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Photo by Darla Hueske on Unsplash
During the 2000s, many commentators worried about the spectre of peak oil. The productivity of the world’s conventional wells was peaking and starting to take a tumble around the time of the Great Financial Crisis.
Then, just a year or so later, the first U.S. shale oil production began hitting markets, supplementing the supply. Since then, it’s been responsible for much of the world’s additional production, making up for the massive shortfall that would have occurred otherwise.
At the time, many people believed it wouldn’t last, but it has proven cheaper and more resilient than a lot of people imagined.
The question of when U.S. shale oil will finally run out is a critical question for science and humanity as a whole. If it stops producing acceptable yields, the price for everything could quickly spike.
Shale Oil: A Miracle?
For many, the shale oil revolution was a miracle. It saved the economy from spiralling oil prices, allowing economic growth to continue at a rapid clip in America and other parts of the world.
Shale oil involves removing oil from shale rock through different methods than conventional oil wells. The oil and gas industry knew about it for decades but didn’t want to exploit it until it became profitable to do so. That point came in the late 2000s when the price of oil started spiralling out of control.
Shale oil took over from 2011 onwards and became a leading reason why gas prices didn’t rise further globally. It prevented them from going up too high.
Consequences Of The End Of U.S. Shale Oil Production
Unfortunately, it now looks like the miracle shale oil production of the last ten years is coming to an end. Wells are no longer producing the yields oil companies saw at the start, and the incentives to invest in new facilities are no longer there.
Environmentalists may cheer this point. However, the societal and human consequences could be dire. Allowing wells to dry up could mean the end of cheap oil for everyone.
The oil and gas industry uses blast rooms to refresh its equipment and test its solutions. However, the amount of money it is pouring into these activities is declining. New explorations and technology developments are wildly underfunded putting the industry’s future at risk.
Ultimately, this means that production will likely take years to ramp up again in response to high prices. And even if it does, it might not be able to reduce costs significantly after that.
Furthermore, there are geopolitical concerns. The abandonment of U.S. shale oil would mean America was once again dependent on unstable countries for its energy requirements. This dependence could lead to economic turbulence (like that seen in the 1970s).
Canada might have a solution in the form of its tar sands, but whether it will allow American companies to exploit them is another matter. Therefore, the overall effect of the end of U.S. shale oil could be catastrophic. The end of economic growth and prosperity is an outcome that could be on the cards.
