Petroleum Production in the United States

Petroleum production in the United States represents one of the nation’s major industries. Petroleum, better known as crude oil, is a form of fossil fuel used to power most automobile engines and perform a wide range of other industrial tasks. The US petroleum industry took shape in the mid-1800s, with the 1855 founding of Pennsylvania Rock Oil Company (later the Seneca Oil Company) and the 1870 founding of Standard Oil, standing as important early milestones. Despite significant petroleum reserves in the United States, Americans began a policy of heavy imports, mainly from the Middle East, in the mid-1900s. This policy has since been questioned, particularly after foreign tensions, wars, and embargoes threatened US energy availability. The petroleum industry has also been heavily criticized for contributing to environmental damages, including climate change. Regardless, it remains an enormously powerful and influential industry in the twenty-first century. In 2019, the United States produced about 19.25 million barrels of petroleum each day.

Background

Petroleum is one of the primary forms of fossil fuel, along with coal and natural gas. Fossil fuels developed from marine life that died millions of years ago and was converted by natural processes into carbon-rich materials deep below the earth. Petroleum is often called crude oil, and is used to produce gasoline and related substances that have a wide variety of consumer uses. For these reasons, petroleum is immensely valuable and has been for hundreds of years. Large companies have formed for the purpose of locating, extracting, and processing petroleum for various uses, mainly as vehicle fuel.

Most of the world’s oil supply is trapped deep below the surface. In some places, such as parts of the Middle East, the geological structure allows petroleum to seep up to the surface. However, in most areas, drilling into the earth is required to find petroleum, an expensive process that requires the use of massive tools. This drilling takes several different forms, known as developmental, exploratory, and directional. Developmental drilling takes place in areas with known petroleum resources, or oil reserves. Exploratory drilling takes place in areas without known reserves, in hopes of finding new sources of petroleum. Directional drilling is an often-controversial process in which a drill travels into the ground at an angle to access nearby petroleum, often from an unauthorized source. Oil may also be found at sea, with large offshore oil platforms built on oceans drilling into the land deep below the water.

The process of extracting petroleum is a difficult, expensive, and sometimes dangerous one. Most petroleum companies use giant engine-powdered drills with hollow drill bits, some of which can reach fourteen inches in diameter. If the drill reaches a rich oil reserve, petroleum trapped deep below the earth could be released in a sudden rush, causing a gusher of petroleum. Although this image is sometimes seen as symbolic of a rich strike likely worth millions, a gusher is actually a potentially dangerous event that can harm people and destroy machines, so companies seek to reduce their occurrence.

Advanced extraction techniques are required to safely remove petroleum for future processing. Once the drill has reached the petroleum, companies use extraction pumps to draw out the material. These pumps take several shapes and use different techniques based on the unique circumstances at hand. Pumps include the pumpjack, gas or bubble pump, and submersible pump. Some rich oil reserves, once tapped, may produce petroleum at a high rate for decades. In addition, many reserves also include deeper petroleum that is harder to access, leading to the use of other techniques. The process of trying to reach petroleum left over after the main pumping is called secondary recovery.

Overview

Petroleum has been an important substance for civilizations since ancient times. In the time before engines, people mainly used petroleum for industrial purposes, such as lubrication and waterproofing, and as lamp fuel for lighting. The Industrial Revolution that began at the turn of the nineteenth century brought a wide array of new uses for the material. It made petroleum into a vital component of global industry, a status it still holds in the twenty-first century.

Throughout the nineteenth century, the United States was growing and industrializing at an astonishing pace, resulting in an increasing demand for petroleum. The country had vast oil reserves, sufficient to provide its citizens with most of the petroleum they needed for many generations. The modern American petroleum-production industry began to take shape in the mid-1800s. Historians often point to the 1855 establishment of the Pennsylvania Rock Oil Company by entrepreneur George Henry Bissell as the first major step in the founding of this industry. Contractor Edwin Drake drilled the first successful oil well for the company at Oil Creek, near Titusville, Pennsylvania, on August 27, 1859.

Towards the end of the 1800s, American demand for petroleum began to evolve. Demand waned with the introduction of electrical lighting and natural-gas heating, meaning that oil was no longer necessary for lanterns or furnaces. However, the oil industry eventually saw a massive uptick with the invention and popularization of the automobile. At that time, petroleum cemented its place as an essential material for American transportation, as well as an important standby for many other industrial and domestic tasks.

