US President Donald Trump has urged oil companies to drill more with his statement “drill baby, drill” and most oil investors feel it is not a good move.
Clark Williams-Derry, energy finance analyst at the Institute for Energy Economics and Financial Analysis, said oil prices are still low at the moment and companies are starting to reduce their capital spending.
The US Energy Information Administration reported that the United States recorded the highest crude oil production in history compared to any other country.
In December 2024, oil and gas companies in the country produced more than 13.49 million barrels of crude oil per day, making it the highest production rate ever recorded.
High production rates usually push prices down, benefiting consumers.
However, if prices fall so sharply that they affect producers’ profits, they are likely to stop drilling.
Gasoline prices in the United States are expected to fall by 11 cents in 2025 and 19 cents in 2026, according to forecasts from the U.S. Energy Information Administration (EIA).
Based on the most recent data available, the EIA reports that crude oil prices will account for about 52.6% of the average retail price of gasoline in 2023.
The future trajectory of crude oil prices remains a major factor of concern for investors in the oil and gas industry.
