Production

What’s Going to Be Needed for Gas and Oil Companies to Pump Up Production

Gas and oil Companies Production, Have you seen the prices at the pump lately? It’s getting so bad that people who must drive long distances to work on a daily basis are using half their paycheck just to fill up their tanks. The same goes for home and business energy needs. Taken along with spiking inflation, the average American is paying way more than in recent years and, as a result, hurting more at the same time. 

With the current administration having placed crippling regulations on the natural gas and oil production and oil well services industry in the U.S. it seems that out of control energy costs amounts to what some people are calling a “self-inflicted wound.” 

But others say we are going through a period of transition from carbon burning energy to electric and solar. Still others blame Putin and the war in Ukraine. And yet others blame the oil and gas producers themselves for price gouging.  

That said, what exactly will it take for oil and gas companies to up their sorely needed production? According to a new MSN report, oil prices have been trading over $120 per barrel for many days while natural gas futures have been pricing in at $8 per MMBtu for weeks.

Treasury Secretary Janey Yellen’s take on this is that energy prices more than likely won’t be coming back down anytime soon which of course doesn’t bode well for families and small businesses alike.

The report also states that for some independent producers of natural gas and oil companies, the price run-up hasn’t been enough to put up the cash needed to invest in increased production. 

The “Capital Discipline” Problem

Say the experts, oil and natural gas producers have been stressing the need for “capital discipline” which translates into placing “healthy earnings” toward stock buybacks, returning money to shareholders, and paying down their ever-mounting debts, instead of putting resources into increasing energy production. 

As industry leaders point to labor shortages, inflation, and difficulty with accessing capital as major factors that are contributing to what’s been called “conservative spending practices,” some larger independent gas and oil companies producers are said to have been closely studying “risk calculations” that are directly related to the Ukraine/Russian war. 

The calculations also take into account U.S. demand while, at the same time, their larger competitors like ExxonMobil and Chevron have announced that they are planning to up production in the near future.  

The War Factor

It’s a fact that energy prices have been on the rise, if not spiking altogether, since the present POTUS was sworn into office and along with it, his signing executive orders imposing strict drilling regulations effectively crippling the industry. Many in Washington, DC however, blame Putin’s war in Ukraine as the culprit for more recent gas and oil companies spikes. 

But the experts attest that even if the war were to end fairly quickly (and it appears that at least Phase I of the war is coming to a close soon with Putin’s generals having successfully connected Southern and Eastern Ukraine to Russia itself), the repercussions of the oil and natural gas market will likely remain in effect due to existing embargoes on Russian petroleum products. 

Also included in the complicated shortage problem is Europe’s plan to replace the Russian gas pipeline with gas from the U.S. along with LNG imports. Says the Energy Information Administration, Russia’s liquid fuel production fell about 2 million barrels per day in the fourth quarter of last year compared with the first quarter.   

The Heat Is On

While the industry has been under pressure from the President to up their production and even accused of price gouging, regulations have not been eased which places independent producers in a lose/lose position. Again, this does not bode well for the average worker trying to fill his or her tank or trying to pay exorbitant energy bills at the office and the home. 

Nonetheless, President Biden made a point recently of singling out Exxon, urging the company to begin investing in the possibility of increased energy production. According to an Exxon spokesperson, the major oil and gas producer is planning on upping its production on the Permian Basin. 

Allegedly, the company has been in “regular contact with the administration,” and has been keeping them informed of what they refer to as “investments to increase production” while expanding refining capacity in the U.S.   

This all sounds well and good, but will gas and oil prices be coming down anytime soon? With the CPI for May 2022 having come in at a record high once again, the answer to that question is not looking very favorable for the energy dependent Middle Class American.

Read also about The Best Way to Ship To and From China

Gas and Oil Companies Production

Thanks for reading about What’s Going to Be Needed for Gas and Oil Companies to Pump Up Production

Leave a Reply

Your email address will not be published.

Back to top button