Media Hype Cannot Alter Immutable Facts About the Oil and Gas Industry

SHALE Featured 3
SHALE Featured 3

Here’s a fun fact: If Texas were an independent country, it would now stand as the fourth largest oil-producing nation on Earth, behind only the rest of the U.S., Russia, and Saudi Arabia.

Here’s another fun fact: In September 2008, total U.S. oil production came in at 3.8 million barrels of oil per day (bpd). Again according to the EIA, the Permian Basin alone will produce that much oil this month. Think about that — it’s almost unbelievable.

A new report issued in February 2019 by the Texas Independent Producers and Royalty Owners Association (TIPRO) contains a raft of additional facts about the Texas oil and gas industry.

Here’s a great example: In its 2019 State of Energy Report, TIPRO notes that “oil production in Texas totaled a record 1.54 billion barrels (bbl) in 2018, surpassing a previous record of 1.28 billion bbl set in 1973.”

Data from the Railroad Commission of Texas (RRC) goes back to 1935, a time in the midst of the oil boom created by the massive East Texas field. RRC data show that an overall production increase of more than 500 million barrels from 2017 to 2018 is the largest in the state’s history. The largest previous year-over-year leap was one of 174 million total barrels from 1950 to 1951.

In other words, the State of Texas is currently in the midst of the greatest oil boom it has ever seen. Oh, and the state also continues to produce more than 30 percent of all the natural gas produced in the U.S.

Here are some more interesting facts from the TIPRO report:

  • In 2018, Texas led the country in oil and gas industry employment with a total of 352,371 jobs, an increase of 26,706 jobs from 2017 numbers.
  • Texas experienced the largest increase in industry jobs in 2018, followed by Oklahoma (5,266), New Mexico (3,626), North Dakota (2,808), and Colorado (2,282).
  • Between 2010 and 2018, total state taxes and state royalty payments paid by the oil and gas industry in Texas exceeded $100 billion.
  • Texas is home to approximately 2.5 million mineral owners, of the 12.5 million mineral owners in the U.S., with oil and gas royalties generating billions of dollars for Texas families last year.
  • From an environmental standpoint, the U.S. oil and gas industry continues to advance efforts to reduce energy emissions through innovation, best practices and voluntary industry programs. Even as production has continued to increase, CO2 emissions in the U.S. are at their lowest levels in 20 years.
  • The industry paid a national annual wage averaging $112,712 last year, more than double average private sector wages.

The oil and gas industry is, without a doubt, the largest driver of the entire Texas economy. As Democrats in Washington, D.C., led by New York Rep. Alexandria Ocasio-Cortez, roll out their “Green New Deal” plan to ostensibly make fossil fuels “obsolete” within a dozen years, Texans of all political stripes should step back and think about what that would mean for the state’s economy.

This industry’s economic contributions are simply irreplaceable, and that’s a fact.

The oil and gas industry contributions to improving the environment and the human condition also cannot be overstated. Despite the fact that the U.S. is the only nation on Earth that does not participate in the Paris Climate Accord, our country has actually been one of the leading nations in reducing its carbon emissions in recent years.

While most developed nations continue to see their own emissions rise, U.S. emissions of carbon and noxious elements have fallen to levels not seen since the early 1990s in recent years. That is mainly due to the retirement of older coal-fired power plants and replacing the great majority of them with clean-burning, combined-cycle natural gas plants.

The continuing reduction of emissions from cars powered by gasoline and diesel is another big reason for this good environmental news. This is why, despite all the hype we keep seeing in the news media and in the hundreds of press releases Tesla puts out every week, electric vehicles (EVs) really do not represent any sort of existential threat to the internal combustion engine.

The potential for EVs is wildly over-hyped in the media. The shift to EVs is far outpaced by the ongoing increases in demand for crude oil, not just in the U.S. but, even more so, globally. That is not going to change anytime soon.

Why? Because the electricity to recharge them has to come from somewhere, and today mainly comes from power generated by coal and natural gas in the U.S. That’s another stark reality that is not going to change any time in my lifetime, which I figure is another 25 years or so. (Every reliable projection even those by the U.N. project that fossil fuels will still account for the vast majority of global power generation in 2050.)

Here’s reality: The world has a choice where fossil fuels are concerned. First, we could burn more and more coal in power generation to recharge billions of new EVs, because it is not replaceable by intermittent power sources like wind and solar. Germany and Spain have clearly demonstrated this over the past decade, as they almost bankrupted their economies trying to do just that.

The alternative is to burn more and more gasoline in automobiles. You cannot have a geometric leap in EVs without burning far more coal than we do today. The alternative to burn more gasoline is a much cleaner environmental solution. It is also a far more affordable solution for consumers.

Thus, it is a virtual certainty that we will continue to burn more gasoline in internal combustion engines for the next half-century, and probably beyond.

To expand on that a bit, here are a couple of other reasons why the world will continue to produce and consume increasing amounts of oil in the coming decades:

First, you have the fact that thousands of other products that ordinary people rely on every day are produced either in whole or in part from petroleum. From plastics to chemicals to polyester to fertilizers to makeup to toothpaste, even to the computer on which I am typing this, people all over the world are heavily reliant on a vast variety of products that use petroleum as a feedstock.

Second, think about incredible recent data released from the World Bank:  

  • According to the most recent estimates, in 2015, 10 percent of the world’s population lived on less than US$1.90 a day, compared to 11 percent in 2013. That’s down from nearly 36 percent in 1990.
  • Nearly 1.1 billion fewer people are living in extreme poverty than in 1990. In 2015, 736 million people lived on less than $1.90 a day, down from 1.85 billion in 1990.

What amazing progress in just 25 years! Here’s the simple truth: None of that progress would have been possible without oil and natural gas. The developing nations of the world need access to plentiful, scalable and affordable sources of energy in order to join modern society and elevate their people out of squalor. This can only be achieved through the use of fossil fuels. Period.

So, bottom line, our world currently has no means of replacing the immense contributions made to our economy, our environment and the human condition by oil and natural gas. That isn’t going to change anytime soon, regardless of the “Green New Deal” or any other foreseeable legislative effort.

About the author: David Blackmon is the Editor of SHALE Oil & Gas Business Magazine. He previously spent 37 years in the oil and natural gas industry in a variety of roles — the last 22 years engaging in public policy issues at the state and national levels. Contact David Blackmon at [email protected].

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