The financial picture around drilling is moving against the Trump administration’s hopes
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US oil industry doesn’t see profit in Trump’s “pro-petroleum” moves
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Check out Matt Randolph - Mrglobaltoo on most media. He has had a good summary of all of this and hasn't been wrong yet. It's not going to be fun or easy.
Also...
Also...
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A couple problems with that theory: US shipping traffic hasn't declined: https://www.bts.gov/freight-indicators
Also, shipping doesn't really use that much oil globally -- something like 5% of global oil.
Global oil prices are indeed down. OPEC increasing production and China using less than expected are the usual reasons I see cited.
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Palin said that when the fracking industry was relatively immature. Drilling went up because fracking cost kept dropping. In the 17 years since then, all the cost efficiencies have have mostly been wrung out. "Drill baby drill" isn't going to work a 2nd time.
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From the article: "The general decline in oil prices from 2022 through late 2025 has reduced the attractiveness of many drilling investments."
This is yet another case of two of Trump's stated goals being in opposition to each other. In this case, drilling more vs. the price of oil. In another case, raising lots of federal income by putting tariffs on foreign goods vs. bringing manufacturing back to the US.
But the man can't admit that his goals are self-contradictory.
This is yet another case of two of Trump's stated goals being in opposition to each other. In this case, drilling more vs. the price of oil. In another case, raising lots of federal income by putting tariffs on foreign goods vs. bringing manufacturing back to the US.
But the man can't admit that his goals are self-contradictory.
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The graph I showed was not this year over last year. It went back to 1975. "Drill baby drill" at best brought us back to the levels we were already at in 2008, followed by continual drops to put at the low point from the prior decade. "Drill baby drill" was all about drilling new rigs. It seems we haven't really done that.*
*Of course, this is imperfect data, because it's number of operating rigs, not number of new rigs built. It's possible they drilled a bunch of new ones, then shut more of the old ones down, thus creating a net drop.
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I remember Palin saying that back in 2008 and thought, besides the climate change problem, their goal seems to be to leave nothing for future generations and take it all NOW!.
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This all feels like typical Trump thinking, where we seem to live in the 1800s. Like setting up a factory is just a building with some cogs and belts and underpaid workers and such. Or drilling for oil is just a hole in the ground. Tariffs will just get people to move their machines here in no time and all will be smiles and sunshine.
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Look, you're trying to make something simple be something complicated.
The claim: the oil industry wouldn't "drill baby drill" because it would reduce oil prices.
The reality: the oil industry drilled and increased US oil production by 2.5x over the period that the GOP slogan has been in use (even though for most of that time, it's not been the GOP that's been in charge).
The conspiracy theory of oil companies colluding to prevent prices from falling is nonsense. OPEC tries to control oil prices and has some success; that takes a heck of a lot more control than just what the Western oil producers have. They increase production whenever the oil price is high enough to give a return on investment.
The graph you showed wasn't year over year, but the text you cited was.
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Recently an ounce of silver became worth more than a barrel of oil for the first time in 45 years (January 1980.)
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Yes. The text I quoted was a snippet of the article about why drilling hasn't been appealing for a while. The graph I showed was about total oil rigs in use. Both of these are applicable to whether we've really "Drilled baby drilled" at the large rate your original comment implied. It remains to be seen that we really did.
I think you are making something simple complicated to justify that assertion, so I guess we'll just agree that we think the other person is wrong.
The one thing we'll agree on (which I noted in my original comment) is that I don't think it's an oil industry conspiracy to not produce oil because it will lower the price. It's more about getting the best return on investment.
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I guess in your mind, those operating drilling rigs just sat around and looked pretty, while the oil just gushed out of the soil unbidden.Yes. The text I quoted was a snippet of the article about why drilling hasn't been appealing for a while. The graph I showed was about total oil rigs in use. Both of these are applicable to whether we've really "Drilled baby drilled" at the large rate your original comment implied. It remains to be seen that we really did.
