With the price of oil so high, though, I wonder if more dramatic changes to the market are coming, including massive numbers of oil wells on private land and fracking nearer to cities.
As a result, new wells account for an outsized fraction of production, and considering all of the costs involved (including high constant costs per well regardless of pumping output), new wells are the cheapest source of oil. Without new wells, the average price to produce a barrel of oil goes up substantially.
The US oil industry is starting the new wells they have in their backlog, but markets are ridiculously forward-looking and you should note that we are talking about the price of futures, not spot price today. Markets are anticipating having a much harder time getting further oil wells, and they are anticipating that the largest supply of currently unexploited oil is on public land. Put another way, current production doesn't involve much federal land, but future production expansion will largely have to happen on federal (and state) land.
The number of wells on federal land has been declining over its history: we are at 38,000 leases in 2020 compared to 55,000 in 2008 (per the BLM), and data presented to congress suggests that in the past, 25% of oil production was on federal land. Today, the number is 8%. That supports the theory that new oil wells will largely have to be started on federal land rather than private land.
This is a particular policy where extrapolation from current data undervalues the effect of the policy.
Of course, this aggregate number doesn't disambiguate the cause of the decrease in production.
[1] https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M...
Nov 9 - OPEC Says To Biden: If You Want More Oil, Pump It Yourself https://www.forbes.com/sites/arielcohen/2021/11/09/opec-says...
> OPEC and its oil-producing partners have rebuffed President Joe Biden’s calls for increased production amidst rising fuel prices, retorting that if the United States believes the world’s economy needs more energy, then it has the capability to increase production itself. The OPEC+ alliance, made up of OPEC members led by Saudi Arabia and non-member top producers guided by Russia, approved an increase in production of 400,000 barrels per day for the month of December.
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Dec 14 - US urges domestic oil producers to raise output https://www.argusmedia.com/en/news/2283072-us-urges-domestic...
> US energy secretary Jennifer Granholm told oil executives today the administration was not "standing in the way" of oil and gas production and supported increased output. She noted that the administration has approved drilling permits on federal land at a faster pace than the prior administration, while pursuing other policies that could bring down retail gasoline prices that in the week ending 13 December were still just 10¢/USG shy of a seven-year high.
> The change in tone comes amid growing frustration from US oil executives, who have bristled at what they see as a lack of support from the administration. Biden in one of his first acts in office blocked the 830,000 b/d Keystone XL pipeline and spent this summer unsuccessfully asking Opec+ to accelerate plans to boost output. US independent producer Pioneer Natural Resources' chief executive Scott Sheffield last week said he has yet to meet another oil executive who has received a call from the administration asking them to increase drilling.
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Mar 2 - More oil supply could stop massive price spikes. But US producers won't fill that gap https://www.cnn.com/2022/03/02/energy/us-oil-production/inde...
> "They can't find people, and can't find equipment," said Robert McNally, president of consulting firm Rapidan Energy Group. "It's not like they're available at a premium price. They're just not available." As a result, US oil production is just under 12 million barrels a day, 8% lower than in 2019. Experts say the industry is unlikely to get back to that pre-pandemic level this year — and that the last decade's rapid increases in US oil production, typically double-digit percentages year-over-year, are probably a thing of the past.
> Another factor likely making oil companies cautious about investing too much, too fast is 2020's oil bust. The early days of the pandemic drove oil briefly to negative pricing, resulting in a spate of bankruptcies across the industry.