Oct 11, 2021 - Economy

Oil and gas producers are still holding back

Data: Baker Hughes; Chart: Axios Visuals

Oil and gas prices have skyrocketed this year as energy demand rushes back — but U.S. producers aren’t activating their dormant rigs in droves.

Driving the news: The U.S. added five rigs last week and a total of 30 over the past four weeks, according to Baker Hughes.

  • But the current count of 533 is far off the roughly 790 from just before the pandemic.

Why it matters: Adding to the supply would help keep a lid on the price growth. Rising oil and gas prices translate to higher electricity and gasoline costs, and weigh on consumer spending.

  • But U.S producers are exercising some caution. Some have been burned in the past when they ramped up production only to have prices move down to unprofitable levels.
  • And pressure from investors, governments and the broader population to focus on the transition to renewables has some of the larger oil companies directing more funds to clean tech.

What's happening: Thanks to a supply-and-demand imbalance, oil has doubled since its low last year and natural gas is up about 130%.

What to watch: Whether producers remain cautious in the weeks and months to come, or decide to open the spigot faster — especially as winter heating needs approach.

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