“Drill, Baby, Drill” Is A Slogan, Not A Business Plan

If you’re anticipating a big oil and gas drilling boom to happen during the coming second term for President-elect Donald Trump, you would do well to temper that expectation. Those who have been loyal readers of my stories over the years know my firm belief is that government policy drives much of what happens in the energy space, and that hasn’t changed.

But companies’ business plans are set to respond to and exploit both public policies and market realities, and that is not going to change. Thus, while federal energy policy actions in a 2nd Trump term will certainly be more pro-oil and gas business than they’ve been during the Biden/Harris years, company management teams will remain bound by market realities that strongly advocate against mounting a new US-focused drilling boom.

Powerful Market Forces Shape Drilling Plans

Across the last several years, US oil and gas upstream companies have steadily diminished their drilling budgets, even in times of relatively high oil prices. While 2020 was an anomaly due to the COVID pandemic, it is fair to point out that the Enverus domestic count of active drilling rigs has steadily dropped across the last three years. It has fallen 15% in the most recent 12 months despite the domestic WTI index price hovering in a range of $70-$85 per barrel.

Enverus domestic US rig count as of 11.11.2024.Enverus

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The current number of active rigs as of this writing - 615, per Enverus - is less than half the number of rigs that were active across most of Trump’s first term in office. Those years represent the latter stages of the big drilling and fracking boom in the prolific Permian Basin. The Permian is of course the largest oil producing basin in the US, as well as its second-biggest natural gas basin, behind only the Marcellus/Utica region of the Appalachian Basin.