I think you are making something simple complicated to justify that assertion, so I guess we'll just agree that we think the other person is wrong.
The one thing we'll agree on (which I noted in my original comment) is that I don't think it's an oil industry conspiracy to not produce oil because it will lower the price. It's more about getting the best return on investment.
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Yeah, I guess you win in that argument you just made up. I think there's a name for that.
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The conspiracist in me thinks that this is part of why he's starting the war in Venezuela. Gonna get the oil from someone that wants to pump it, if it's not economic to do it here, then we'll take over somewhere that will do it...
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IMO this is what will happen in the long run, there's plenty of startups already coming out with success stories.
Crazy that silver is worth more than oil now, strange times we live in.
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thelongdarkteatimeof
Ars Scholae Palatinae
I hope this does enough damage to oil prices to finally make Alberta's dirty nasty toxic tar sands unprofitable enough to tank Alberta's economy.
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"
There is opposition on the East Coast, too. More than 250 East Coast local governments have passed resolutions against drilling.
"
But I read states, local governments, democrat politician, companies, civilians, all filthy foreigners (the aliens, like on this Ridley Scott movie, yuck!) on Earth and reality was legally forced to obey Trump.
There is opposition on the East Coast, too. More than 250 East Coast local governments have passed resolutions against drilling.
"
But I read states, local governments, democrat politician, companies, civilians, all filthy foreigners (the aliens, like on this Ridley Scott movie, yuck!) on Earth and reality was legally forced to obey Trump.
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I think there's a bit of a misunderstanding of how the US is dominant in the petroleum industry. The thing the US is REALLY good as is refining shitty oil - the sour, nasty stuff at the end of a fields life. The good stuff, the sweet stuff, is relatively easy to refine and a lot of countries do that domestically.
The main reason why the US both extracts enough oil to meet domestic needs and is presented by the GOP as being dependent on foreign nations is that we import a BUNCH of shitty oil (like Alberta tar sands) refine it and then export it as refined products. We do that so much that we export the good oil drilled locally to other countries at a bit of a premium and take their shitty oil in return because we can process it and they can't. So the US is not 'dependent on foreign markets' - if we turned off imports, we'd still be able to put gas in the car just fine, instead the oil refining companies are dependent on foreign markets for their profits.
The reason they don't want to drill is that's the speculative part of the industry. You spend a bunch of money to prospect, put down drills, built infrastructure to move that oil to the refinery, and if the price of oil goes down because of some OPEC policy, you can't turn a profit on it - it's place where you can lose a lot of money. Instead, the US industry lets other countries take those risks. They know it's a lot harder for other countries to meet the US refining ability.
There's also an aspect of mismatched drill and refining infrastructure. There's a decent amount of refining capacity in the northeast, but there's no sizable oil drilling there any more and the easiest source for that is the North Sea as there aren't easy ways to get oil from Texas to New Jersey. The other aspect to the problem is the Jones Act. The most obvious way for California to get more oil is to ship it down from Alaska but the Jones act requires all domestic shipping be done with domestic flagged ships, and we don't really have many of them. So it's cheaper to sell Alaska oil to Japan and import Russian or Indonesian oil to California in order to bypass the Jones Act restrictions (also why everything in Hawaii is hella expensive).
So, let's say we did do a bunch of new drilling in Alaska. The only way to move that oil to domestic refineries is to then build some domestic double hulled tankers and flag them in the US, which is incredibly expensive and not profitable on its own, and if oil prices drop, they won't be able to recover that investment anyway because these are commodity markets. And it's not like the US needs the oil, and it's not like there isn't enough on the global market needing the kind of refining capability that the US has, so why take the risk?
The main reason why the US both extracts enough oil to meet domestic needs and is presented by the GOP as being dependent on foreign nations is that we import a BUNCH of shitty oil (like Alberta tar sands) refine it and then export it as refined products. We do that so much that we export the good oil drilled locally to other countries at a bit of a premium and take their shitty oil in return because we can process it and they can't. So the US is not 'dependent on foreign markets' - if we turned off imports, we'd still be able to put gas in the car just fine, instead the oil refining companies are dependent on foreign markets for their profits.
