Why isn’t Big Oil drilling more as gas prices surge? The answer is more Wall Street than White House
A popular trick at gas stations this fall is to slap a sticker featuring President Joe Biden pointing to the price per gallon and saying, “I did that.” But the real answer has more to with Wall Street than Pennsylvania Avenue.
The root cause of today’s high gas prices isn’t politics: It’s financial pressure on oil companies from a decade of cash-flow losses that have made them change financial tactics. Investment in new wells has dropped more than 60%, causing U.S. crude oil production to plummet by more than 3 million barrels a day, or nearly 25%, just as the Covid virus hit, and then fail to recover with the economy. For an oil-drilling sector that lost 90% of its stock value from 2012 through early last year, it hasn’t been the toughest call in the world.
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