Booming and Busting: The Mixed Fortunes of US Oil and Gas–Producing Regions

In the early years of the shale revolution, some prominent voices argued that the boom would be short-lived (Hughes 2013). As recently as 2018, some warned that the inevitable bust would even pose risks to the US financial system (McLean 2018). But today, more than 15 years after companies began producing substantial quantities of natural gas and oil from shale and other “tight” rocks, the revolution marches onward, with US oil and gas production at all-time highs. In 2023, the country produced about 13 million barrels of crude oil per day (mb/d) and more than 40 trillion cubic feet of natural gas (EIA 2024a, 2024b) and was the global leader in both categories.

But despite this surge in overall production, it’s not all boom times in the oil patch. In fact, production in some of the most significant oil and gas-producing regions of the pre-shale era have declined steadily, creating local economic challenges including losses of jobs and tax revenue. What’s more, enhanced efficiencies, automation, and other factors are driving down employment in the US oil and gas industry. Compared with 10 years ago, US oil and gas employment has fallen by about 40 percent while production has increased by about 60 percent for oil and almost 50 percent for natural gas (BLS 2024; EIA 2024a, 2024b).

In short, the economic outlook for US oil and gas-producing regions is highly variable. Many uncertain factors will shape those regions’ economic futures, most of which lie outside the control of both the producing regions and—despite recent claims to the contrary—the federal government. These include the potential for fast-growing and emerging technologies (e.g., solar, batteries, enhanced geothermal, advanced nuclear) to outcompete oil and gas in certain markets (Shawhan et al. 2021); the potential for climate and environmental policies, both at home and abroad, to reduce demand for hydrocarbons (Raimi et al. 2024b); and the potential for low-cost producers in the Middle East to respond to expected demand declines by “opening the taps” to capture market share (e.g., Jensen et al. 2015; Kellogg 2024).

This analysis offers a simple primer to understand the changes in production and economic outcomes in US oil and gas-producing regions. It divides regions into categories based on recent production trajectories and explores how these production outcomes may have affected local economies. Although past performance does not predict future results, a continuation of these trends would exacerbate the divergence between the “haves” and “have-nots” of US oil and gas-producing regions. If this occurs, a considerable portion of the nation is likely to experience substantial economic challenges, similar in some ways to the challenges faced by many US coal communities (e.g., Blonz et al. 2023).

Figure 2 depicts the three groups of oil- and gas-producing regions we discuss in this analysis: “booming” regions, where production has grown strongly in recent years; “steady” regions, where production has been fairly consistent; and “declining” regions, where production has fallen. In the following sections, we show that the economic performance of these three groups has largely mirrored trends in oil and gas production.

2.1. Booming Regions

The most productive onshore oil and gas plays are dominated by shale and other tight rocks, led by multiple formations in the Permian and Appalachian basins. Other regions where production has grown rapidly in recent years (and remains strong through 2023) include the Bakken in North Dakota, the Eagle Ford in southern Texas, the Niobrara in Colorado, and the Haynesville, which straddles Louisiana and Texas. In addition, the Uinta basin in Utah has seen rapid growth in oil production in recent years, although its volume of output remains well below that of other major US oil plays (and its natural gas production has also declined).

In the Permian basin, oil production has grown nearly fivefold since the early 1980s. Because production from conventional wells in the region was already substantial in the 1980s, this rate of growth is slower than that of some other regions but represents an enormous increase in overall production: from 1.3 mb/d in 1980 to 5.8 mb/d in 2023. All of this growth has been driven by the region’s two major subbasins—the Delaware and the Midland—where oil production grew more than 12-fold from 2010 to 2023.

In Appalachia, which is primarily a natural gas play driven by the Marcellus and Utica formations, production also grew 12-fold from 2010 to 2023 (and more than 100-fold since 1980). In the Bakken, Haynesville, Denver-Julesburg, Eagle Ford, and Uinta regions, production has grown fivefold or more since the early 2000s. Figure 3 illustrates these trends, with summary data provided in Appendix B.

2.2. Steady Regions

Several regions have experienced meaningful growth or modest declines in recent years but are distinct from the booming and declining regions discussed in Sections 2.1 and 2.3. These include the Powder River basin, centered in Wyoming, where oil production has grown considerably since 2017 (with a dip during the Covid pandemic). In Montana’s portion of the Williston basin, where tight oil wells drove production to a 2007 peak, development has slowed considerably over the past 10 years but remains higher than in the 1980s and 1990s.

Oklahoma’s portion of the Anadarko basin, which stretches into parts of Texas, Kansas, and Colorado, has seen sizable production growth in the shale era, producing more than twice as much oil and natural gas as it did in 2010. However, this growth came after several decades of decline and has been marked by substantial volatility (Figure 4). Other parts of the Anadarko basin, which we discuss in the following section, have declined consistently.

2.3. Declining Regions

The regions experiencing falling production are “conventional,” “tight sands,” and coalbed methane plays, and most have not significantly benefited from the shale revolution. Some regions where most historical production has come from conventional wells have seen a resurgence as companies tap underlying shale formations; the Permian is an example. Other regions with significant conventional production (e.g., central California, southern Louisiana) have not. In the conventional fields, where most production comes from vertically drilled wells (in some cases assisted by enhanced oil recovery or other methods to boost production from aging reservoirs), production is on a slow and steady decline.

In tight sands plays, such as the Piceance and Green River basins in Colorado and Wyoming, production surged with the application of directional drilling and hydraulic fracturing in the first decade of the 2000s but declined subsequently as operators moved away from tight sands and toward shale resources in other parts of the country. In coalbed methane plays, such as the Black Warrior basin in Alabama and Mississippi and the San Juan basin in New Mexico and Colorado, production grew considerably from the 1980s until around 2000, when it plateaued and began to decline as operators again focused on more promising resources (Figure 5).

