This article was originally published on The River of Lost Souls and is republished here with permission.
When he was elected, President Donald Trump promised that he’d achieve American energy dominance by rolling back regulations on oil and gas extraction, thereby bringing jobs and prosperity back to the then-busted energy communities of the West.
Now, two years into his tenure, it appears superficially as if he’s delivered on his promises. A flurry of environmental protections have been rescinded successfully, though some attempts have been stymied by the courts. U.S. crude oil production is higher than it’s ever been. And national media outlets have suggested that Trump’s rollbacks have rescued the energy economy from Obama’s stifling regulations: “Driven by Trump Policy Changes,” a recent New York Times Magazine header reads, “Fracking Booms on Public Lands.”
But a deeper look at the statistics reveal that while drilling has ticked back up since 2016, the current oil and gas “boom” remains a mere shadow of the frenzy that occurred under Obama’s reputedly burdensome policies, and the recent comeback has very little to do with Trump’s rollbacks. It’s a matter of correlation rather than causation.
Something that often gets lost amongst the thicket of rhetoric around energy independence and dominance, fracking booms and environmental policy, is the fact that oil and gas, like all marketable commodities, generally follow laws of supply and demand. As demand rises relative to supply, so do prices. And as prices increase, producers drill more wells, which is the most expensive, labor-intensive, and arguably the most disruptive and destructive phase of hydrocarbon production.
An oil and gas boom is really a surge in drilling, not production (though the former ultimately leads to the latter). If prices crash, drilling slows, jobs are lost, the oil patch quiets a bit but production continues from existing wells. This is why the rig count — not production figures, amount of leased acreage or even the number drilling permits issued — is typically considered the best metric for gauging the health of the industry, and the harm it’s doing. Rig counts faithfully follow the price of oil and gas — if prices go up, the rig count will too, without fail.
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