/C...
    Reply | Link to Comment
  •  
    Jul 31 09:24 AM
    Mark has now identified his bias. Thats a good thing. One of these days we are going to be smart enough to follow the money. Then you will be able to see the red herring arguments and throw away distractions for what they are. Does anybody see a disconect between oil companies record profits and the price per barrel VS the price per gallon. To praphrase Hyundai DUH! You see profit is profit. Huge record profits are GREED!!!!!!!!

    So now we need to up our production of domestic oil, DRILL< Yes but not for lower gas prices but for the big picture less dependency on imported oil. Lower gas price pressure is the excuse to galvinize the support to get the tree huggers out of the way and create a bogus national emegnency to jack up congress to blow the lobbyists and let' um drill drill drill.

    So are we really the smart ones after all. We went to every country in the world drilled and pumped them almost dry. If we are to believe the world shortage Theory. Sort of like golbal warming, So now we come back home and tap our vast reserves and live happy on our own.

    Great you want to drill pass down some relief at the pump.. You still have plenty of money to drill.

    And Jack take a look at world war II industrial ramp up and production of equipment. We can get and build and train and have anything we put our collective minds to. The chinese are not the only ones who can build stuff. You just have to make it worth while for americans to get off thier toucas and go to it. We have an estmated 11,000,000 man imported work force looking for jobs; Why not the awl bidness!!!!
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  •  
    Jul 31 09:32 AM
    Back in the late 70's I heard repeatedly by "supposedly sensible" people that we could "drill our way out of the oil crisis".

    I said "B-S!" to the conventional logic then, the reason being America was an oil pincushion... already stuck with an absurdly high number of "pins'. Compared to the rest of the world the USA was "drilled out".

    The best hope we had then was to radically improve our electric grid, add large capacity to the US nuclear power stations (including building new facilities) and working like crazy to conserve... I was part of the "Detroit project" when we doubled car mpg from 13 to 27 in less than 7 years... and the US should have instituted oil price controls, upper and lower... tax floor and subsidy top... with small escalation built in, but every dollar put in an oil trust fund like the SPR... would have been cheap insurance and stabilised behavior.

    Instead what did the USA do? Revel in an oil crash, then build an absurd SUV fleet, and throw up McMansions on no money down that suck up 10 megawatt-hours per month...

    Oh yeah... they voted for sunshine lies and resource wars too... Reagan twice, Bush I, two Clinton terms, Bush II twice... and passed up on Perot when they had the chance.

    So what do our children inherit?

    Neocon wars (and the neo's are in both parties)... Bank and real estate crises... Auto companies going under... Hubbert's Peak proven... future disasters by the score... food, water, and power shortages on the way.

    Get ready folks. And the next time Larry Krudlow or some wannabe bozo spouts about "drill, drill, drill"... drill 'em. Right in the chops.
    Reply | Link to Comment
  •  
    Jul 31 10:05 AM
    remember the nature of capitalism - profits in the current fiscal quarter are made by getting rid of the resource as rapidly as possible. hence all the suv's & plasma tv's.
    > jack
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  •  
    Jul 31 10:14 AM
    don A - go back to 1939-40 and remember that herr hitler ended the 1930-39 depression. england had let her industrial base wither and suddenly needed to fight. using england's gold reserve & the lend-lease program we were able during 1940-41 to create a warm base & hit the ground running in 1942. it didn't hurt that we had IGFarben's synthetic-rubber process in a file cabinet at standard oil in NYC, those plans were seized as enemy property on dec.8 1941 & plants were built chop-chop. ain't gonna happen again.
    > jack
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  •  
    Jul 31 10:25 AM
    I agree with you about increasing the drilling but less royalties and more incentives are needed to make this a go. oil service companies are not getting thier share of these profits so the government must structure incentives to redistribute the wealth to the companies that can build the infrastructure to sustain drilling.
    Reply | Link to Comment
  •  
    Jul 31 11:55 AM
    What a shock --oil wells run out!! Say it isn't so!.
    Well anyway let's drill some more, maybe these will produce forever, and alternatives will just become a bad dream.

    A short term cushioning is OK but it should take second billing to an alternative more permanent fix, electric, bio diesel etc.