Industries rise and fall, with consequences for workers and communities, but rarely do the successes of an industry translate into large macroeconomic outcomes for local regions. Oil and gas are often an exception, given the heavy dependence of many local economies on these industries.

This section connects the region-level production data described in Section 2 with county-level economic outcomes. For each of the three categories described above, economic outcomes from the “core” counties that dominate production in each region are aggregated to assess the degree to which production trajectories correlate with economic outcomes (see Appendix A for how we define core counties for each region).

Economic performance in booming regions generally has been strong, as indicated by gross domestic product (GDP), which provides an indication of overall economic activity (Figure 6). Since the early 2000s, real GDP per capita in booming counties has roughly doubled, dramatically outpacing the national GDP, which grew by 31 percent from 2001 to 2022. In contrast, GDP per capita in the steady counties has risen slowly and unevenly over this period, The data we rely upon for the steady regions come from a relatively small sample (17 counties) compared with a larger sample for booming (46 counties) and declining (84 counties) regions. Results for “steady” counties therefore are generally less reliable than those for the other two groups. See Appendix A for additional detail. and it flat-lined in the declining counties. Although large differences across these categories of counties already existed in the early 2000s, the gaps substantially widened in the following decades. The communities in the steady and declining regions largely missed out on the new wealth generated by the shale revolution and subsequent growth of oil and gas production. In the declining counties, wages over this period increased by only 4.2 percent, far below the national average of 28 percent.

Although the GDP data shown in Figure 6 indicate rapid growth in booming regions, economic output from oil and gas does not necessarily mean that individuals and families in producing regions will reap the rewards. Indeed, some portion of the economic benefits will flow to companies headquartered in Houston or other cities, to the shareholders of those companies, and to mineral rights owners who do not live in producing communities. Indeed, previous literature has found that US regions with heavy dependence on oil and gas industries can underperform their peer counties over the long term in per capita income and other measures of community well-being (Haggerty et al. 2014).

However, data from the shale era indicate that personal income has largely tracked oil and gas production at

the local level. As Figure 7 indicates, personal income in booming regions has grown in real terms, from roughly $38,000 in 2001 to $60,000 by 2022 (in 2023 dollars), outpacing the national average growth. This growth in income likely stems from a mix of higher salaries and increased royalty earnings for mineral rights owners. Despite this growth, personal income in the booming regions remains below the national average, likely because of the relatively high income levels in major US cities, where little oil and gas production occurs.

Among declining regions, three stand out for their scale of production and heavy dependence on the industry: Alaska’s North Slope, California’s San Joaquin basin, and the onshore Gulf Coast. On the North Slope, production is down 29 since 2010 and 76 percent since 1990. GDP in the North Slope Borough, which is closely linked to oil prices, has been highly variable over this period, rising to nearly $10 billion in 2009 and falling to almost $5 billion in 2022 (before rebounding to more than $7 billion in 2023). The economic and fiscal risks of a long-term decline in global oil demand for Alaska are particularly acute because if production falls below a certain threshold (perhaps 350,000 barrels per day), the Trans-Alaska Pipeline, which transports the crude to market, will have to shut down for operational and safety reasons (Sieminski et al. 2017). The prospect of North Slope oil production falling to zero has enormous implications for Alaska, which relies heavily on the industry to finance essential services statewide (Newell and Raimi 2018).

In the San Joaquin basin, oil production has fallen by 39 percent since 2010 and 62 percent since 1990. Unlike the Los Angeles basin, the other substantial oil-producing region of California, Kern County (where most of San Joaquin’s production occurs) is heavily dependent on the industry for local jobs and tax revenue. In 2021, the oil and gas industry directly contributed at least $238 million to local government finances, representing roughly 25 percent of county property tax revenues (Raimi et al. 2024a). GDP per capita in Kern County has stagnated since the mid-2000s, falling about 3 percent between 2007 and 2022. However, per capita income has grown, rising from roughly $38,000 in 2001 to $50,000 in 2022 (in 2023 dollars).

Along the Gulf Coast, onshore oil production has declined by more than half and natural gas production has fallen by nearly 80 percent since 1990. However, production growth elsewhere in the United States has boosted economic outcomes in the region, with many billions of dollars in investments for offshore production in the Gulf of Mexico (which has grown in recent decades), new or upgraded chemical manufacturing plants, oil and natural gas export facilities, and—more recently—carbon capture and hydrogen projects (Dismukes and Upton 2022). In Louisiana, personal income increased more than 20 percent between 2008 and 2023 in real terms. Importantly, these investments have also heightened local concerns around health risks and environmental justice outcomes in the region (Berberian et al. 2024; Waxman et al. 2024).

Although US oil and gas production is at all-time highs, not all regions are sharing in the economic benefits. In this analysis, we identify 11 US regions with significant histories of oil and gas production where the industry appears to be in long-term decline. These declines are generally driven not by public policies but instead by economic and geological factors that make them relatively unattractive to new investment by oil and gas operators.

As policymakers consider options to support fossil fuel–dependent areas of the United States, they should tailor that support to the characteristics of each region. As such, it may be appropriate to treat declining oil and gas-producing regions similarly to declining coal-dependent regions with imminent needs for near-term support. Looking toward a net-zero-emissions future, oil and gas production in booming regions will also likely decline. Because economic diversification can take decades to achieve, it is also appropriate to consider strategies to build economic resilience in these booming regions to ensure that the communities will have alternative economic opportunities in the decades ahead.