The reason they don't want to drill is that's the speculative part of the industry. You spend a bunch of money to prospect, put down drills, built infrastructure to move that oil to the refinery, and if the price of oil goes down because of some OPEC policy, you can't turn a profit on it - it's place where you can lose a lot of money. Instead, the US industry lets other countries take those risks. They know it's a lot harder for other countries to meet the US refining ability.
There's also an aspect of mismatched drill and refining infrastructure. There's a decent amount of refining capacity in the northeast, but there's no sizable oil drilling there any more and the easiest source for that is the North Sea as there aren't easy ways to get oil from Texas to New Jersey. The other aspect to the problem is the Jones Act. The most obvious way for California to get more oil is to ship it down from Alaska but the Jones act requires all domestic shipping be done with domestic flagged ships, and we don't really have many of them. So it's cheaper to sell Alaska oil to Japan and import Russian or Indonesian oil to California in order to bypass the Jones Act restrictions (also why everything in Hawaii is hella expensive).
So, let's say we did do a bunch of new drilling in Alaska. The only way to move that oil to domestic refineries is to then build some domestic double hulled tankers and flag them in the US, which is incredibly expensive and not profitable on its own, and if oil prices drop, they won't be able to recover that investment anyway because these are commodity markets. And it's not like the US needs the oil, and it's not like there isn't enough on the global market needing the kind of refining capability that the US has, so why take the risk?
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I think the prevailing theory is that his Venezuelan deportation EO got shot down by a judge because he was relying on the alien enemies act to justify that action and we weren't at war with Venezuela. <insert light bulb lighting up over Stephen Miller and Pete Hegseths's heads>
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I have been working at a leading software company in the E&P space for well over a decade, and worked at multiple oil companies before that. I've spent a lot of time on oil rigs (drilling and completions) in that time, often troubleshooting technical issues directly impacting D&C operations. All told I have about 2.5 decades experience in this. I mention that to establish that I'm not just regurgitating something I've read online.
Rotary rigs are utilized differently now than they were back in Palin's drill baby drill heyday.
There has been a dramatic increase in pad drilling in the USA. In pad drilling the drilling rig just punches a bunch of holes in rapid succession then moves on. A small fleet of completions rigs will finish setting up the wells while the drilling rig moves to the next location. This has led to a greater specialization of the rigs and their crews.
This is especially true in the case of shale plays, where fracking can take quite some time, while the drilling and casing takes only a few days.
That's all to say that rig counts staying relatively even, or even decreasing, while production goes up could be easily explained. It's a direct consequence of the change to how drilling is being done today.
There have also been real advances in extraction techniques over the past 1.5 decades that have increased per well production by a huge amount. In the case of heavy oil extraction SAGD has had a particularly large impact.
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I appreciate that informed opinion! I caveated the previous post because the data really only tells how many rigs exist at one time, but those may not be the same rigs that existed a year before. It looks to be exactly what I questioned here:
Your explanation makes a lot of sense.
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"The Fart of the Deal" by D. Trump.
If this kind of bullshit was all that the Fuckwit-in-Chief did to the world, I wouldn't mind it so much. And in keeping with the not minding it so much, the same could be said for all the anti-vax shit going on. Yeah, it's going to be very hard on kids and old fucks like me. But old fucks like me are mostly of the reason why Trump got elected (they make up a majority of the GOP voter base - me being decidedly in the minority side). So LOTS AND LOTS of them are going to die from preventable diseases in the coming few years, trimming down the ability of the GOP to stay in power.
And the CDC won't be tracking those numbers, so the fuckwits won't see it coming, either. The less stupid among them are trying to break the banks by adding more "shoe-in seats" to tilt the balance of power in their favor, but when you don't have the number to do that in the first place, you can't win that shell game.
And those voters won't be replaced anytime soon.