    If the ratio now in cars/ per-barrel produced was the same as 1948 we'd all jump for joy. Don't make too much of coincidental numbers.
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  •  
    Jul 31 11:58 AM
    JOHN S. GORDON just glad to see someone else that does not buy the fdr myth. then we had an industrial base. you are so right, if we get into a real war (not a u.n. police action) we are in a world of trouble. i often wondered when we would attack russia and china if we did not allow brutal governments to posses wmds. remember too that grandfather bush and grandfather gore got in trouble for trafficking with the nazis. john i went ahead in a small way on rtk while it was down. now i am looking at qtww. did you ever look at gbrc?
    Reply | Link to Comment
  •  
    Jul 31 12:01 PM
    CAPTBOB what do you think of coal liquification as an aid in a quick fix and maybe part of the long term solution.
    Reply | Link to Comment
  •  
    Jul 31 12:02 PM
    U.S. Oil Production Today (Totally) Different from 1948:
    -US population ~146 million v. 310m now (see how different your graph is done in per capita terms)
    -Zero oil imports v. two-thirds now
    -Oil industry private industry dominated (except Mexico)
    -US the "Saudi Arabia" of crude, no other country produced even half what we did
    -US production lite sweet crude all extracted on land in temperate climates v. most now off-shore and polar
    -World production had only started its upward climb v. now more or less at peak - - so what whether it's now or 2011 or 2015 (unless you've stopped buying green bananas)
    I'm stopping now, but I'm nowhere near done . . .
    Reply | Link to Comment
  •  
    Jul 31 12:05 PM
    There's enough blame to spread around. Do speculators run the price of oil up? What a stupid question! Of course they do and anyone who feels to the contrary is kidding himself. This entire business adds little if nothing to the efficiency of the markets. Look at the stock market and how the stocks go up when oil prices fall and vice versa. Which would the most want? A healthy stock market or fat oil companies who are producing at 1948 levels!!? It should be out-lawed in that only those that actually take possesion of the oil are allowed to speculate. While they are at it, outlaw this short-selling and naked short-selling business. It's ridiculous and the fact that the practice even exists is a scandalous blemish on our financial system. The more I have become aware of these practices the less faith I have in the stock market. I'm sure I'm not alone.
    Reply | Link to Comment
  •  
    Jul 31 12:13 PM
    MIKE i have the same sentment about naked shorts across the board. but to be fair would we also have to stop uncovered calls? i do not feel the same about selling either on what you own.
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  •  
    Jul 31 01:11 PM
    As one petroleum engineer who left the West Texas oil fields in 1962 because I saw no future in the domestic oil business and learned upon joining the New York financial community that the lack of economics in the domestic oil industry was due to self-proclaimed petroleum economists at Harvard and MIT convincing the NE liberal establishment led Congress the country could get all the oil it ever would need from the Middle East at $1.50/B instead of paying domestic producers $3/B. Despite President Eisenhower's efforts to limit the oil importation program because he knew it was the domestic oil industry that enabled the Allies to win WWII and believed the nation needed to preserve a strong oil industry, the liberal establishment hell bent upon destroying the Country's strong industrial complex held forth and what resulted is a story of the destruction of the U.S and International oil industries.

    The comparison between domestic oil production in 1950 and today is a good one because it depicts the effect the illogical, brain dead, socialistic, anti-industry, academic styled economic theories and Congress' involvement manipulating domestic oil prices by importing steadily rising amounts of cheap foreign oil from 1.0 MMBPD in 1958 to 6.0MMBPD in 1973.

    Not to be undone by disastrous results of their 1958-1973 cheap oil price policy which created OPEC in 1960, resulted in nationalization of Middle East oil fields, almost destroyed the domestic oil industry's infrastructure and saw the oil price controlled by Saudi Arabia grow to $34/B in 1981, petroleum economists of U.S. and British based academia determined in 1985 the oil price needed to support the Group of Seven's "One World Economy" plan conceived to control rising inflation rates in the industrial nations to be $15/B. And so, between 1986 and 2001 by building "strategic oil supplies" and distorting oil supply figures, the Group of Seven were able to hold world oil prices at an average $15/B.

