(World Oil) – The media are reporting new predictions that oil production in America is in irreversible decline. Apparently, peak oil is back in vogue, like it’s 2005 instead of 2025. As a regulator of the nation’s largest oil and natural gas producing state, I’ve seen these scary headlines many times before, but here’s the good news: they are always wrong.
Previous inaccurate predictions. For half a century, analysts, environmentalists and policymakers have “cried wolf,” trying to forecast the arrival of “peak oil”—the point at which a country’s oil production hits its maximum and begins an irreversible decline. In the United States, this idea has taken on the character of prophecy, re-emerging every few years with new data, new fears, and new consequences for energy markets. Yet time and again, these predictions have fallen flat. Why?
The short answer: oil production is not just a matter of geology—it’s a moving target shaped by economics, politics, innovation and infrastructure. And nowhere is that dynamic clearer than in Texas, the powerhouse of American oil and gas.
The concept of peak oil dates back to geophysicist M. King Hubbert, who famously predicted in 1956 that U.S. oil production would peak in the early 1970s. He was right—for a time. U.S. output did, in fact, decline for several decades. But in 2008, the shale revolution took off! Thanks to human ingenuity, new drilling technologies like horizontal drilling and hydraulic fracturing unlocked vast reserves once thought inaccessible. Innovation mixed with the right public policy propelled U.S. production to historic highs and flipped the country from an energy importer to a net exporter. Who’s to say it won’t happen again in the face of these new predictions of peak oil?
The Texas success story. This American energy renaissance largely occurred in Texas. The Permian basin has become one of the most productive oil fields in the world, Fig. 1. In fact, if the Lone Star State were its own country, we would be the world’s third-largest producer of natural gas and fourth-largest producer of oil.1 The state’s rich geology is only part of the story; its vast amount of privately-owned land, commonsense conservative government, responsible science-based regulatory environment, and oilfield infrastructure make it uniquely suited to adapt quickly to market changes and technological advances.
What makes predicting peak oil nearly impossible is that people incorrectly assume current trends will continue without interruption. Forecasts often extrapolate current trends without accounting for dramatic changes caused by innovation or market shifts. Someone once told me that “something that has never happened before happens every day,” and when something happens that has never happened before, I bet it disrupts a trend the experts predicted would continue.
Learning from the pandemic period. Take 2020, for example, when a combination of Covid and OPEC+ collapsed global oil markets, causing international chaos and West Texas Intermediate to trade at a negative price. At the time, we were told by many “experts” that the industry was quickly trending toward destruction and to save it, the Railroad Commission must legally cap Texas’ production, i.e. prorate. Presenting a false choice between industry destruction or government intervention, many testified that proration was necessary to save Texas. However, we had faith in Texas producers and consumers and let the free market take its natural course. The Railroad Commission didn’t intervene, and that faith was rewarded with a healthy rebound.
“Peak oil” is inherently a misleading term for the average person. It’s a term for industry to describe market forces and a hyperbolic one for the mainstream media. Thanks to technology, hardworking Americas should rest easy, because geologists are finding more oil and gas reserves all the time. In 2018, the Permian boom continued, thanks to the largest find in history.2 More recently, the U.S. Geologic Society (USGS) discovered oil and gas reserves in Wyoming that were five times more than originally predicted.3
Future potential. Regardless of predictions of peak oil, Texas will continue to be the oil and gas workhorse for the nation. America has 48 Bbbl of proven oil reserves,4 and since 2016, Texas has accounted for 40% of that.5
According to the Institute for Energy Research, there are 1.66 trillion bbls of total technically recoverable oil in the U.S., which is enough to last for 227 years (or 539 years, if dedicated only to making gasoline).6 This is more than 5.6 times the proven reserves of Saudi Arabia. The same study showed 4.03 quadrillion cubic feet of recoverable natural gas reserves or enough supply for 130 years. Additionally, there’ve been reports that the Permian basin holds more than 230 Bbbl of oil and 600 Tcf of natural gas.7 Texas producers have told me that with current technology and techniques, they are only able to produce at most 5% to 6% of the oil underground. But when technology and technique improve, the sky is the limit on production, and we’ll have reliable energy for generations.
In the end, peak oil isn’t a single event, nor will it likely ever be. It’s a complex, evolving story that defies easy prediction. The only certainty is that the world needs fossil fuels; and so long as the world runs on oil and gas, Texas will have the capability to fuel it.
REFERENCES
https://www.forbes.com/sites/arielcohen/2018/12/21/americas-oil-and-gas-reserves-double-with-massive-new-permian-discovery/
https://oilprice.com/Energy/Crude-Oil/USGS-Discovers-Large-Oil-Gas-Deposits-In-Wyoming.html
https://www.eia.gov/naturalgas/crudeoilreserves/
TXOGA Analysis Finds Texas’ Production, Proved Reserves of Oil and Natural Gas Continue to Grow
https://www.instituteforenergyresearch.org/wp-content/uploads/2024/05/2024-North-American-Energy-Inventory.pdf
https://investors.next-decade.com/static-files/b464c51a-a6e7-42e8-85e4-f07a4fa3d81b
A lifelong conservative businessman, Wayne Christian was elected as the 50th Texas Railroad Commissioner in November 2016. Since taking office, Commissioner Christian has been appointed by Governor Greg Abbott to the Interstate Oil and Gas Compact Commission (IOGCC) as the Official Representative of Texas. Christian graduated from Stephen F. Austin State University with a B.B.A. in General Business in 1973. In 1987, after gaining valuable experience in business, banking and real estate, Commissioner Christian opened a financial services business and is a three-time AIG top advisor nationwide. In 1996, he was elected to the Texas House of Representatives. He served as Vice-Chair of Regulated Industries and as a multi-term member of the Energy Resource Committee. On these committees, he had direct oversight of the Railroad Commission and accumulated a strong record of standing for free markets and against burdensome regulations.