So yeah, let them pwn the libs. Let 'em think they're fucking 'em hard. And then drink their rage and misery when all that they did is reversed, and their power consigned to the garbage disposal of history.
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The irony is that the fast push for more oil and more drilling represent exactly what the industry dones not need nor way. Any increased push from Trump probably pushes those result further way.
Above anything, the industry craves stable conditions over long time scales. As pointed out several times, oil projects are capital intensive and long running. The companies need to be reasonably sure that the conditions today continue tomorrow ... and the next year and ideally the next decade.
Sudden decrees from the president is as far from long term stable conditions as you can think of. Whatever sudden and rash desicion Trumps makes today, Trump can remove tomorrow. Or his predesesor can remove tomorrow.
Trump may promise, shout and bully ... but nobody trusts him.
Above anything, the industry craves stable conditions over long time scales. As pointed out several times, oil projects are capital intensive and long running. The companies need to be reasonably sure that the conditions today continue tomorrow ... and the next year and ideally the next decade.
Sudden decrees from the president is as far from long term stable conditions as you can think of. Whatever sudden and rash desicion Trumps makes today, Trump can remove tomorrow. Or his predesesor can remove tomorrow.
Trump may promise, shout and bully ... but nobody trusts him.
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I knew the Dallas Fed did these reports but I’ve never deep dived them. I just read all of this years reports and in a lot of ways they make me feel better about the political climate. Execs literally comment on how “drill baby drill” lead to losses.
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With OPEC still being able to control oil prices, oil companies are restricting their investments. Like the last time oil prices spiked, they didn't increase investments - they increased profits.
The thing is - OPEC controls oil prices because the Saudis are deliberately trying to bankrupt US oilfields in order to pick them up for a cheap price. Those fields will become important once Saudi runs out of oil and oil prices jump to make them profitable. None of this is for making oil prices low to keep inflation down, but to invest in the future when oil prices are going to rise and to keep them high for higher profits.
With Trump being in bed with them because they know how to buy Trump - lots of gold and gifts (that $400M jet ain't free), nothing the US does with oil regulations really matters right now. It doesn't matter if the Republicans drill Alaska, the Democrats ban it, because right now none of that matters. In 30 years when oil reserves dwindle and the prices start climbing beyond $100/barrel, whoever's in charge might get pressure to open the taps because EVs have failed and there's no alternative to oil based transportation.
It's why EVs are a thorn in the plans - because should oil run out, drill baby drill will be the theme of ANY government out of desperation if EVs did not establish a foothold.
Peak oil isn't a myth, we've just managed to extend it. You want to see an equivalent, look at IPv4 addresses. We've run out of them for decades, yet they're still traded around freely, and IPv6, while growing and dominant in many areas (LTE and 5G telephony is exclusively IPv6), IPv4 still dominates,
The thing is - OPEC controls oil prices because the Saudis are deliberately trying to bankrupt US oilfields in order to pick them up for a cheap price. Those fields will become important once Saudi runs out of oil and oil prices jump to make them profitable. None of this is for making oil prices low to keep inflation down, but to invest in the future when oil prices are going to rise and to keep them high for higher profits.
With Trump being in bed with them because they know how to buy Trump - lots of gold and gifts (that $400M jet ain't free), nothing the US does with oil regulations really matters right now. It doesn't matter if the Republicans drill Alaska, the Democrats ban it, because right now none of that matters. In 30 years when oil reserves dwindle and the prices start climbing beyond $100/barrel, whoever's in charge might get pressure to open the taps because EVs have failed and there's no alternative to oil based transportation.
It's why EVs are a thorn in the plans - because should oil run out, drill baby drill will be the theme of ANY government out of desperation if EVs did not establish a foothold.
Peak oil isn't a myth, we've just managed to extend it. You want to see an equivalent, look at IPv4 addresses. We've run out of them for decades, yet they're still traded around freely, and IPv6, while growing and dominant in many areas (LTE and 5G telephony is exclusively IPv6), IPv4 still dominates,
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Saudi isn't likely to run out of oil before the world runs out of demand.
