In a dusty swath of sagebrush country near the Texas-New Mexico border, engineers at oil producer Matador Resources Co. encountered a problem.

Conventional wisdom called for drilling four wells into the ground and then horizontally to access layers of oil-soaked rock, a technical feat perfected by the US shale industry. But the plot of land was too narrow, limiting each well’s reach and likely making them unprofitable. So the engineers tried a novel concept: a U-turn. After boring vertically to the shale layer, they went sideways for one mile, curved the well around and then drilled back to where it began. It worked. Matador was able to pump the oil with two wells instead of four, essentially cutting costs in half.

“It’s astounding, really,” says Matador Chief Executive Officer Joseph Foran. “You give people a target, and they’ll find out better ways, better equipment, better techniques.” The U-turn, or horseshoe well, is an example of the small improvements that together have pushed oil and gas producers to the biggest labor productivity gains of any US sector over the past decade—including even tech-related industries, which have historically ranked first. The nation’s crude output has risen to a record 13.3 million barrels a day, 48% more than Saudi Arabia. All with less than a third of the rigs and far fewer workers than were needed 10 years ago.

America’s oil industry has gone from being an outsider in the world’s crude market to stealing market share from OPEC, turning the US into a net exporter of petroleum and becoming an engine of the economy. Investors were fleeing the sector just a few years ago, betting on the green transition as a global oil glut weighed on producers. But the iterative process of drilling thousands of wells each year—and learning from each one—has been a major reason for US productivity gains after years of tepid growth. US oil production will grow by 600,000 barrels a day in 2025, about 50% more than this year’s growth, due to higher well productivity, according to BloombergNEF.

“You have a highly productive energy sector, and that results in a number of positive spillovers to the rest of the US economy,” said David Rodziewicz, a senior economics specialist at the Federal Reserve Bank of Kansas City, in an interview before the central bank’s pre-meeting communications blackout. “It covers us from larger commodity shocks compared to the 1980s or 1990s, when we were broadly a net importer of these products.”

America’s surging oil and gas production may run counter to the Biden administration’s efforts to lead the world to net zero. But its benefits to the economy—particularly in key swing states such as Pennsylvania—are now so great that Democratic presidential nominee Kamala Harris has repeatedly said she won’t ban fracking, walking back comments she made in 2019. It’s also been a key contributor to slowing inflation, with gasoline prices down more than 10% in the past year despite elevated violence in the Middle East.

Lower crude prices—which energy companies can still profit from, thanks to higher efficiencies—feed through to other industries. Cheaper natural gas, for example, is helping President Joe Biden’s reindustrialization strategy by providing low-cost power for manufacturing as well as feedstock for the production of fertilizer and plastics. But the benefits go beyond cheaper energy: Bolstered by advances in the sector, the growth in overall US labor productivity—the main ingredient for long-term improvement in living standards—over the past four years has helped dull some of the pain that traditionally accompanies fast inflation. The higher output per hour worked is factoring into the Federal Reserve’s calculus as it begins cutting interest rates. If companies can produce more with the same number of workers or fewer, wages can rise faster without fanning inflation, increasing buying power.

US shale won’t be able to out-muscle OPEC forever. Eventually, production will decline as fields are tapped out. The International Energy Agency, meanwhile, predicts that global oil demand will level off in 2029 as we shift away from fossil fuels. While share buybacks and dividends have lured some investors back to the sector, many haven’t returned. “Efficiency gains help keep the US competitive as the resource base degrades over time,” says Raoul LeBlanc, vice president for North American unconventionals at S&P Global Commodity Insights. “But in the end, geology always wins.”

Over the past decade, however, the oil boom has helped the American economy grow at a faster pace than those of other rich nations and kept demand for workers high. Even though the shale revolution is now 15 years old, its success has yet to be replicated outside the US, where geology, property rights and available capital combine to make it possible. Higher levels of productivity across all sectors could add $10 trillion to US gross domestic product from 2023 to 2030, according to a McKinsey Global Institute analysis.

Productivity in the oil and gas extraction sector almost tripled in the 10 years ending in 2022, compared with a near-doubling in some tech-driven industries. US productivity growth has been a big topic of debate among economists, many of whom wonder how much the recent jump is being driven by artificial intelligence and to what extent AI will affect it in the future.

America’s oil resurgence over the past decade was a different kind of technological breakthrough, the combination of drilling horizontally through layers of shale and then fracturing, or fracking, the rock with blasts of water, sand and chemicals to extract hydrocarbons. But shale drilling was initially thought to cost more and be geologically more limited over the long term than drilling the free-flowing reservoirs of the Middle East. Output from US basins like the Permian of West Texas and southeastern New Mexico was expected to run out of steam as producers exhausted well locations and faced rising costs.

