U.S. crude and natural gas production soared to record highs in 2023, presenting a complex political challenge for President Joe Biden as the 2024 presidential campaign gains momentum. The industry’s increased output raises questions about its ability to reduce emissions and navigate the evolving political landscape.
Following three years of upheaval due to Covid-19 lockdowns and a European energy crisis, the U.S. oil and gas sector experienced a significant realignment in 2023. The latest data from the U.S. Energy Information Administration indicates a 6% annual increase in oil production and a 5% rise in natural gas production compared to the previous year. By September, daily oil production exceeded 13 million barrels, setting a new record.
Experts predict that record U.S. production will continue to dominate headlines in 2024, with S&P Global analysts suggesting that the country’s output could offset OPEC+ production cuts planned for the year.
President Biden finds himself in a delicate position, facing conflicting pressures from both sides of the political spectrum. While he confronts Republican accusations of impeding oil and gas drilling, he must also appeal to the progressive wing of his party by demonstrating a commitment to addressing climate change and transitioning away from fossil fuels. The outcome of the upcoming election could significantly impact federal agencies’ efforts to establish methane emissions regulations for the oil and gas industry, with global standards for greenhouse gas emissions potentially influencing U.S. companies’ decisions.
Major oil companies are grappling with competing demands as well. Elevated capital costs, high interest rates, and other challenges have hindered their ability to meet Wall Street earnings projections, despite the surge in production. Some European giants, such as BP and Shell, have scaled back their investments in lower-carbon business segments due to declining returns. Meanwhile, U.S.-based companies like Exxon Mobil and Occidental Petroleum are making substantial investments in carbon capture initiatives while simultaneously channeling funds into their fossil fuel operations through extensive mergers and acquisitions.
Key Focus Areas for 2024
1. Methane Rules: The Biden administration is expected to publish new regulations targeting industry methane emissions in 2024. The Environmental Defense Fund’s Jon Goldstein anticipates the release of final rules by the Pipeline and Hazardous Materials Safety Administration, addressing methane emissions from pipelines.
