Great News From The Oil Patch.
This week we’re going to get out of town. Away from Wall Street, and for that matter away from Pennsylvania Avenue.
I don’t know about you, but I’m tired of the petty bickering and doomsday talk, that has become our national conversation.
It’s time to change things. It’s time to go out and see how the real economy is doing. What’s up out in the American heartland.
Today we’re going to hit the dusty lease roads in Texas and New Mexico. The high desert country, that sits atop of the world’s greatest natural wonder. The oil fields of the Permian Basin.
For years this has been one of the premier sources of energy for this country, but it’s just about to hit some all-time, historic levels of energy production.
Now our story begins in those halcyon days of 2019. The time before the Pandemic, before economic lock-down. These were great times for the oil companies.
Nationwide over 1,000 drilling rigs were at work. Bringing new sources of oil and gas online. And creating the largest oil-producing country in the world. A position incidentally, that America still holds.
But, as you know that all changed with the advent of the novel Corona Virus-19, and the reaction by governmental leaders to shut down America.
After shutting down rigs throughout the Pandemic year of 2020, the oil industry came into Joe Biden’s inauguration in January of 21 with just a third of the operating rigs they had back in 2019.
And this may sound counter-intuitive: but during the Biden Presidency, there is a miracle happening in oil town.
I know it’s hard to believe. In spite of being the most anti-oil President in memory. A president who considers it an accomplishment to shut down pipelines, and close oil company’s leases. The American Oil Patch is beginning a true renaissance.
Now, unfortunately, the result of all of this politicking has been that America now only produces about 95% of the oil and gas we need to operate this economy. That’s right we’ve got a 5% deficit in oil and gas demand versus how much this country can currently produce.
But undeterred oil companies have continued to “Build Back Better,” to use a well-worn phrase. And in spite of all those political headwinds, American Oil workers have strapped on their hard hats and gone back to work. Building a true colossus out in the dusty reaches of this country.
The oil rig count has nearly doubled since Biden became President. A remarkable feat all things considered. And new wells are once again tapping into those incredible reserves, like the Permian Basin.
But it’s not just the number of producing and exploratory wells, it is the new technology behind those wells which is truly remarkable. You may visualize a standard oil, like I did, as one in which a well is drilled straight down and hopefully reached its target.
But that’s no longer the case. Today once a well has reached the desired depth, it can then turn out, horizontally. Going a mile or more underground. Reaching a vastly further distance than ever before. Making that rig you see on the surface, cover an incredible underground distance.
All of this to say, that according to the US Energy Department’s best estimate by next year, 2023, oil production in the US should rise by about 5%.
To a new all-time historic high production. And also roughly equaling that 5% shortfall we are currently experiencing in oil and gas production.
Does that mean that the US will no longer import foreign oil? Not likely, as we may still want to use certain specific kinds of oil, that another country may produce more economically.
But what it does mean is that much of the price pressure that were experiencing at the pump should subside.
Of course, we will still need some help out of Washington and the various statehouses. Hopefully, they will stop producing such outsized anti-oil regulations and taxes.
If these “leaders” will just get out of the way, the American people and the American oil and gas industry can take it from here.
And that’s the moral of our story. America’s strength and power do not come from the halls of government bureaucracies. But from the hard-working men and women who make up this nation. Many of whom live in fly-over country.
Like those oil workers.