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Honestly, I thought COVID killing off mostly older people would tip that electoral balance too, but it didn't seem to. Then again, I guess it would have been "worse" if it hadn't. It is pretty awful to think about it like that.
My hopeful silver lining is that a sufficiently huge majority of people will realize just how awful this has all been, and is going to continue getting, and there is enough political support to truly reform the system to stop it from happening again.
I don't expect it to happen, but when all you have is whistling past the graveyard, then you whistle your little lungs out.
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To add in, also interest. You hit on the scale of the projects, but even oil companies usually don't have multiple billions rattling around. They are trying to return that to stockholders. So they take on a new $8 billion oil field? They take out a bank loan to do it. Right now, I assume they are paying between 5-6% interest rates on that loan. Likely with a 10-15 year maturity.
That is the double edged sword of Trumps push for lower interest rates. Yeah, I'd personally be grateful to refinance my 6.875% 30-year mortgage that I didn't have much choice in taking on at something significantly lower. But that also adds fuel into the economy and ramps up inflation. Honestly, one of the few things keeping inflation in check has been how bad the economy has been getting. But unleash real interest rates 2-3% lower and you WILL get increase consumer and commercial/industrial spending with much lower loan rates. And that will drastically heat up inflation. As much as I hate to say it, especially if much of the tarrif regime gets rolled back too (which SCOTUS actually seems poised to do, and whatever Trump tries to pull next, is going to have to be a lot more targetted and/or shorter duration for tarrifs)
Suddenly your loan costs get halved, and your materials costs drop by a third? YES! Sign that loan to build X! Quick!
However, you might have the double edge of only somewhat increasing demand heating up inflation, without extra production, making things that much more scare, causing prices to REALLY go up through the roof. Again, many corporations aren't stupid and they just got kicked in the nuts. Think they are going to expand production? Or just refinance loans they can, and sit on their current production rates and make more money off what they are currently producing until they have some stability?
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But wait ... Venezuela has something like the largest proven reserves of oil. Don't we want to take that over and start pumping it? Inquiring minds want to know .... 
/s, as required
/s, as required
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Oil value doesn't matter because wealthy corporations can switch to selling electricity. All you need are a few bribes to pass laws making personal solar unaffordable.
Block solar panel imports. Mandate that homes in warm climates have only a white roof to reflect heat. Say that solar panels arrays need extensive environmental review. Prohibit grid tied solar. OK, back to monopolizing energy production. (Some suspect Newsom of helping California power companies do this already)
Block solar panel imports. Mandate that homes in warm climates have only a white roof to reflect heat. Say that solar panels arrays need extensive environmental review. Prohibit grid tied solar. OK, back to monopolizing energy production. (Some suspect Newsom of helping California power companies do this already)
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Historically, everything that Mango Mussolini touches dies horrible deaths. While that will also include his reckless energy, asinine AI and crypto coin policies, it also includes public education, science and the state of democracy in the entire US. Those last three are nearly gone. Who knew that putting a feeble-minded narcissistic career criminal in charge of the US would be a bad idea? Around 1/3rd of the US voting population didn't know that, and many still refuse to accept that.
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The mad king is terminally irrational. Look how many jellyfish backboned sycophants have decided that pleasing the mad king is better than being continually attacked by him and his stochastic terrorist cult members. So the answer to your question is, historically, YES they will.
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These companies may also have some understanding that the wind will change as climate-driven issues continue to get worse. And something as recent and brutal as "turned pristine parkland into a maga wasteland" may be a tipping point for doing a Big Tobacco on Big Oil- that is, large scale, industry-wide crackdown on their longterm deceit with a profit-draining turndown of the entire industry.
May it happen anyway, but the industry may get more favorable terms if they aren't (openly) seen as having rolled around the fossil fuels pigtsy with the fascists.
May it happen anyway, but the industry may get more favorable terms if they aren't (openly) seen as having rolled around the fossil fuels pigtsy with the fascists.
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