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High costs and rising demand have helped U. S. oil makers make record profits despite global efforts to encourage greater use of renewables and electric cars.
By Rebecca F. Elliott
Photos via Désirée Rios
Reporting from Midland, Texas
For all the attention on the energy transition, the U. S. oil industry is booming, extracting more crude oil than ever from underground shale rocks in West Texas.
After years of wasting money on horizontal drilling and hydraulic fracturing, the corporations that helped the United States be the world’s most sensible oil manufacturer have reached a monetary milestone and are generating healthy profits. Shares of some oil and fuel corporations, such as Exxon Mobil and Diamondback Energy, are at or near record highs.
The industry’s recovery from the fatal losses caused by the Covid-19 pandemic is largely due to market forces, even if Russia’s war in Ukraine has helped. Oil prices have averaged around $80 per barrel since the beginning of 2021, compared to around $53 over the past four years.
The fact that the price and demand for oil have been so strong suggests that the shift to renewable energy and electric cars will take longer and be bumpier than some climate activists and world leaders once expected.
The good fortune of oil companies is not just the result of emerging stocks. Under pressure from Wall Street on their financial returns, companies that survived the 2020 oil price crash have sometimes abandoned the debt-driven expansion strategy that fueled the United States shale boom.
Many have reduced expenses and costs through layoffs and greater automation of their operations.
Since 2021, oil and fuel wells in the lower 48 states have generated more than $485 billion in loose coin flow, with the coins left after operating expenses and new projects, according to estimates from Rystad EnergyArray, a studies and consulting. Over the past decade, the industry spent about $140 billion more than it took in.
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