With gas prices climbing to $4 a gallon, why is the US drilling rig count actually going down?

August 21 – Recent reporting from Baker Hughes, an energy technology company, has shown that the total active drilling rigs in the United States fell for the 10th time in the last 11 weeks, declining by 5 to 675. 

At this time last year, there were 756 drilling rigs in the US. 

Why aren’t we drilling for oil and natural gas in this country?

Pat Ryan of NewsTalk 103.7FM pointed out, “Last guy, we were in good shape and energy independent. This guy, here’s another piece of bad or challenging news.”

Attorney Clint Barkdoll said, “This is an interesting story because the other thing to put into this backdrop, a couple of weeks ago, the reporting was that US domestic oil production hit an all-time record in 2023, which is totally contrary to all of the news and information reporting that we’ve had this year. But yet as you’re pointing out, the number of wells keeps declining and I’m not sure how to reconcile that. Are the ones operating just that much more efficient? We know oil prices are going up and typically when oil keeps increasing like this, that’s when you see these drills come back online.”

Also it was announced this morning that at the G20 Summit next month in India, President Joe Biden is apparently going to ask for a meeting with Saudi Arabia. 

Barkdoll said, “Undoubtedly, oil production is going to be part of that discussion and agenda as well. There’s some local gas stations now where your gallon of gas is over $4. So, it’s a problem, needless to say.”

Michele Jansen of NewsTalk 103.7FM suggested, “I think we can thank the Inflation Reduction Act for this claim. I mean, now you have Joe Manchin, screaming and crying about the bill they say he helped to craft because he was key to getting that passed and this is a climate bill. It has nothing to do with reducing inflation. What are these companies going to do? They’re looking down the road. They’re also already seeing how their ability to get financing to keep these operations going or to start new operations is going to be impacted by all the rules, regulations and law that was passed with the so-called Inflation Reduction Act, the green bill, by Joe Biden. You’re not going to have companies willing to take these risks when they see electric cars and they see all the forced mandates on getting rid of all the greenhouse emissions by ridiculously short timeframes. I wouldn’t invest in it. They’re not going to either. I think that’s the biggest reason.”

Barkdoll agreed, “That’s undoubtedly part of this. That might be the explanation because when you see oil prices increasing, you would think that would put more wells back online, but these companies may be looking at the long term investment return and if oil usage keeps getting stripped down in light of legislative efforts, you can imagine the decision in the corporate boardroom. Why would we keep investing in this drilling?”