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Your guide to what the 2024 US elections mean for Washington and the world
Cutting red tape, letting loose, removing barriers – these are all great business-friendly policies. They are working wonders in industries that were previously restricted by regulation. But there is little evidence to suggest that this is the case for fossil fuels in the United States. This refers to the efforts of President Donald Trump Accelerating oil and gas projects It will deliver a trickle, not a flood.
Oil producers have been “drilling, drilling, drilling” for some time. In 2024, the United States oil Its average production is 13.2 million barrels per day, making it the largest oil producer in the world. That's two and a half times what the country was producing in 2008. Gas supplies in the United States also nearly doubled during that period.
It is true that this fast pace cannot continue forever. The industry will add an additional 270,000 barrels per day on average in 2025 and 2026, according to consultancy Argus Media, roughly a quarter of what was squeezed in 2023. But this largely reflects the fact that much of the best acreage has been… Already cultivated. exploited.
Trump policies, such as encouraging drilling in US coastal waters, will open up new areas. Even if it has exploitable resources, the time it takes to develop the project extends beyond a single four-year presidential term. This is not a short-term solution.
Unfortunately for Trump, what is preventing the flow of oil is not red tape, but low prices. Producing oil from shale formations in the United States is relatively expensive. Companies need prices to be between $60 and $80 per barrel if they want to cover all their costs and pay dividends, estimates Stifel's Christopher Whitton.
Shale oil is also very sensitive to commodity price movements because, unlike traditional projects in which a significant portion of the cost is paid upfront, maintaining shale oil production requires ongoing spending. For example, the record low price for natural gas in the United States in 2024 has already reduced production.
This limits Trump's room for maneuver, at least regarding oil. Gas may be a little more responsive, as there is some hope that strong demand, not least from data centres, and the resumption of permitting LNG exports, will lift domestic prices. This would help producers justify more exposure.
In the current situation, the oil market is not in short supply. A Sparkling China Translates into weak demand. OPEC+, which wants prices to remain high, is concerned enough that it is effectively holding up supply. This means that any increase in US oil production will likely lead to lower prices and therefore be short-lived. The only thing that flows in the oil patch is rhetoric.
