I have a different take as an oil and gas economist for decades and conducting many thousands of economics for projects .
Oil companies have a portfolio of many projects. They seek stability of prices first and foremost, high prices secondarily for projects.
Projects are always examined for approval by achieving threshold returns, no matter what the price happens to be.
Higher prices mean more activity, sure, but are not necessarily as important as a degree of confidence that prices will not be volatile over the time a project's return on capital is obtained.
Even $40 oil is not a doom scenario for integrated oil companies, as at that price, the feedstock for their refineries and chemical plants make profits there outstanding. And the dirty secret for oil companies that make profits from foreign sources, is that a cost recovery mechanism exists which permits the company to have their costs covered prior to profit taking, so it is a less risky proposition for the company to undertake. The host country instead takes it on the chin during low oil prices in revenue.
That latter effect results in less drilling domestically and more overseas during low crude prices, and vice versa during high crude prices.
My focus is on the Domestic upstream oil industry. I have turned down opportunities to work overseas and concentrated my efforts here. If energy self-sufficiency is the goal, decimating the upstream end of the domestic oil industry is not the way to achieve it. Yes, the multinational larger oil companies will ride that out just fine, at least at the boardroom level, but the effects of busting a booming domestic industry in mid stride have always been that good people leave the industry, equipment is scrapped, despite being viable, and in the long run, to get those hands back, it's going to cost a lot more. My first 'bust' was in '82, and there have been a few since. We don't need one now, especially when you consider the decline curves I mentioned.
Coming on the heels of the Biden anti-oil era, and having areas reopened or freshly opened to drilling, crashing the price will mean lost opportunity to make new discoveries and exploit that window of opportunity.
If we get another Democrat in office, we're stuck with reduced production (80% production decline from IP on horizontal wells drilled until the price crash, which happens in the first couple years, not replaced by constant new production brought on line*) and undeveloped prospects that may not be reopened to drilling in our lifetimes.
*Please note, this is the salient difference between the bust of say, 1986, where the vast majority of wells were vertical wells, which declined from IP relatively slowly, no where near as fast as the first two year decrease in production from Horizontal wells in unconventional reservoirs.
