Questioned by US legislators legislators this week, CEOs from the nation’s biggest oil companies took great pains to explain why they have not raised production fast enough to tame rocketing energy prices.
Unlike shale wells that cost $10m or $15m to drill and mere months to yield oil, offshore projects cost billions and rarely come online in less than a decade. This difference in business models explains why it’s so difficult for oil giants such as Shell to quickly ramp up production when geopolitical disruptions such as Russia’s war in Ukraine upend markets.
The Biden administration’s campaign pledge to rid the world of fossil fuels to counter climate change has only complicated matters. White House efforts to curb leasing and drilling permitting in federal waters has crimped the flow of investment into the Gulf of Mexico, a key factor in the energy crunch now under way, Milito said.