Price-supply curve explains US production below 1970s’ peaks

Even with much higher prices, neither US oil nor gas production has ever exceeded the peaks attained in the early 1970s. This can be explained with a resource price-supply curve showing the amount of the resource available for a given market price, assuming best available technology, reasonable returns on invested capital, and no political constraints on production.1Since at least 1935, the market price of petroleum has been set far above the lifting cost of the most competent producers, first by the Texas Railroad Commission and then by the Organization of Petroleum Exporting Countries. Production was limited in order to meet but not exceed demand and maintain prices at the desired level...

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