I called this image “The most amazing graph of the 21st century,” and I argued that the rapid inversion of the declining trend of crude oil production is the cause of the return of the US government to an aggressive foreign policy. But the vagaries of oil production in the US haven’t ceased to amaze us. We are seeing a desperate attempt to keep oil production growing, even at the cost of dumping everything done so far in terms of “green” policies to mitigate climate change and ecosystem disruption. It is a major historical change, but not the only one we will see in the coming years. 

Sometimes, things change so fast in our world that we are left bewildered at seeing that the world we had thought was “normal” is swept away and disappears forever. The Covid pandemic was a case in point. It changed our habits and how we see ourselves and others and affected our fundamental rights. Yet, in less than a couple of years, it propelled us into a “new normal” that became the way things had to be. 

The wave of rapid changes is not over. Now, change is sweeping through the energy and environmental policy of the United States. A recent article in “The Epoch Times” reports about a document approved by the House Natural Resources Committee with the title “GOP-Led House Panels Shift Gears, Go Full Throttle for Domestic Energy Production.” It is a true tsunami poised to propel us into another kind of “new normal.” Here are some excerpts.

“Among the proposals that will dominate the committee’s and its subsidiary panels’ agendas in the coming months are bills prohibiting restrictions on hydraulic fracking without congressional approval, expanding natural gas exports, repealing the IRA’s Green House Reduction Fund, and amending the Clean Air, Toxic Substances Control, Solid Waste Disposal, and National Gas Tax acts.

“Within the tranche of proposed legislation on the committee’s “unleashing American energy agenda” are bills calling for permitting reform, promoting development of “critical minerals,” and prohibiting the import of Russian uranium. 

If you refer to crude oil and gas, the US is indeed exporting wealth abroad. But the Republicans don’t seem to be able to see the glaring contradiction in what they are proposing. Ramping up oil production, assuming that it will be possible, means that more oil and gas will be exported. In fact, it doesn’t matter if it is exported or burned at home: once it is “produced,” it will be gone, and the country will be impoverished, having lost some of its natural resources. (Unless, of course, you think that oil and gas are an infinite resource…. and that’s precisely what the US elites think.) 

Besides, there is an even more worrisome point in the Republicans’ ideas. Can fracking production be actually increased? Note the sentence about prohibiting restrictions on hydraulic fracking. It smacks of desperation. During the past 10 years, an incredibly rapid increase in oil production was obtained without the need for such a radical legislation. So why is it needed now? It may be a way for senators to show their determination, but it is more likely that the fracking industry is in trouble, unable to recover after the drop caused by the Covid pandemic. Let’s see some data from “Peak Oil Barrel.”

You see that the US oil production collapsed in 2020, then it restarted growing, but it has not returned to the record level of Nov 2019. During the last two years of fast growth, production had grown more than 1 million barrels per year, close to a yearly rate of 10%, a rate never seen during the whole history of US oil production. But during the current recovery. it has been about half that value. The forecasts see a further reduction to nearly zero growth so that the 2019 record may not be breached in December 2024. Note also how production went down for about 6 months before the Covid shock. So something was rotten in Texas already by then. 

What’s happening? One thing is clear: the US oil industry can no longer sustain the incredible growth rate that had been the rule up to 2019. We may very well be close to the second (and final) peak of oil production in the US (as also noted by others)

We are at a critical point in history. An empire that does not expand is a dead empire, and the American Empire needs energy to keep its expansion going. A war, after all, is just a continuation of the economy where the market is the battlefield and “programmed obsolescence” is assured by the competitor’s products (a concept explored in depth by Ingo Piepers). During the past decade, the US empire has been able to accumulate considerable economic potential by means of the “fracking miracle.” This potential has been turned in large part into a military potential. It is now time to dissipate this potential; it is the basic reason for what we see in the world nowadays.

The American elites seem to understand that they can keep the empire expanding only as long as they can keep oil production increasing. Hence, the effort to prop up the oil industry, even at the cost of dumping all the environmental protection legislation that had been developed and enacted during the past decades. The public does not seem to be able or willing to avoid this steamrolling of the ecosystem. Most people have never been enthusiastic about the idea of having to make sacrifices for a nebulous entity called “the environment.” Today, the general trust in science has taken a considerable beating from the Covid crisis, and it may become increasingly difficult to convince people to make sacrifices in the name of a “science” that they see with suspicion. 

So, will the Empire succeed in continuing to expand? Will it be able to create a new “Global Empire” encompassing most of the world? The only thing we can say is that the current war is not being fought on the battlefield but, rather, on the oil fields. The side that runs out of fuel first will be the loser. In the long run, anyway, the winner will also lose: at some moment, production by fracking will not just decline: it will crash down in one of the most brutal Seneca Cliffs ever witnessed by humankind. As in the old Chinese malediction, we are living in interesting times. But do not despair: humankind has been thriving before the age of oil, and it may well do the same afterward. It will just be a very different world. 

Below, a post that I published in 2015, where I compared the growth of shale oil production to that of cod fishing in the Atlantic. In both cases, producers were blinded by a false sensation of abundance generated by production growth. They didn’t realize that the faster you extract it, the faster you run out of it. 

Sometimes, we use a simple metric to evaluate complex systems. For instance, a war is a complex affair where millions of people fight and struggle. However, in the end, the final result is seen as a yes/no question: either you win or you lose. Not for nothing, General McArthur said once that “there is no substitute for victory.”

Think of the economy: it is an immense and complex system where millions of people work, produce, buy, sell, and make or lose money. In the end, eventually, the final result can be described as a simple yes/no question: either you grow, or you don’t. And what McArthur said about war can be applied to the economy: “there is no substitute for growth.”

But complex systems have ways of behaving, surprising you that can’t be reduced to a simple yes/no judgment. Both victory and growth may create more problems than they solve. Victory may falsely signal a military might that doesn’t exist (think of the outcome of some recent wars….), while growth may signal an abundance that is just not there.

Take a look at the figure at the beginning of this post (from Ron Patterson’s blog). It shows the oil production (barrels/day) in the US and Canada. The data are in thousand barrels per day for “crude oil + condensate,” and the rapid growth for the past few years is mostly due to tight oil (also known as “shale oil”) and oil from tar sands. If you follow the debate in this field, you know that this growth trend has been hailed as a great result and as the definitive demonstration that all worries about oil depletion and peak oil were misplaced.

Fine. But let me show you another graph, the US landings of North Atlantic Cod up to 1980 (data from Faostat).

Doesn’t it look similar to the data for oil in the US/Canada? We can imagine what was being said at the time; “new fishing technologies dispel all worries about overfishing” and things like that. It is what was said, indeed (see Hamilton et al. (2003)).

Now, look at the cod landings data up to 2012 and see what happened after the great burst of growth.

I don’t think this requires more than a couple of comments. The first is to note how overexploitation leads to collapse: people don’t realize that by pushing for growth at all costs, they are destroying the very resource that creates growth. This can happen with fisheries just as with oil fields. Then, note also that we have here another case of a “Seneca Cliff,” a production curve where the decline is much faster than growth. As the ancient Roman philosopher said, “The road to ruin is rapid”. And this is exactly what we could expect to happen with tight oil.