Reply to $7/gallon gas is coming

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[quote=Anonymous][quote] Unlike in most petrostates, where state-owned firms dominate drilling, American oil is pumped by private firms, which make their own decisions. They have increased output by so much since 2022, when Europe started shunning Russian barrels, that America is already the largest producer of crude in the world. In October it cranked out a record 13.5m b/d, up from 11.5m when the Ukraine war began. To go further, America’s oilmen need a convincing reason.
They may not get one. America’s shale oil, which accounts for most of its output, used to be pumped by thousands of tiny, trigger-happy firms. A wave of mergers and failures since the late 2010s, when overproduction caused prices to crash, means that the industry is ruled by a few large companies that hate risk. Their shareholders require stable dividends and double-digit returns. Moreover, dearer capital comes on top of rising costs: as production has surged the best wells have been depleted. Shale firms therefore have little incentive to drill more unless oil prices reach $89 a barrel, according to a survey by the Kansas City Federal Reserve. At less than $70 a barrel today, West Texas Intermediate (WTI), America’s oil-price benchmark, is far from that threshold.

The market looks unlikely to move in a helpful direction for Mr Trump. Not only is global oil supply plentiful, but members of the Organisation of the Petroleum Exporting Countries (OPEC) have plenty in reserve. At the same time, demand is weak because of tepid global economic growth and the replacement of petrol-powered cars by electric vehicles. No wonder the Energy Information Administration (EIA), a federal agency, expects [b]America’s oil production to rise by only 0.6m b/d by 2028. On December 5th Chevron, America’s second-largest energy firm, slashed its capital-expenditure forecast for 2025[/b].[/quote]
Economist.

Bottom line it will be very talk to increase oil production. OPEC has plenty of capacity. Trump would have to pay oils companies to drill and produce more oil.
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