After three and a half years of recovering from COVID-era losses, U.S. oil production hit an all-time high this past week.
Domestic crude oil production was reportedly up to 13.2 million barrels per day, entirely wiping out COVID-era losses of more than 3 million barrels per day.
The good news for the industry follows a $60 billion deal between ExxonMobil and oil producer Pioneer Natural Resources, as well as Wall Street for cost containment and high stock dividends and consolidation like the Exxon-Pioneer deal, CNBC reports.
Here are seven important factors that played into domestic oil’s recent history and its future:
As recessions like the one in 2020 end, oil demand slowly rebounds. The price per barrel actually shot up from less than $15 to $120 in 2022 before leveling out at about $90.
The U.S. production rebound is more concentrated in the Permian Basin of Texas and New Mexico, where production costs are among the lowest in the country. Locally, offshore oil drilling in the Gulf of Mexico recovered to 2 million barrels a day, but hasn’t grown.
Oil companies are also spending less money. U.S. oil companies cut capital spending to $106.6 billion last year from $199.7 billion in 2014, according to Statista, contributing to the decline in oil production and arguably delaying the recovery. And they put that money to work paying higher dividends and doing stock buybacks. Read more.