US Oil Production under Bush, Obama, and Trump

Political leaders during the course of history have influenced the nature, use, and prices in the energy industry. The tenure of American Presidents George W. Bush, Barack Obama and Donald Trump are marked by irony and inconsistency when it comes to the policies and their effects on the oil and gas industry. In this blog, we shall pay special attention to US Oil production under the presidentship of Bush, Obama, and Trump.

For instance, ex-President Obama had presided over the biggest increase in oil production in American history. The irony is that he was widely seen as an anti-fossil fuel President! It need not be stressed enough that the oil and gas industry is no stranger to political influence. But what effect does this influence have on crude’s prices and production? Let us take an aerial perspective of the scenario of oil and gas industry during the political leadership of Bush, Obama and trump respectively.

When President Bush – regarded as a pro-drilling and oilman – first took office in 2001, the US field production of crude oil stood at 5.8 million barrels per day (bpd). At the end of his first term in 2005, the production stood at 5.4 million bpd, with a low of 3.8 million bpd in August 2005. In 2008, at the end of his second term, the average production was around 5 million bpd.

While he undertook a number of industry-friendly policies, the insufficient increase in supply couldn’t meet the increase in demand. He created the National Energy Policy Development Group (NEPDG), tasked with solving the problem of heavy dependence on oil from the Middle East. He also called for drilling in the Arctic National Wildlife Refuge, which is a protected area. He provided tax incentives for the purchase of high-mileage cars and proposed easing regulations on refineries and pipelines. Vast areas of public lands in the US were leased for oil and gas development, like the Wyoming Range and Roan Plateau.

President Obama, in contrast, was not generally seen as a bosom friend of the oil and gas industry. His administration’s move to block the Dakota Access and Keystone XL Pipeline stand out in particular. It also blocked offshore drilling in the Arctic, while putting additional regulations on the fossil fuel industries. Ironically, he presided over rising oil production in his first 7 years in office (from 2009 to 2016), an increase from 4.9 million bpd, when he took office, to 9.4 million bpd.

This, supposedly counter-intuitive increase, can be explained by certain factors. One is that while the production has increased a lot, it has mostly occurred on private properties, which is outside the ambit of the government’s policies. Secondly, the results of policy changes by the government are not witnessed until many years. For example, the technological changes in drilling technology like hydraulic fracturing, (fracking), which allows extraction of oil and gas from previously unexplored shale formations led to a shale oil boom. This contributed in driving down the price of crude oil in recent years. When President Bush started his first term, the benchmark price of Brent ranged around 30 dollars/barrel, which eventually decreased in the first few months. The WTI crude oil price ranged around $50-75 per barrel till the end of his first term. His second term witnessed a continued increase, with prices crossing $100 per barrel. During Obama’s first term, the prices increased further until the global financial crisis. In January 2009, it was $48 per barrel and touched $124 in April 2011. In the past few years, crude oil prices have experienced a free fall. From $110 per barrel in June 2014, prices dropped to around $29 in January 2016.

Quite interestingly, the oil and gas policy outlook seems to have come a full circle under President Trump. While it is too early to tell, he has taken a slew of decisions related to the oil and gas industry. He backed out of the Paris Climate Accord and gave a go-ahead to the Keystone XL and Dakota Pipelines. He even proposed selling off 270 million barrels of oil from the Strategic Petroleum Reserve (a cushion against global price shocks and supply disruptions) of 687.7 million barrels, on top of the existing 190 million barrel drawdown from 2018. This has created a noticeable friction with the OPEC, as it would slow down their efforts to reduce global inventory levels which almost at record highs. He also plans to increase imports from Western hemisphere nations like Canada, Mexico, Brazil, and Venezuela. It is also important to note that former Exxon CEO is the present Secretary of State in his administration which hints that Oil and Gas industry forms a prime area of focus in his regime.

Since he remains to be a political wildcard, major companies are being cautious in his approach. While President Trump is a vocal proponent of fossil fuels, his foreign and trade policies are likely to have an equal if not bigger effect on the oil and gas industry by influencing the supply and demand for US oil and natural gas. But how far he will succeed, only time will tell.