Wall Street Times

Biden Brings America to Peak Oil

peak oil
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Peak oil predictions have been made since the beginning of the 20th century. Approximately every ten years, a gloomy forecast about the world’s approaching oil shortage will be made by a knowledgeable individual. This was especially noticeable as the 2000s approached, but when hydraulic fracturing (fracking) gained popularity in the US oil and gas business, it destroyed these projections.

By 2019, the United States has converted into “Saudi America” and a major energy exporter. However, the present administration, driven by a fixation on the environment, is working to make peak oil a reality even if the US is swimming in black gold and Texas tea.

Joe Biden and Peak Oil

The Energy Information Administration (EIA) reports that, aside from two weeks in August, US oil output has been stable this year, fluctuating between 12.2 and 12.4 million barrels per day (bpd). Domestic production is still less than the pre-pandemic high of 13.1 million bpd, which was reached in March 2020. What’s worse is that production levels have been below trend since the summer of 2022, and this situation may continue given the number of active drilling rigs in the nation.

For the week ending August 11, the Baker Hughes Oil Rig Count registered at 525, which is the lowest level since March 2022. The closely followed index of crude oil rigs has been falling since it peaked at approximately 620 in late 2022. Furthermore, despite prices being substantially higher than they were prior to the COVID-19 public health crisis, the measurement had not yet recovered to pre-crisis levels.

According to a new research from Enverus Intelligence Research, the industry underestimated how quickly domestic production from US shale wells would fall. Due to state and federal red tape, drilling chances are becoming more and more expensive, which is causing enterprises to increase their workload to avoid output from slowing down and develop new tactics to do so.

According to Dane Gregoris, managing director at EIR and author of the research, “the U.S. shale industry has been enormously successful, roughly doubling the production out of the average oil well over the last decade, but that trend has slowed in recent years.” “In addition, we have noticed that as density rises, decline curves, which represent the pace at which productivity diminishes over time, are becoming steeper. In conclusion, the industry’s treadmill is accelerating, which will make output expansion more challenging than in the past.

The EIA appears to concur with some of the most recent estimates regarding peak oil production as we go into the fall. The government agency reported that US shale-producing regions’ oil and natural gas production volumes are expected to fall in September and drop to their lowest levels since May.

It turns out that the sector is being further burdened by rising interest rates. Due to their quantitative tightening cycles, which were started as a result of their stimulus and relief spending packages during the coronavirus epidemic that were fueled by inflation, the Federal Reserve and other central banks have raised the cost of capital and financing.

Everything in the oil and gas business becomes more expensive as a result, from storage costs to investments in exploration and production. More drawdowns in US and global stockpiles could indicate a trend toward higher pricing in the future. Additionally, the greatest economy in the world has experienced significant withdrawals from rising demand, reaching around 17 million barrels since March 2023, according to weekly EIA data.

Higher Prices Ahead?

The most recent oil find in the Niger Delta demonstrated how much bubbling crude there is in the world. All around the nation, the US is likewise covered in the substance. But by preventing a conducive atmosphere for production, the establishment is attempting to make ludicrous peak oil prophecies come true.

Of fact, consumers and businesses pay more because the government imposes high regulatory costs that prohibit greater supply from entering the market. Over the past three months, West Texas Intermediate (WTI) has increased 12%, trading above $80 per barrel on the New York Mercantile Exchange. On London’s ICE Futures exchange, Brent, the global standard for oil prices, has increased by more than 11% since May to more than $84 per barrel due to the peak oil situation. 

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Motorists are paying more at the pump this year because oil accounts for roughly half of the price of a gallon of gasoline. The national average price of a gallon of gasoline has up 20% so far in 2023 and is getting close to $4. Perhaps the present administration in Washington won’t be content until the US completely outsources all of its energy requirements to other countries or relies solely on unreliable windmills that are killing whales.