HOUSTON – Even with rising oil and gasoline prices, industry leaders are resisting their usual drive to pump more oil from the ground, which could keep energy prices on track as the economy recovers.
The oil industry is predictably cyclical. When oil prices rise, producers compete for drilling until world-wide oil prices fall. Then, the energy companies that were overdoing themselves go bankrupt.
The wash-rinse-repeat cycle has been played many times over the past century, only three times in the last 14 years alone. But, at least for now, the oil and gas companies are not going back to those old stage directions.
The rapid penetration of vaccines in the United States this spring and summer is expected to make the US economy turbulent, encouraging people to travel, shop and travel. In addition, President Biden’s coronavirus assistance package will save more money for consumers, especially those out of work.
Even before Congress approved the legislation, oil and gasoline prices were recovering after a drop in fuel demand last year. According to the AAA Automobile Club, gasoline prices have risen by an average of 35 cents per gallon in recent months, and in some states can reach $ 4 per gallon in the summer.
Washington, in all probability, would be among them. The state average was $ 3,219 on Wednesday, which is much higher than the national $ 2,826, according to the AAA. West Coast markets are usually more expensive. An example attributed to their lack of connection to America’s medium-sized pipeline networks, the limited number of processing plants, and even high taxes.
Although overall inflation remains low, some economists worry that prices, especially fuel prices, could rise faster this year than after some time. It will do more harm to working families as they tend to drive older, less efficient vehicles and spend most of their income on fuel.
Oil prices have risen more than $ 65 a barrel in recent weeks, a level that would have been impossible just a year ago when some traders had to pay buyers to buy oil. During the day of April last year, oil prices fell by more than $ 50 per barrel, reaching zero.
It seems that this strange day has deepened in the memories of the oil leaders. The industry was forced to shut down hundreds of devices, shut down many wells, some well. As many as 120,000 U.S. oil and gas workers have lost their jobs in the past year or so, and the companies are expected to lay off 10,000 workers this year, according to Rystad Energy, a consulting firm.
Still, as they make more money on higher prices, industry leaders promised at a recent energy conference that they could not significantly expand production. They also promised to repay the debt and distribute more of the profits to the shareholders in the form of shares.
“I think the worst thing that could happen right now is for U.S. manufacturers to start growing fast again,” he told the ICS CERAWeek conference, an annual gathering that was virtual this year, said ConocoPhillips, նախագահ CEO and CEO. Ryan Lance.
Scott Sheffield, chief executive of Pioneer Natural Resources, a major Texas producer, predicts that US production will remain at 11 million barrels per day this year, up from 12.8 million barrels just before the epidemic.
Even OPEC, allied producers like Russia, surprised many analysts this month by keeping several million barrels of oil out of the market. The 13 members and nine partners of OPEC pump about 780,000 barrels of oil per day less than at the beginning of the year, although prices have risen by 30% in recent months.
“Discipline to support higher prices is needed to revive their economy,” said Rene Ortiz, the former secretary general of OPEC and now Ecuador’s energy minister, adding that many members of the group needed higher oil prices to balance their budgets. : և service their debts. “Their resources are exhausted.”
The decision to keep production in check was largely the work of Saudi Arabia, its closest ally in the Persian Gulf, just a few years ago. In late 2014, when oil prices began to fall due to rising US oil production, Saudi Arabia և OPEC increased production, recording a drop in prices. The cartel seemed to want to drill wells in shale fields in the United States, particularly in Texas and North Dakota.
But the US oil industry was much more resilient than Saudi officials had expected, and US production continued to grow as companies cut costs. Although many shale companies suffered from OPEC’s move, oil prices never fully recovered, the economies of other oil-dependent countries in Saudi Arabia suffered far more than the United States.
But the temptation to produce more as prices rise has not completely disappeared, especially for countries like Colombia and Guyana, which want to pump as much oil as possible before climate change concerns reduce fossil fuel demand in favor of electricity. : hydrogen-powered vehicles. Russia is putting pressure on Saudi Arabia to loosen production caps, while Kazakhstan, Kazakhstan, Iraq and a number of other countries are exporting more. Even Iran and Venezuela, which have been struggling to sell oil due to US sanctions, are starting to export more.
Some analysts expect that when OPEC և its allies meet again next month, they will allow more production, which could push down prices.
But for now, oil reserves around the world are declining as energy demand begins to recover.
As always, tensions in the Middle East could determine what happens to oil prices.
In recent weeks, drone strikes in Saudi Arabia have caused tremors in oil markets. As Yemen’s Houthi rebels secured the credit for the operation, the drones may have been deployed by Iran, an ally of the rebels, according to Saudi Arabia’s security service.
“The escalation of the war in Yemen between Iran and Saudi Arabia is only fueling the oil price fever,” said Louise Dixon, an oil market analyst at Rystad Energy.
Iraqi militias, allegedly allies of Iran, have also attacked US forces.
Some tensions in the region could be eased if the Biden administration’s Iranian officials resume talks on a new nuclear deal that replaces the Obama administration-negotiated deal abandoned by the Trump administration. At that time, Iran was likely to export more oil.
Of course, US oil leaders have little control over these geopolitical issues, saying they are doing what they can to avoid another sharp turnaround.
“We are not betting on higher prices,” Chevron CEO Michael Wirth told investors on Tuesday.
Chevron recently said it would spend $ 20 billion to $ 16 billion a year on capital projects from 2025 onwards. That’s a few billion dollars less than the company spent in previous years of the epidemic, as the company focuses on producing the lowest-cost barrels.
“For now, these guys are refusing to take the bait,” said Raoul LeBlanc, vice president of IHS Markit, a research and consulting firm. But he added that US investment decisions could change if oil prices rise further. “It is far, far too early to say that this discipline will continue.”
Breaking National contributors to this report.