And yet a funny thing has happened during the bust. Oil production in America has been rising, as this chart of monthly oil production from the Energy Information Administration shows. In November, the U.S. produced 9.02 million barrels of oil per day, up 14.5 percent from November 2013. The last time the U.S. pumped more than 9 million barrels of oil per day for two straight months was in 1986. This week, in its short-term energy outlook, the Energy Information Administration noted that the boom is continuing. Production in January 2015 rose to 9.2 million barrels per day. And even with WTI crude settling at a forecasted price of about $55 per barrel for the year, production for all of 2015 should come in at 9.3 million barrels per day—up 7.8 percent from 8.63 million barrels per day in 2014.
You'll just love the reason behind this unexpected behavior:
What we’re seeing, I’d argue, is an example of yet another type of American business exceptionalism. Compared with many of their peers in other countries, U.S. firms have often—not always, but often—demonstrated a superior capacity to adapt rapidly to changing circumstances. We saw it after the dot-com bust, as new tech industries arose amid the wreckage. And we saw it in 2009 and 2010, when companies large and small acted swiftly, often brutally, to ensure their survival, return to profitability, and help the economy come back (ahem) better, stronger, and faster. Look hard enough, and you can see it in the oil patch, too. In recent decades, the oil industry—especially in the U.S.—has evolved from a brute-force industry into a nimbler high-tech manufacturing one. Fracking—a new drilling technology developed primarily in the U.S.—propelled the shale revolution. And technology-based companies don’t respond to falling market prices by cutting production or shutting down. Rather, they innovate and experiment to bring down the cost of production and operations, push suppliers for lower prices, and hold down costs. If the market won’t keep the market price above the break-even price, you can stop producing—or you can try to lower the break-even price.
Full essay is here.