Oil production growth in the USA is restrained by green rhetoric of Biden administration
The United States was one of the main causers of oversupply in the oil market in 2014 and 2018. It also experienced the greatest shock from the fall in demand for hydrocarbon raw materials in 2020. Now the USA slowly restores production, remaining one of the main unknown in the world equation of supply and demand. But Biden administration’s green plans and the global energy crisis stand in the way of the American oil and gas industry.

Since the end of the 2000s the USA from an importer of liquefied natural gas has been turning into a gas-surplus country and one of the largest exporters of natural gas. This transformation was connected with slate production.

The beginning of the 2010s was the time of utopian forecasts in which successful export of slate revolution worldwide and defeat of traditional suppliers of energy carriers was predicted. But time went, confirming correctness of few skeptics who spoke about impossibility of large-scale transfer of slate experience out of borders of the USA.

At the moment production of slate gas is in large quantities made in two countries — the United States and China, besides the real results appeared repeatedly below forecasts in Celestial Empire.
During the commercial success the American slates managed to endure some crises. The first came in 2012. Transfer of the main efforts to production of slate oil became its result. And on the whole slate gas became only a by-product at production of the black gold.

Because of extreme instability which is logical continuation of high dynamism, the American slate production fell off during each large crisis in the markets of hydrocarbon raw materials. Except for, perhaps, 2018, but then it was involuntarily supported by efforts of OPEK+ on production reduction.

In the pre-coronavirus 2019 the USA extracted 930 billion cubic meters of gas and in March, 2020 came to the record indicator in the field of production of oil — 13,1 million barrels per day (slate oil occupied about two thirds of this volume). Growth of production was followed by increase in domestic demand and deliveries to foreign markets.

The States actively export oil though in this area they remain net importers. The greatest progress is observed in the field of export of the liquefied natural gas (LNG) in which the States became one of the leading suppliers in the world.

During 2021 oil production in the USA was restored slowly — from 11 million barrels per day in January to 11,8 million barrels per day at the end of December. However by the present moment this indicator, according to Energy Information Administration of the USA (EIA), was reduced to 11,6 million barrels. According to the forecast, an average value in 2022 is to make 12 million barrels per day.

As oil production increased, gas production also recovered, which in 2021, according to preliminary EIA estimates, reached a record of 1.07 trillion cubic meters. And in 2022 this indicator can grow to 1,1 trillion CBM. It is supposed (proceeding from opportunities of the production installations put into operation) that export of LNG from the United States in the current year will increase by 16% approximately to 119-120 billion cubic meters. Thus, the gain of export opportunities of the American plants will make about 17 billion cubic meters. And it is against the expected growth of domestic demand.

It is worth noticing that the main sales market for the American LNG is China (about 13,5 billion cubic meters in 2021). For the last seven years this country actually doubled demand for natural gas and does not intend to stop. In this regard it is possible to assume that the increase in the offer in the world market will be compensated by the advancing consumption growth. But if to speak specifically about prospects of production of hydrocarbons in the United States, there are some risks.

The first is an increase in dependence of the internal American prices on quotations in foreign markets in process of growth of export capacities. In the IV quarter of 2022 the gas price of Henry Hub updated maximum for this period since 2008. Then it decreased a little but nevertheless remained at least 1,5 times higher than an average values in recent years. This situation frightened a number of American politicians who suggested limiting export.

The second risk is a green course of Biden administration. Demand for hydrocarbon raw materials, a rate for the renewables (R) and electric cars — all these is intention to create «climatic neutral» economy, to reduce in a conflict with need to invest in oil and gas production for satisfaction of the growing requirements. By the way, you should not forget about the stated desire to reduce the volume of coal generation which RES and natural gas have to replace.

The leadership of the USA gives mixed messages to the branch and the bank sphere. There is a need to increase production but increase in production needs money, and investors have no confidence in long-term prospects of hydrocarbon power. Banks don’t have it either.

Besides it is impossible to tell that the leadership of the USA would not like to stimulate increase in production of oil and gas. It repeatedly voiced an idea that it is required to beat down high prices of raw materials, and for this purpose it is necessary to increase the offer. These statements (and also the decision to unpack a part of strategic reserve of black gold) are connected with breaking records prices of oil products in domestic market of the United States and the population asking uncomfortable questions. Sales of electric cars, of course, grow in the USA (to 700 000 in 2021), but most of motorists still needs gasoline.

If Biden administration had effective tools which could stimulate increase in production of hydrocarbons, it would have already used them. And in reality we observe that even high prices of oil do not force the extracting enterprises increasing its production by former rates (in 2018 this indicator grew by 2 million barrels per day). It is almost impossible to overcome this state of affairs at preservation of green rhetoric.