Oil and gasoline prices continue to climb, and energy company profits are surging. President Biden, who came into office promising to reduce the use of fossil fuels, has effectively joined the “drill, baby, drill” chorus. Europe would love to end its dependence on Russia.
Yet most U.S. oil businesses are not eager to capitalize on this moment by pumping more oil, The New York Times reports.
Production of oil by U.S. energy companies is essentially flat and unlikely to increase substantially for at least another year or two. If Europe stops buying Russian oil and natural gas as some of its leaders have promised, they won’t be able to replace that energy with fuels from the U.S. anytime soon.
The biggest reason oil production isn’t increasing is that American energy companies and Wall Street investors are not sure that prices will stay high long enough for them to make a profit from drilling lots of new wells.
Executives at 141 oil companies surveyed by the Federal Reserve Bank of Dallas in mid-March offered several reasons why they weren’t pumping more oil. They said they were short of workers and sand, which is used to fracture shale fields to coax oil out of rock. But the most salient reason—the one offered by 60% of respondents—was that investors don’t want companies to produce a lot more oil, fearing that it will hasten the end of high oil prices.