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There are two important things to remember about how oil and gas production work: The government doesn’t place any production limits on oil and gas companies, and there’s no such thing as an immediate production increase. Oil and gas companies decide, all by themselves, whether or not to increase production, and new drilling now generally translates to oil and gas on the market in six to 12 months. A new fracking well takes six to eight months to produce oil, for example. Are there idle wells that could be productive again in less time? Sure. Are there some that were shut down during the pandemic that can be brought back online? Yep. But then we get to the real reasons oil companies aren’t drilling: It’s not government intervention, it’s a combination of money, labor, and materials (shocking, I know).
The big fracking companies — Devon, Pioneer, and Continental — burned by multiple boom and bust cycles over the years, pledged in February not to increase production until 2023. “Whether it’s $150 oil, $200 oil, or $100 oil, we’re not going to change our growth plans,” Pioneer CEO Scott Sheffield said during a Bloomberg Television interview. “If the president wants us to grow, I just don’t think the industry can grow anyway.”
In ExxonMobil’s February earnings call, Woods said the company’s focus remains on price per barrel over volume. “One of the primary objectives we’ve had in looking at the portfolio is less about volume and volume targets and more about the quality and profitability of the barrels that we’re producing.” he said. “That’s been the focus. And as we move forward, we’ll continue — you’ll continue to see the quality of the barrels or profitability of the barrels increase.”
But it’s Biden’s fault
Posted from my iPhone/Mobile device
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