New Texas oil discovery means more low prices

oil pricesThe U.S. Geological Survey announced this week that it had discovered what may be the largest untapped supply of oil ever found in America. The discovery sits in the Permian Basin of West Texas near Midland, an already booming oil town that was the childhood home of President George W. Bush.

The find comes amid a two-year oil price slump that has caused pains among Texas companies as well as foreign oil producers like Saudi Arabia, Venezuela and Russia. Many oil companies in Texas have already filed bankruptcy and many more hover on the brink.

“The fact that this is the largest assessment of continuous oil we have ever done just goes to show that, even in areas that have produced billions of barrels of oil, there is still the potential to find billions more,” said Walter Guidroz of the USGS. “Changes in technology and industry practices can have significant effects on what resources are technically recoverable, and that’s why we continue to perform resource assessments throughout the United States and the world.”

take our poll - story continues below

Is Biden's Vaccine Mandate Unconstitutional?

  • Is Biden's Vaccine Mandate Unconstitutional?  

  • This field is for validation purposes and should be left unchanged.
Completing this poll grants you access to Conservative Firing Line updates free of charge. You may opt out at anytime. You also agree to this site's Privacy Policy and Terms of Use.

The new find and the oil slump are both made possible by new technology that allows oil to be harvested that was untouchable in the past. Hydraulic fracturing (fracking) and the ability to drill for shale oil have vastly increased the amount of the world’s recoverable oil reserves.

The New York Times reports that US domestic oil production has almost doubled in the past few years, largely due to these new technologies. As US production of oil has increased, the need for foreign imports has fallen. Foreign oil companies have struggled to find new markets and prices have fallen as a result.

Over the past few months, oil prices have recovered from less than $20 per barrel to the current $40-50 range. Many wells are not profitable at current prices and have shut down. Likewise, new exploration and projects have lagged because they are not cost effective without a higher price for oil.

Most analysts have predicted that oil prices will take several years to recover to the $60 range where many more wells and projects would be profitable. The likelihood of oil returning to $100 per barrel prices that were frequently seen from 2008 through 2014 seems remote.

The new oil discovery also serves as a reminder of how rapidly things can change. Alarmists have been predicting for years that the world has reached the point of “peak oil,” the point where oil production has reached a maximum and will begin a decline due to diminishing reserves. Far from it.

In the past few years, US and world oil reserves have increased markedly due to new discoveries and new technologies. At the same time, the world is using its oil more efficiently thanks to technological advances in engines and aerodynamics. Even with more people and countries using oil, the world’s oil supplies should be abundant for many years to come.

Originally published on The Resurgent


If you haven’t checked out and liked our Facebook page, please go here and do so.

And if you’re as concerned about Facebook censorship as we are, go here and order this new book:

Banned: How Facebook enables militant Islamic jihad
Banned: How Facebook enables militant Islamic jihad – Source: Author (used with permission)

David Thornton

David Thornton is a longtime conservative and freelance writer who also works as a corporate pilot. He currently lives in Texas.

Related Articles

Our Privacy Policy has been updated to support the latest regulations.Click to learn more.×