U.S. oil industry faces hurdles to expand as pressure grows

BILLINGS, Mont. — In the oil fields of northern Montana, industry veteran Mac Mcdermott watched crude prices whipsaw from $75 a barrel in January to more than $120 as Russia pressed its war in Ukraine, then down again when coronavirus worries in China raised the specter of a global slowdown.

Mcdermott said his family-owned company will modestly increase drilling if oil prices stabilize. But for the next few months, he’s waiting on the sidelines.

President Joe Biden’s move to ban Russian oil imports over its invasion of Ukraine was met with Republican demands to boost U.S. production to address high gasoline prices. The White House, too, called for more drilling and cited the war as it shelved Biden’s campaign pledge to curb drilling on public lands because of climate change.

Yet political rhetoric about quickly ramping up U.S. crude output is at odds with the industry’s reality: There’s not enough workers to rapidly expand, scant money to invest in drilling and wariness that today’s high prices won’t last, according to industry representatives, analysts and state officials.

The U.S. doesn’t import much Russian oil and Biden’s administration has effectively halted new oil or natural gas lease sales from federal lands and waters. But it’s approved almost 4,000 new drilling permits on federal lands and companies have thousands more stockpiled. White House spokesperson Jen Psaki said companies should use those permits to “go get more supply out of the ground.”

Federal energy reserves account for about a quarter of U.S. oil, with the remainder coming from private, tribal and state land.

Pumping rates overall slowly increased during Biden’s first year as the industry climbed out of the pandemic, when oil future prices briefly dipped below $0 a barrel.

Obstacles to more U.S. oil are surmountable, according to analysts, yet will take months to work through and it could be late this year or early next before a significant production increase materializes.

”It’s going to be a slower ramp up for fields like ours,” Mcdermott said. “Everybody in the industry would say if we have a consistent price, then you know what you would get for an extended period of time and it’s easy to make business decisions.”