A New Era for American Oil Is Emerging

We know a little bit about oil booms and busts here in the United States. 

Ever since the earliest days in the mid-19th century, when men like Edwin Drake were hired by Seneca Oil Company to check out some oil seeps in Titusville, Pennsylvania, our oil industry has gone through several eras. 

In fact, Pennsylvania was once the world’s largest oil producer for a period of nearly 20 years. 

But we tend to learn too much about the boomtimes and casually ignore what comes next. 

Even in Titusville, Drake’s first well stopped producing crude oil within its first two years, and the property was sold off in 1864. 

Yet, it was enough to spark the oil rush that gave Pennsylvania its oil crown… at least for a little while. In a not-too-unfamiliar fate, the oversupply of crude oil led to a price crash that decimated the industry. 

Of course, you know as well as I do what came next as John D. Rockefeller built his empire on the back of Standard Oil. 

When the famous Lucas geyser erupted at Spindletop in 1901, Texas was put on the oil map, and by the time the 1930s rolled around, the East Texas Oilfield was discovered and the state had become the epicenter for the U.S. oil industry — something that hasn’t changed to this day. 

After U.S. oil output started its seemingly irreversible decline in 1970, it felt as if a miracle was needed to reverse falling production. 

That’s when our prayers were answered by George Mitchell, an oilman down in Texas that was tinkering with new drilling and completion techniques in the Barnett Shale. 

Truth be told, they weren’t exactly new, but by combining hydraulic fracturing with horizontal drilling techniques, Mitchell was able to commercially tap into the vast reserves of oil and gas trapped in tight rock formations. 

Soon, all hell broke loose as previously locked oil and gas resources flowed and led us to the greatest oil boom in U.S. history. 

In a way, our latest oil boom shared some similarities with Captain Drake back in Pennsylvania in 1859. You see, when Drake was investigating the oil deposits around Titusville, he made a game-changing decision to use a different extraction method. 

Rather than using traditional techniques, Drake drilled in the same manner you would a salt well. He took a cast iron pipe and drove it into the ground and then slowly drilled his well.  

Before Drake’s drilling method, oil was extracted from seeps or shallow holes dug with shovels. 

And just as Pennsylvania learned 155 years ago, the U.S. is about to find out that the boomtimes don’t last forever. 

To put a little perspective on just how crucial U.S. tight oil production has been for the entire world, just consider that between 2015 and 2024, the U.S. accounted for 90% of global supply growth. 

It was an unprecedented surge in output, and perhaps too many people haven’t realized that our production growth has all but dried up. Yes, even with OPEC+ unwinding its production cuts, the supply/demand fundamentals are going to remain tight. In fact, some overly optimistic oil bears like the IEA are finally starting to catch on to this fact through revising old projections. 

Even in its latest Oil 2025 Report, the IEA is holding onto hope that global demand peaks in 2030 at 105.5 million barrels per day. It’s a bit of wishful thinking that EV growth will displace oil demand in such a short period of time, despite the continued growth in the EV market. 

But it’s not demand that we should be worried about. 

Like any period of low oil prices, the market will correct itself and production is already starting to decline. I believe we’ll start seeing those production declines start to show themselves in the monthly EIA data soon enough, which as you know is backdated by a few months. 

Don’t think that this is all doom-and-gloom, dear reader, because just as drilling technology saved us before, it’ll do so again. Despite fewer rigs out in the field, today’s best oil companies are learning how to do more with less. 

Fortunately, we haven’t reached the breaking point yet, but the situation will radically change once reality sets in. 

My readers and I just made our move, and this is how we’re doing it. 

But I can only open the door, it’s up to you to take the next step.