Why US oil companies are not riding to Europe’s rescue

“The model has completely changed,” he said.

Oil executives also argue that they are spending a lot of money on new oil and gas production, but that inflation is undermining their efforts. According to RBN Energy, a Houston-based research firm, spending on exploration and manufacturing will increase by more than 20% this year, but about two-thirds of that increase will go towards paying higher prices for labor, materials and services, among other costs.

“It’s a bit of a sticker shock because we’re seeing inflation across the industry,” Jeff Miller, chief executive of Halliburton, who drills wells and performs other services for oil companies, told analysts in a recent conference call.

Smaller private companies, financed by private equity, are responsible for much of the new business. According to the Dallas Fed survey, the median growth rate for companies producing less than 10,000 barrels per day was projected at 15% this year, compared to only 6% for companies producing more than 10,000 barrels per day. .

Bigger oil companies complain that even if they wanted to invest more, it would be difficult because Wall Street is not keen on funding new fossil fuel projects. Some investors worried about climate change choose to invest their money in renewable energy, electric cars and other assets instead.

It’s not that investors have become environmentalists. Many have calculated the numbers and concluded that the recent hike in fossil fuel prices will be short-lived and that it is best to invest in companies and industries that they believe have a better future.

“If you are an investor, has your vision for the next 5-10 years really changed? I think the answer is no, “said Amy Myers Jaffe, CEO of the Climate Policy Lab at Tufts University’s Fletcher School.” History tells us that oil shocks accelerate the shift to alternative energy, not the other way around. “

Many oil executives also complain that the future of their industry is clouded by political and regulatory uncertainty. They acknowledge that Mr. Biden has asked them to produce more, but fear that his administration will return to emphasize the need for less oil and gas when prices fall.