Despite falling oil prices, Texas oil output surged in December to the highest level since the 1970s

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By  Mark J. Perry, AEI

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The Energy Information Administration (EIA) released new state crude oil production data last week for the month of December, and one of the highlights of that monthly report is that oil output in America’s No. 1 oil-producing state – Texas – continues its phenomenal, eye-popping rise. Here are some details of oil output in “Saudi Texas” for the month of December and the economic impact that production is having on the state and national economies:

  1. For the ninth straight month starting in April 2014, oil drillers in Texas pumped out more than 3 million barrels of crude oil every day (bpd) during the month of December. The 3.44 million bpd in December was the highest daily oil output in the Lone Star State in any month since at least January 1981, when the EIA started reporting each state’s monthly oil production (see top chart above). Compared to oil production a year ago, Texas posted a 24.8% increase in December.
  2. Remarkably, oil production in the Lone Star State has more than doubled in the last three years, from 1.68 million bpd in December 2011 to 3.44 million bpd in December of last year (see chart above), and that production surge has to be one of the most significant increases in oil output ever recorded in the US over such a short period of time. A 1.76 million bpd increase in oil output in only 36 months in one US state is remarkable, and would have never been possible without the revolutionary drilling techniques that just recently started accessing vast oceans of shale oil in the Texas oil fields of Eagle Ford Shale and Permian Basin. As I have reported before on CD, the Eagle Ford and Permian Basin oil fields in Texas are now each producing crude oil at a rate of more than 1 million bpd, joining an elite international group of only ten super-giant oil fields in the world that have ever surpassed the one million barrel per day production milestone at their peak level of output.
  3. The exponential increase in Texas oil output over roughly the last four years has completely reversed the previous, gradual 28-year decline in the state’s conventional oil production that took place from 1981 to 2009 (see arrows in top chart) – thanks almost exclusively to the dramatic increases in the state’s output of newly accessible, unconventional shale oil.
  4. As recently as mid-2009, Texas was producing less than 20% of America’s domestic crude oil. The recent gusher of unconventional oil being produced in the Eagle Ford Shale and Permian Basin oil fields of Texas, thanks to breakthrough drilling and extraction technologies, has recently pushed the Lone Star State’s share of domestic crude oil production up to more than 37% of America’s crude output for the last five months.
  5. Oil output has increased so significantly in Texas in recent years that if the state were considered as a separate oil-producing country, Texas would have been the 7th largest oil-producing nation in the world for crude oil output in October (based on international oil production data here) at 3.35 million bpd – just behind No. 6 Iraq’s production of 3.46 million bpd.
  6. The dramatic increase in Texas’s oil and gas production is bringing jobs and economic prosperity to the state. For example, over the last 12 months through December, payroll employment in the state of Texas increased by 457,900 jobs – the largest 12-month job gain in state history – and that represented a 4.0% annual payroll increase, significantly more than the 2.3% increase in total US payrolls over that period. With only 8.4% of the US population, Texas created 14.7% of the new US payroll jobs over the last 12 months through December. Every business day over the last year, more than 1,700 new jobs were created in the Lone Star State, and many of those jobs were directly or indirectly related to the state’s booming energy sector, which experienced a 5.3% increase in payrolls for oil and gas extraction jobs (5,700 new jobs) over the most recent 12-month period through December. Oil and gas companies in Texas hired nearly 22 new employees every business day over the last year just for extraction activities, in addition to many more indirect jobs in support industries.
  7. Job creation in the state of Texas has been so strong in recent years that the state has actually been largely responsible for a big share of the net US job creation since December 2007, as the bottom chart above shows. Without Texas, the other 49 states and the District of Columbia are still at a net job deficit of almost 275,290 compared to December 2007, while employment in Texas has increased by more than 1.44 million jobs over that period. So when we hear about a recovery in the US labor market and a declining jobless rate, we can thank the state of Texas for its significant contribution to the country’s improving job market.

MP: The significant increase in Texas’s oil production over the last several years is nothing short of phenomenal, and is a direct result of America’s “petropreneurs” who developed game-changing drilling technologies that have now revolutionized the nation’s production of shale oil. Thanks to those revolutionary technologies, Texas is now home to two of only ten super-giant oil fields in the world to ever produce more than 1 million barrels of oil per day – the Eagle Ford and Permian Basin.

For oil output in Texas to more than double in the last three years, and increase so dramatically that the state now produces more than 37% of US oil, is undoubtedly one of the most remarkable energy success stories in US history. At the current pace of consistent annual increases of 25%, daily Texas oil production is on track to surpass the 4 million barrel milestone by as early as July of this year. With those projected increases in Texas oil output, the state could soon surpass Iraq and even Canada to move up in the international oil production rankings to become the world’s No. 5 oil producer this year.

And the shale boom in Texas has contributed to a gusher of more than 1.44 million new jobs since the start of the Great Recession, while the rest of the US is still struggling to recover all of the non-Texas jobs lost since December 2007. Simply put, “Saudi Texas” continues to be the shining star of The Great American Shale Boom, and the American state at the forefront of the US economic recovery.

Mark J. Perry is concurrently a scholar at AEI and a professor of economics and finance at the University of Michigan’s Flint campus

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