I am an attorney in the oil and gas industry. I have been in the industry for 40 years and lived in an oil and gas producing part of the country since childhood.
What most conservatives don’t understand about the oil and gas business is exploration and production companies need a market price that makes future drilling and production economical. Beginning with Reagan, republicans encourage foreign suppliers to oversupply the market with cheap foreign crude, which kills the domestic industry. They do this because they traditionally viewed the oil consuming industries of the midwest and the gas buying public as their major constituency. Trump continued this in his first term with constant tweets aimed at OPEC demanding that they bring the price of oil down, instead of letting supply and demand take care of itself.
Ironically, beginning with Jimmy Carter, and again under Clinton and Obama, the industry has done far better under democrats because the price is always higher due to threats limiting drilling opportunities and geopolitical uncertainty, which the democrats are really good at. Now throw in the democrats efforts to increase the cost of conventional energy in order to make “renewable” energy look more competitive. The result is oil and gas economics are dramatically better when the democrats are in power.
Traditionally when the republicans are in office the industry makes a lot less money, because government policies encourage self-destructive overproduction. The one destructive thing the democrats always do is threaten to change tax policy to penalize domestic oil and gas drilling. Every other industry is allowed to deduct its costs and amortize capital assets, but the opponents always call the deductibility of intangible drilling costs and depletion “subsidies.” But when the politicians get in the back rooms, somehow these provisions always survive.
I would humbly submit that the federal government, regardless of who is in power, would do well to leave the industry along and let the market correct itself. There are plenty of hydrocarbons left to produce and they are the cleanest, cheapest and most reliable energy supplies on earth. Left to their own devices, the market will find a price that incentivizes future drilling but provides fuel at a price consumers are willing and able to pay.
The government should change slowly, if at all. Instead we have policy whipsawing back and forth.
Can the U.S. return anytime soon to being the predominant producer of crude oil?
In the recent past the U.S. was referred to as being self-sufficient, but of course, fresh U.S. supply has always gone partially overseas to be consumed there, as overseas supply has always gone partially to the U.S. to be consumed here.
Correct:
“the oil and gas business - exploration and production companies need a market price that makes future drilling and production economical”
Not correct:
“Beginning with Reagan, Republicans encourage foreign suppliers to oversupply the market with cheap foreign crude, which kills the domestic industry.”
Not correct, because:
Encourging foreign suppliers is not an exclusively a chronic “Republican” thing; there are always shifting considerations and decisions made by a variety of political bases.
Also subject to a variety of considerations made by a variety of bases:
“government [or others’] policies encourage self-destructive overproduction”
Presently, there is a glut of available oil in the U.S.A. - this summer, there was almost a panic to find storage space. (Would have helped, if the Biden Admin. had been buying/storing some of that glut - the petroleum reserve holding half the volume that existed at the start of the Biden Admin.)
Correct:
“the federal government, regardless of who is in power, would do well to leave the industry along and let the market correct itself”
IMHO
Good synopsis.
“I would humbly submit that the federal government, regardless of who is in power, would do well to leave the industry along and let the market correct itself.”
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Your recommendation is backed by the wisdom of the great philosopher, Ringo Starr: “Everything the government touches, turns to shit.”
I agree with both of you. The government has massively interfered in a number of industries (with medicine, education and energy production/distribution and housing being the most obvious ones), and in every single case the goods or services end up being more expensive and of lesser quality…oh, and as a bonus, everyone involved gets to deal with expensive, unresponsive and frustratingly arrogant bureaucracy.