Texas Ramps Up Oil Production as Gas Prices Reach New Record High
Tue, May 24, 2022
As the Biden administration doubles down on its policies restricting domestic oil and gas production and promoting green energy, Texas is ramping up production and hiring people to work in the industry.
West Texas producers are expected to pump out a record amount of crude next month, and last month Texas saw its highest monthly job growth in the industry in nearly 11 years.
Texas is seen as the model of how to respond and lead during an energy crisis, one those in the industry argue was created by President Joe Biden.
From cancelling federal land and offshore leasing permits, to increased regulation and proposed taxes, to depleting the Strategic Oil Reserves, to turning to foreign oil production, Biden has done everything to hamper, and in many ways, halt domestic oil production, those in the industry contend.
Under the Trump administration, the U.S. became the largest producer of crude oil in the world, led by Texas. Under the Biden administration, within months of implementing a range of restrictive policies, gas prices reached a seven-year-high and inflation reached a 40-year high.
And on Monday, the average price of a gallon of gasoline reached yet another record high. AAA reports gasoline on average costs $4.60 a gallon as of Monday. A month ago, the average price was $4.12 a gallon. A year ago, it was $3.04. The price of diesel, the fuel used by truckers to transport food and other consumer goods across the country, was $5.55 a gallon Monday, up from $3.18 a gallon a year ago. Surging energy prices are in part responsible for 40-year-high inflation.
In some parts of the country, gas prices today are double what they were before Biden took office, and analysts say they’re still going up.
To offset rising prices and meet demand, the Texas oil and gas industry is beefing up production primarily in the Permian Basin. It’s able to do so because the Railroad Commission of Texas, which regulates the oil and gas industry, has been increasingly issuing drilling permits. Last month, it issued 946 original drilling permits, 1,176 permits in March and 732 in April.
Producers in the Permian Basin are expected to increase output by 88,000 barrels per day (bpd) to a record 5.219 million bpd in June, the U.S. Energy Information Administration reports.
With increased production, comes increased jobs – as evidenced by the industry reporting its highest monthly job growth in April in nearly 11 years.
Approximately 5,200 upstream oil and natural gas jobs were added last month, with a total of 190,400 employed, according to Texas Workforce Commission data. Compared to last April, jobs in the industry were up by 26,700, or 16.3%, this April.
“Despite continued policy setbacks and supply bottleneck challenges, oil and natural gas companies are moving forward to meet demand here at home and abroad,” Todd Staples, president of the Texas Oil & Gas Association, said. “These historic job numbers are a sign of strength and, when coupled with the rig count increase of about 58% from last year, are clear indicators of the commitment of the oil and natural gas industry to continue to deliver Texas and American energy security.”
Since the low point in September 2020, the Texas oil and gas industry has added 33,400 upstream jobs, averaging 1,758 new jobs a month.
Job growth months have outnumbered decline months 17 to 2.
The Texas Independent Producers and Royalty Owners Association (TIPRO) points out that the industry is continuing to lead even while the president and Democratic-controlled Congress are intent on working against it.
Last week, the House of Representatives passed a bill along party lines authorizing the Federal Trade Commission to investigate energy companies for alleged price gouging. Only four Democrats joined Republicans to vote against it: Reps. Lizzie Fletcher of Houston, Stephanie Murphy of Florida, Jared Golden of Maine and Kathleen Rice of New York.
“Texas operators are responding to the call to increase production, despite facing numerous challenges, including inflationary pressures, workforce shortages and an adversarial federal policy environment,” TIPRO president Ed Longanecker said. “Instead of politicians interrogating oil and gas executives, making false accusations and pushing for more taxes and regulations on American producers, it’s time to stop politicizing energy security and create a coherent strategy to address our current and future energy needs.”
Longanecker said the bill was another example of “political theater from policymakers unwilling to take responsibility for the impact of their own failed energy policies.
"Prices are not set by some shadowy cabal of companies," he added. "Over the past three decades, there have been more than 100 investigations and lawsuits brought by consumers, the FTC and states' attorneys general alleging such conspiracies in the gasoline market, none of which have shown even a hint of wrongdoing from domestic producers."
TIPRO notes that Texas’ strong industry job posting last month indicates a continued demand for talent and commitment to increase oil and gas exploration and production. Last month, there were 11,313 active unique jobs available. The majority are available in Houston, Midland and Odessa.