A little chart to help explain how we got here.
And some ammunition for you all to push back against the Republican cult programmed/brainwashed zombies pushing API/Oil Company nonsense — excusing the victimizers.
Oil executives this week mentioned another factor that has limited production but has nothing to do with government: pressure from shareholders to hold back spending on exploration and drilling and boost investor returns through share buybacks and dividends.
[Occidental Petroleum Chief Executive Vicki Hollub said at the CERAWeek conference] that oil and gas companies have been limiting costs and spending to return more cash to shareholders. "Capital discipline today for oil companies is basically no (production) growth," Hollub said.
Her view was echoed by another executive at the conference.
"As an industry, we can't lose sight of the returns," said ConocoPhillips CEO Ryan Lance, and he also blamed the administration's "poor energy policy, poor regulatory policy" for creating the current squeeze. The company has nearly 400 unused federal permits."
And
America’s largest frackers are reporting huge profits but plan to keep oil production in low gear this year, adhering to an agreement with Wall Street, even as prices approach the $100-a-barrel mark for the first time since 2014.
Three of the largest shale companies, Pioneer Natural Resources Co. , Devon Energy Corp. and Continental Resources Inc., this week [Feb 18] reported their highest annual profits in more than a decade in 2021. The companies said they collected a record amounts of extra cash by hanging on to the money they earn selling oil and natural gas and reinvesting only what they need to keep output roughly flat. All three said they would continue to limit production growth this year.
And
Oil Producers Aren’t Keeping Up With Demand, Causing Prices to Stay High
OPEC Plus, the United States and others have been slow to ramp up output, lagging production goals.
Oil producers are finding it harder than expected to ramp up output. Members of the cartel OPEC Plus, which agreed to cut output by about 10 million barrels a day in early 2020, are routinely falling well short of their rising monthly production targets.
“In a lot of places, once output has been reduced, it is not easy to bring it back,” said Richard Bronze, the head of geopolitics at Energy Aspects, a London-based research firm.
Production in the United States, the world’s largest oil producer, has also been slow to recover from its one-million-barrel-a-day plummet in 2020, as companies and investors are wary of committing money amid climate change concerns and volatile prices. The Energy Information Administration forecasts that U.S. crude output in 2022, while rising, is likely to average half a million barrels a day below 2019 levels.
From a year ago but still valid:
Hold That Drill: Why Wall Street Wants Energy Companies To Pump Less Oil, Not More
Oil companies are under a lot of pressure to keep their production down. And the call is coming from inside the house: it's oil investors who are pushing for companies to pump less oil.
www.npr.org/…
And unfortunately a prediction that did not come true:
As oil-well backlog shrinks, U.S. shale may upset investors and drill more
U.S. energy producers have cut so deeply into a once-large reserve of oil wells waiting to be turned on they soon may have to resume drilling to keep production from sagging, executives and analysts said.
This would mean an increase in spending which could unsettle investors who have benefited from shale companies' recent prioritization of shareholder returns over ramping up production.
Investors, frustrated with years of low returns from the sector, have punished companies that have looked to grow production at the expense of shareholder return and rewarded those that have shown capital discipline.
www.reuters.com/…
Drilling data from EIA showed that drilling rigs peaked under Trump at 1,055 drilling rigs in October 2018. That dropped to 770 by January 2020 — right before COVID.
What Trump policies caused oil companies to reduce drilling rigs? None. It was all done to divert capital spending on drilling to dividends. And that trend continues today.
The bottom line:
Oil companies have no interest in drilling more. They love taking more and more money from consumers. If they drill more, they have to divert spending from dividends, and the price goes down, so they make even less money. A lose-lose for the oil companies.
What’s a win-win for the oil companies? Keeping production low and prices high. I can’t rule out that this is a calculated play to help Republicans win in 2022 so they can pillage Americans even more.
The oil companies do not care how much people pay for gas, and they don’t plan to lift a finger to help.
They will laugh all the way to the bank.
Oh sure, they will spread the BS “Biden policies” as the cause, but they never mention a specific policy.
Biden pushed more than 3,000 drilling permits in 2021. They have 9,000 permits that they are not using. $$$ for investors, paid for at the gas pump.
Biden offered 80 million acres in the Gulf of Mexico in November 2021. Only 1.7 million acres received a bid. It only costs them $2 an acre per year to do nothing. $$$ for investors, paid for at the gas pump.
THAT has to be the story. Repeated widely.