What with all the talk about semi-conductor production and rare-earth mineral extraction, I think that it’s worth examining what the USA produces in terms of what we get out of the ground. This includes mining, quarrying, oil and natural gas extraction, and some support activities (I’ll jump more into the weeds in the future). I’ll broadly call them the ‘extractive’ sectors. How important are these industries? In 2021 extractive production was worth $520 billion. That was roughly 2% of all GDP. Below is the break down by type of extraction.
Examining the graph of total extraction output below tells a story. The US increased production of extracted material substantially between the Great Depression and 1970. That’s near the time that the clean water and clean air acts were passed. But the change in the output growth rate is so stark, that I suspect that those were not the only causes of change (reasonable people can differ). For the next 40 years, there was a malaise in output. This was the period during which it was popular to talk about our natural resource insecurity. As in, if we were to be engaged in a large war, then would we be able to access the necessary materials for wartime production?
But for the past 15 years we’ve experienced a boom with extracted output rising by 50%, an average growth rate of 2.7% per year. That’s practically break-neck speeds for an old industry at a time when the phrase ‘great stagnation’ was being thrown about more generally. By 2023, we were near all-time-high output levels (pre-pandemic was higher by a smidge).
For people concerned about resource security, the recent boom is good news. For people who associate digging with environmental degradation, greater extraction is viewed with less enthusiasm. Those emotions are especially high when it comes to fossil fuel production. Below is a graph that identifies the three major components of extraction indexed to the 2021 constant prices. By indexing to the relative outputs of a particular year, the below graph is a close-ish proxy to real output that is comparable in levels.
The results are striking and help to explain why the oil and gas boom in the US has received so much attention. Our oil and gas extraction has been growing by leaps and bounds, driving *all* of the growth in extractive output for the past 15 years. Other mining (including coal, a dirtier fuel) and support output have declined in value over the same period. The US has become a power house of fossil fuel energy production and it’s a big deal to our economy (more than 1.5% of GDP in 2021). Even more recently, between 2021 and 2023, while our economy grew by 4.5%, oil and natural gas production grew by 14.5%! That’s crazy! A decade ago, analysts were saying that fracking was a one-time innovation and that output growth in oil and gas couldn’t keep growing. Those people have turned out to be wrong, wrong, wrong. Output is 80% higher than when they said that.
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