    What the 1958-1973 $3/B average oil price didn't do to completely destroy the domestic oil industry's infrastructure, the 1986-2001$15/B average oil price not only destroyed the domestic oil industry infrastructure, it practically destroyed the international oil industry's infrastructure to the extent the major problem to restoring domestic oil production and increasing international oil production is a shortage of skilled men, materials and modern equipment. A problem Russia, China and India are rushing to solve by educating the large numbers of engineers and geologists who should be in position within the next five to ten years to restore the international oil industry to normalcy, hopefully, without further interference from brain-dead academics who for the past fifty years haven't yet figured out that building and maintaining a strong economic environment requires a steady supply of energy rather than a university full of tenured professors with a grudge against the private sector that won't hire them who resort to consulting with politicians in ways designed to undermine the capitalistic spirit.

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  •  
    Jul 31 02:45 PM
    I get such a kick out of hearing posters repeatedly proclaim that big oil's record profits and the investments of speculators are somehow responsible for skyrocketing energy prices. Either we have only 3% of the world's oil reserves or we don't, and Bush must be responsible for falling oil prices and not the shorts. But you can't have it BOTH WAYS! So do yourselves a favor and THINK for a moment before you run your mouths and fingers.
    Reply | Link to Comment
  •  
    Jul 31 03:00 PM
    Gee, I wonder what the present profits of the oil companies are in terms of 1948 DOLLARS? Probably the same as they are today, 8% of sales. And that's in good years, not the ones where many of them closed their doors due to record LOSSES. All those empty charges against them might mean something if they actually had ANYTHING TO DO with determining prices.

    (Or maybe they secretly control the futures markets. Hmm, hadn't thought of that. We'd better empanel several new committees of Democrats to investigate. Or perhaps we can wait on the one now busy impeaching the president.)
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  •  
    Jul 31 03:09 PM
    No, it must be the Republicans. Clearly, they're in league with big oil. That's why they want us to explore for more domestic oil and gas, so the prices will COME DOWN. No, that can't be it.

    However, if they fail in their attempt to buck the Democrat Congress, whose antics are responsible for record high oil prices, they're all going retire to some South Sea island paradise with the big oil CEO's. Okay, that sounds better.
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  •  
    Jul 31 03:16 PM
    See, I can come up with great sounding "talking points" for brainless Democrat politicians, just like their environmental lobby does. And mine make just as much sense, if not moreso!
    Reply | Link to Comment
  •  
    Jul 31 04:29 PM
    PAUL8756 did you catch the scientist on hannity last night? his job was to keep tabs on the oil rigs off the southern california coast. his first point was that the new technologies make accidents less likely everyday and wasted oil was the last thing a company wanted. then he talked about the healthy marine life around the rigs. his main point was that the drilling was reducing pressure on the oil & gas pools and was reducing natural seepage and was actually keeping the coast much cleaner. apparantly 5 years of seepage is the equal of a major spill. the last point was the deaf ears of california politicos and all they wanted to hear was the algore nonscience. it was interesting. he mentioned the rising caribou population around prudhomme bay breifly.
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  •  
    Jul 31 04:33 PM
    OILDADDY wish you would write a rebuttal article or three. you have a clear longview understanding and insight that would be good for all.
    Reply | Link to Comment
  •  
    Jul 31 08:12 PM
    No, but I live in south Louisiana. Our Gulf Coast is rated as one of the TEN BEST salt water fishing spots in the WORLD by sportsmen's magazines. (I want to strangle the young Congressman from here who keeps failing to mention this when I see him on C-SPAN with his colleagues on the House floor at night. Maybe he's not a fisherman.)

    But I'm sorry I missed the guy on Hannity. It's true about the caribou, the pipeline keeps them from freezing to death! I'm familiar with the oil seepage issue (2/3 of all oil enters the water that way, and most of the rest comes from boats). But I didn't know about oil naturally washing up on the CA coast.


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  •  
    Jul 31 08:25 PM
    As I think about it, it's too bad more oil doesn't hit the CA beaches that way. Maybe we could get some converts for more offshore oil exploration if it got bad enough. Ha, ha!
    Reply | Link to Comment
  •  
    Jul 31 10:38 PM
    OK guys and gals this is how it works . Right now oil(gas even at 150 ) is the cheapest fuel we have in the USA ,except maybe coal .This means that for alternative forms of energy to take hold and become economically worthwhile ,oil and gas has to get much more expensive .I do not know what level , maybe 200 /barrel .So the liberal democrats (and there can be no dispute on this matter ) are against everything so that oil and gas become so expensive people will finally use alternative sources of energy . You can accept this or not but this is the way it is and you can take it to the bank , which is just what I plan to do .
    Reply | Link to Comment
  •  
    Aug 01 10:45 AM
    Surg,

    That's exactly right. It's also the VERY last thing you will ever hear them say, because it would get most of them quickly un-elected.

