As the U.S. bans Russian oil imports, worker and supply shortages may make it hard for American energy companies to fill in the gaps

As America’s ban on Russian oil goes into effect, industry advocates are saying U.S. energy companies are ready to meet the increase in demand for oil. But producers are facing obstacles that will make it difficult to expand their operations quickly.

Pump jacks working just outside of Midland, TX. (Mitch Borden / Marfa Public Radio)

By Mitch Borden

Soon after President Biden announced he was banning Russian petroleum products imported by the United States, supporters of the Texas oil and gas industry were quick to say companies are primed to step up their production. However, issues like labor shortages, lack of investor enthusiasm and supply issues currently face drillers.

Marfa Public Radio’s Bárbara Anguiano spoke to Permian Basin reporter Mitch Borden about the situation. Here’s a quick synopsis of their talk.

Oil production is projected to increase…but it’ll take time

The U.S. Energy Information Agency has projected oil from West Texas is set to drive record-breaking oil production in the coming years. By the end of 2023, America is estimated to produce an additional 760,000 barrels of oil a day. Even though that will make up for the loss of Russian oil, it will take months for producers to drill more wells and get enough crude flowing to potentially offset price increases caused by the ban.

Challenges facing the U.S. oil industry 

According to Andrew Lipow, a Houston oil analyst, there are a few factors limiting companies’ ability to expand their drilling operations. Lipow, along with the CEOs of Pioneer Natural Resources and Occidental Petroleum, pointed to labor shortages challenging the ability of companies to quickly increase production. There are also problems concerning access to frac sand and other supplies needed for oil and gas production. 

Another thing potentially holding companies back from rapidly drilling more wells: the last time oil prices were this high was in 2008, and a few months later the price of a barrel of oil cratered. 

Lipow said, “Their concern is while prices may be high today, if there is a rapid de-escalation or a crash in oil prices then their investment won’t payout.”

The political response to the Russian ban

Even though the ban on Russian oil has received bipartisan support, many conservative lawmakers have taken this moment to criticize President Biden’s efforts to curtail domestic oil production. U.S. Rep. August Pfluger, who represents the Midland-Odessa area, recently addressed Congress and said the president needs to prioritize “Midland over Moscow.”

Pfluger and many of his colleagues want the Biden Administration to repeal its moratorium on issuing drilling permits on federal land and are calling for the reopening of the Keystone XL pipeline. It’s unclear if Biden is receptive to these demands, but earlier this week the president met with industry leaders in Texas to discuss the current situation.

About Mitch Borden

Mitch Borden is Marfa Public Radio's Permian Basin Reporter. If you have any questions about West Texas' energy industry or the Permian Basin email him at mitch@marfapublicradio.org.
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