These limits are being reevaluated. Oil and gas extraction is forecast by the US Bureau of Labor Statistics to see some of the fastest output growth among industries over the next decade. And, according to industry researcher Novi Labs, 2024 is shaping up to be the best year ever for productivity per well. “That was a bit of a surprise to me,” says Ted Cross, vice president for product management at Novi. “It’s very interesting and is kind of a counternarrative to what you’ll often hear.”

Operators continue to improve the fracking process. That includes drilling longer wells and releasing the water at half the rate, reducing friction that can slow the process and waste horsepower. Explorers are now drilling 4-mile (6.4-kilometer) wells horizontally through layers of shale, up from 3 miles only a year or two ago. Industry consolidation is aiding the trend. Producers, by buying companies with neighboring acreage, are gaining access to larger swaths of land into which they can drill lengthier wells.

On a recent afternoon, Katy Dickson, senior vice president for technology at oilfield service company Patterson-UTI Energy Inc., scanned a wall of computer screens that lit up a dark control room on the seventh floor of a Houston office building. The roughly 110-inch screen on the left projected clusters of dots scattered around North America, depicting locations for Patterson rigs. But Dickson was mostly focused on the middle screen, which showed diagnostics from a rig drilling a well in south Texas.

It’s a far cry from the old days, when an engineer at headquarters passed out USB flash drives and had to wait for someone in the field to bring the data back to the office for analysis. “Now if he wants the data, it’s at his fingertips,” Dickson says. “It makes his job so much easier.”

Many drill bits, such as those offered by Baker Hughes Co., are now autonomous and can steer themselves. Using electronic sensors stuffed into a roughly 6-foot-long metal cylinder behind the steel-toothed bit, computers can chart the optimal course through layers of rock and self-correct in about a minute, rather than the more than 10 minutes it would take a human to change the trajectory. Workers at rig sites are also aided by improved software—a kind of three-dimensional, underground Google Maps—that advises them in real time where to direct the drill bit to stay in the biggest oil pocket.

Along with these technological advances, drillers have transformed their relationship with investors. After breakneck production gains in the shale boom’s early years helped trigger a plunge in oil prices, producers have shifted to a model of restrained growth and increased efficiency, boosting returns to shareholders. Mergers and acquisitions are reducing the number of workers in US oil fields. Shale workers now need only a year to drill the same footage that, a decade ago, would have taken them three years to get through. As the number of crews is winnowed down, only the most experienced are left. Back in 2014, Permian operators needed crude prices above $70 a barrel to make a profit. But about a decade later, they can make money in the $40-a-barrel range, even as they expand to less favorable geologic formations, according to S&P Global Commodity Insights. Crude has recently traded around $70 a barrel.

This kind of bootstrapping by a bunch of drillers—many of them small and some closely held—in West Texas and other parts of the US is problematic for Saudi Arabia. The kingdom needs an oil price at least twice as high to balance its national budget. As crude prices slid in July through September, in part because of faltering demand in China, it was OPEC that was forced to give way, not US shale. The cartel delayed plans to restore long-curtailed production as American drillers carried on increasing output.

Oil companies in the Permian Basin — where major producers include Chevron, Exxon Mobil, ConocoPhillips and Occidental Petroleum—have also sought other ways to get the most out of workers’ time on the clock. For instance, when Patterson-UTI, the second-biggest drilling contractor in US shale, was in the process of upgrading living quarters at the rig site, the fastest crews were first on the list for the new digs.

Devon Energy Corp. keeps a daily scorecard for all 16 of its rigs running in the Permian, from fastest to slowest—with measurements down to the minutes and seconds—and shares the rankings with the crews. “It’s a naturally competitive bunch,” Chief Operating Officer Clay Gaspar says. “Making sure that they know where they stand I’ve found to be very, very beneficial.”

Matador piloted fracking two wells simultaneously in 2021, and now more than 70% of the company’s wells are fracked at the same time, saving the producer $35 million over the past three years. The company is even fracking three wells at once now, says Cliff Humphreys, its executive vice president for completions. The producer estimates it’s saving $350,000 per well.

“The one thing that’s been remarkable is the persistent productivity gain that we’ve seen, particularly in the oil and gas space,” says Ken Medlock, senior director of Rice University’s Center for Energy Studies at the Baker Institute for Public Policy in Houston. “If you go back to 2012, there were books written about how shale is going to be a flash in the pan, it’s going to go away, and here we are 11 to 12 years later, and it hasn’t gone away—it still keeps growing.”