In 1870, magnate John D. Rockefeller founded Standard Oil Company, which would soon overshadow Bissell’s work and become a behemoth in petroleum extraction and processing. Many other petroleum companies sprang up internationally to get involved in the sprawling market. In the United States, some of the main competitors for Standard Oil were Gulf Oil and Texaco, founded in Pennsylvania and Texas, respectively, in 1901. However, Standard Oil remained at the top of the hierarchy, and came to dominate some 80 percent of the industry. The company became so powerful that it threatened to drive its competition out of business, a situation the US government sought to avoid with antitrust laws in 1909. To comply with the new legislation, Standard Oil divided into 34 separate entities, many of which went on to develop into distinct companies.

In the 1940s, three of the branches of Standard Oil—Standard Oil of New Jersey, Standard Oil of New York, and Standard Oil of California—joined Gulf Oil, Texaco, and two overseas companies (Anglo-Persian and Royal Dutch Shell) in the so-called “Seven Sisters” that controlled the petroleum marketplace for years to come. As the industry developed, Standard Oil of New Jersey developed into Esso, and then Exxon. Standard Oil of New York evolved into Mobil Oil. Standard Oil of California was ultimately rebranded as Socal, and then Chevron.

By the end of World War II (1939–1945), the international oil industry had undergone major changes. Many countries began to limit foreign drilling within their borders, or nationalize the industry to keep more profits at home. Large international companies had to negotiate for new deals or search for new oil reserves, while countries had to find new balances of imports and exports. In addition, major new oil discoveries brought many regions to prominence in the petroleum industry, including Iran, Saudi Arabia, Venezuela, Canada, Russia, and Mexico. Meanwhile, international tensions, disasters, and wars brought strain to the flow of petroleum, several times playing havoc on oil prices.

Despite these changes, the United States maintained a leading role in world petroleum production. It also sought international agreements in order to avoid drawing too heavily from its own limited oil reserves. Upon learning of huge new petroleum discoveries in Saudi Arabia, President Franklin Roosevelt began forging ties with that country, planning to use Middle Eastern petroleum to meet America’s ravenous demand. This new relationship would greatly assist the United States, particularly in the booming post-war era and the coast-to-coast adoption of some forty million automobiles by 1950.

Slowly but steadily, the huge reserves from Saudi Arabia and other lands began to supplant domestic production within the United States, which shifted from being primarily an exporter to importing more than a third of its petroleum by 1950. However, in the 1950s, crises in the Middle East threatened to cut off oil exports to the United States, leading many Americans to begin questioning their ever-increasing dependency on foreign oil. Measures such as import caps helped to reinvigorate American production, but only temporarily, and in the coming decades, America remained largely at the mercy of its suppliers. Events such as the oil crisis of October 1973, in which Arab states launched a damaging international oil embargo, highlighted the virtual powerlessness of the United States under the import system.

American leaders debated programs such as fostering energy independence, restructuring energy policy to conserve oil, and investing in research of alternative sources of energy. In the 1990s through 2020s, the call to replace petroleum with alternative fuel sources, such as solar, wind, and water power, steadily increased. Proponents point out the damaging environmental effects of fossil fuels, as well as their limited and dwindling availability. Technologies such as biofuels made from corn and other crops have also shouldered in on the oil market.

Regardless of these changes, the American petroleum industry remains extremely powerful in the twenty-first century, especially with the use of hydraulic fracturing, or “fracking,” techniques to access shale gas and other difficult-to-reach reserves. In 2018, the United States was estimated to be the world’s top producer of petroleum. According to the US Energy Information Administration, in this year most of the production (41.4 percent) took place in Texas. However, the largest oil reserves in the United States are located in Alaska.

By the mid-2020s, not only was the United States the largest producer of petroleum in the world, but its output was the largest in the nation’s history or by any nation in the history of the world. According to figures published by the US Energy Information Energy in 2024, 2023 production averaged 12.9 million barrels a day, breaking the previous record of 12.3 million barrels in 2019. This was nearly 3 million barrels a day more than either Russia or Saudi Arabia, the second and third largest global producers. These three countries combine for roughly 40 percent of worldwide petroleum production. The United States accounted for 14.7 percent of global production, Saudi Arabia next at 13.2 percent, and Russia third with 12.7 percent. The next three largest producers were Canada, Iraq, and China, whose combined output totaled 13.1 million barrels, or almost what the United States alone produced in a year.  

Within the United States, in 2023, Texas was by far the largest oil-producing state with 42.4 percent of all production. Texas produced more than three times the output of New Mexico (13.3 percent) the nation’s second-largest source of petroleum. This was followed by North Dakota (8.9 percent), Colorado (3.7 percent) and Alaska (3.7 percent).

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