Posted on 02/02/2025 4:51:04 PM PST by Miami Rebel
Several U.S. oil and gas companies have warned that they will not be looking to increase production unless prices increase significantly. President Donald Trump stated he wanted to “Drill, Baby, Drill”, when it came to oil and gas. However, oil majors are concerned that increasing oil and gas output even further could create a glut and drive prices down, something they want to avoid. On his first day in office, President Trump declared an energy emergency, stating, “The integrity and expansion of our Nation’s energy infrastructure is an immediate and pressing priority for the protection of the United States’ national and economic security.” Trump signed executive orders on his first day in office, including one aiming to “unleash America’s affordable and reliable energy and natural resources”. This effectively ended the Biden administration’s pause on the approval of new LNG exports. It also commenced processes for easing regulations on oil and gas production. Trump also signed an order to lift restrictions on oil, gas, and mineral production in Alaska and announced plans to establish an inter-agency working group to determine and implement measures to expedite oil and gas development. Last year, U.S. oil and gas production rose to record highs. U.S. crude output increased by 260,000 bpd month-on-month, to a record 13.46 million bpd, in October, in line with demand growth, according to the U.S. Energy Information Administration (EIA). In 2024, drilling operations became more efficient, allowing for greater output. However, weaker-than-expected demand growth in several parts of the world contributed to lower oil prices. Many oil and gas companies have shown support for Trump’s executive orders including new exploration projects and production increases. However, several oil executives have said that these new policies will not lead to an immediate boost in output, stating concerns over oil prices.
(Excerpt) Read more at oilprice.com ...
My single largest position is Enterprise Products, the premier oil and gas pipeline operator, and among my other top twenty are South Bow, Vitesse Energy, Expand energy (formerly Chesapeake Energy,) and Tortoise Energy Infrastructure (a pipeline fund.)
The idea that the US is going to be entering an oil-drilling boom is ludicrous. We are already at record-high production.
Production companies boomed with the advent of fracking in the early teens, which is why production went through the roof even under an anti-fossil fuel Obama administration. The new horizontal drilling technology trumped the government's best effort to squelch production.
As with most innovations, enthusiasm led to a massive overspending on new fields. When WTI sold off from the $80s and $90s to the $30s in 2015-2016, a host of marginal players got wiped out and a lot of more-established players were forced to tighten their belts just to survive.
Shareholders and banks wrote off billions.
The lesson from that was that expanding production in good times is a high-risk proposition, which is why in the last ten years oil companies have prioritized share buybacks over new production.
And the proposition that oil and gas companies now are chomping at the bit to expand production is supremely illogical: why should they be the agents of lower prices? To build production from current levels means to boost surpluses that will drive down prices, resulting in their new investments going underwater.
Between the economic constraints energy producers face, there is the shared history of massive losses the last time the industry boosted supplies.
I would be shocked if overall production increases even 10%.
BS!
Empty Stategic Petroleum Reserve
Interesting. What about all the small independent companies that want in on the action?
They’re cheaper. The idea is to undercut OPEC and the Russians.
It'll force Putin to negotiate if he's no longer able to fund his war machine in Ukraine.
If the oil companies increase or even decrease production the price of oil will come down as competition for the product takes place. Who cares if production is increased or not, the competition will drive PRICE DOWN. That will determine whose oil is purchased. You want to stay in the game, you’ll have to supply cheap oil.
Just take all that green money and give it to the oil companies with strings attached. We would have lots of oil.
We had it during his first term. We were an oil exporter that caused Iran to almost go broke.
Indeed, other rumors/scuttlebutt we hear is that Trump will have Saudi Arabia open the oil spigots - but the first to shut in production, or even be bankrupted, would be US oil producers
We now have also tariffed our biggest oil supplier, Canada, which will have the effect of slashing capital investment there. Its also throwing a political life-line to Trudeau and the Liberal Party, who were about to absolutely trounced by the Conservatives.
Yes but it takes time. All their plans have been based around green new bullshit for fours now. Trump will no doubt offer incentives to get the industry on warp speed.
Pipeline expert? I have a real stupid idea I just wanted to bounce it off of someone. is a pipeline from Nova Scotia to Greenland to Scotland to Europe feasible?
By the way line up those refineries and those tankers and whatever it takes to ship the oil out cause we need to drill baby drill and bring the price down. Energy independence here we come. Damn the torpedoes full speed ahead.
Never say can’t. Trump’s gonna steamroll right over all the can’t doers.
**They’re cheaper. The idea is to undercut OPEC and the Russians.
It’ll force Putin to negotiate if he’s no longer able to fund his war machine in Ukraine.**
Think Star Wars and Reagan at Reykjavik. No guarantee it would work but the Russians were the ones who thought otherwise.
Geology doesn’t care about politics. We have been pumping for 100+ yrs. How long did we think that could continue?
Been getting a bit suspicious about Greenland. That would be the sort of thing you would chase if you had been told that shale is going empty.
Let’s not forget the record number of new regulations forced down the throat of American industry. If that can be paired back that will result in a cost savings to the energy companies.
“Let’s not forget the record number of new regulations forced down the throat of American industry. If that can be paired back that will result in a cost savings to the energy companies.”
1. What do you reckon is the savings that energy companies will recoup on reduced regulation?
2. Do you think that those savings will be passed on the consumers or instead to shareholders? As an investor, I hope and expect it will be to the latter.
Yep. Getting some government regulations out of your hair most always lowers your costs.
The U.S. has enough oil to last 227 years at the current consumption rate.
The U.S. has enough natural gas to last 130 years at the current consumption rate.
As to Greenland, most of the majors (Royal Dutch, Exxon, and Chevron) crapped out on attempts to drill there without success.
And the Greenland government itself (NOT the Danish government) has banned further drilling, which means that not only would we have to invade a Danish territory, but we’d have to do it against the will of native Greenlanders.
“Empty Stategic Petroleum Reserve”
When Biden did just that, it was rightly considered a naked political ploy. Why do it now? To punish US producers?
Either will work for me. If they wish to pass on to the shareholders, that’s fine. If they wish to use it for additional exploration or R&D that results in new technology that ushers in lower cost and increases production, that’s fine too.
This sounds an awful lot like a "combination in restraint of trade" to me. A legal position to be avoided at all costs.
Oil and gas leases on public lands need to be on a use it or lose it basis. We need to turn some lean, hungry barbarians loose among the fat cats.
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