    It is a very difficult issue to openly discuss, actually. Almost like the "third rail" of Social Security. Europeans encourage conservation through HIGH levels of gasoline taxation, but that wouldn't work here due to our anti-tax nature and inherent suspicion of government.

    That presents the D's with something of a "Catch 22," if you will. Reasonable people just don't BELIEVE their excuses that the oil companies and auto manufacturers are somehow to blame for America's economic decline. Hell, the internal combustion engine BUILT THE PLACE, so they implicitly know better!

    This forces the D's to lie, then. About the closest any of them have ever come to saying so was Obama, when he intoned that gas prices weren't too high, only that they'd risen too fast, earlier this year. (And it's safe to say we won't be hearing THAT again as we approach Nov. 4.)

    The R's take just the opposite tact, as they have more faith in free markets. ("The LOWEST COST energy solution will win every time," as Boone Pickens puts it.) They also sense the public popularity of this issue, and are badly need a boost in the polls right now.

    But don't bet your house that the D's will be able to hold off the R's here. Owing to the peculiar nature of the OCS moratorium, it must be RENEWED by Oct. 1 EACH YEAR. And the only viable way for the D's to extend it is to make it part of a Continuing Budget Resolution they must adopt before they go home to campaign.

    But they don't have the 60 votes they need in the Senate to do this. At the same time, however, it would require the R's to SHUT DOWN the entire federal government to keep the moratorium from being extended. My bet is they will, because when you, "Don't have nothin', you ain't got nothin' to lose."

    So what has already been an historic election year promises to get A LOT MORE EXCITING before it's over! I can't wait to see it, myself.

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  •  
    Aug 01 10:50 AM
    P.S. And that's not to mention what such a wild public policy fight right before the presidential election will do to oil prices and the stock market here and around the world. Wow!
    Reply | Link to Comment
  •  
    Aug 01 11:10 AM
    PAUL8756 good morning bud. the point was that drilling earlier had reduced pressure so the seepage was greatly reduced. i guess in the 50s and early 60s it was much worse. i hope you heard mark levine last night on exxon and schumerpig. i had to go in to work for a little while last night so i was out and listening on the way home.
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  •  
    Aug 01 11:12 AM
    PAUL8756 you know me. shut it down. then we have no more harm for a little breather.
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  •  
    Aug 01 11:13 AM
    P.P.S. As the D's obviously have a great deal more to lose than the R's here, I've been of a mind they were planning to find a way to diffuse this coming showdown all along. But their leaders, Nancy and Harry (clearly not the brightest bulbs in the pack!) have proven me wrong so far. And now they're running out of time, as they return to Washington after Labor Day with only four weeks left before Oct. 1 (which is only another four weeks from Election Day).
    Reply | Link to Comment
  •  
    Aug 01 11:32 AM
    No, but I like Mark. What did he have to say?
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  •  
    Aug 01 11:35 AM
    You know, FB, this promises to be the biggest political fight of our time. And right before a historic election, no less. It will make immigration look like small potatoes. And put the prez candidates right in the middle on the Senate floor. I can't wait!
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  •  
    Aug 01 12:36 PM
    PAUL he pointed out that what exxon made was very reasonable. then he showed how whatever they made in profit per minute you could about triple it to see the rate of taxation per minute. then he pointed out that the red green goal was to raise fuel rates until alternatives become attractive no matter the economic havoc it causes. then he said ultimately it was to nationalize oil once joe six pack is desperate enough he will be ready to sieze big oil. so maybe mad maxine is not the joke she should be. he pointed out that the banking is on the road to nationalization. healthcare is far down that road and the ultimate goal is to takeover everything of any importance until you stand in line with your mouth shut to get a little ration of what you need. mark is carrying the fight. i just hope enough people hear him to matter. the problem is that to many do not want to hear the truth, the facts or the numbers so they go thats not true and tune it all out.
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  •  
    Aug 01 12:38 PM
    i look forward to it too. circumstances may pin them down enough to force some actual answers instead of political vauguries.
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