The US Isn’t Amping Up Oil Production Quickly Enough

The US Isn’t Amping Up Oil Production Quickly Enough
Theodora Lee Joseph, CFA

over 1 year ago1 min

The price of a barrel of oil (black line) has been rising fast in the last couple of years, taking it to highs not seen since 2012. And while US drillers have been increasing the number of active rigs, you can see from the blue lines above that they’re not moving quickly enough. Higher costs, supply bottlenecks, and a historic lack of investment have made sure of that.

That’s worrying because demand is poised to go into overdrive, with Europe cracking down on Russian exports and the Chinese government easing up on lockdown restrictions. And the only other producers capable of boosting output sufficiently to meet demand are the members of OPEC, which just reiterated that they don’t intend to increase production any more than they were already intending to. It’s in the members’ own economic interests to keep the oil price high, after all.

That means oil producers’ stocks might have much further to rise, even after a pretty exceptional run. So if you want to buy in – and have no compunctions about supporting the fossil fuel industry – you can invest in US exploration and production via the iShares U.S. Oil & Gas Exploration & Production ETF (ticker: IEO, expense ratio 0.42%). If you fancy more exposure to the European majors, consider the iShares Global Energy ETF (ticker: IXC, expense ratio 0.43%).



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