Frontier Watch | Is the U.S. Refusing

Earlier this year, after President Joe Biden first called for OPEC to increase production, Texas Governor Greg Abbott (GregAbbott) responded angrily to Biden, telling him to "stay away" and let American companies solve the supply problems that are driving up oil prices. With Biden taking various actions against oil, such as terminating KeystoneXL pipeline projects and suspending oil and gas extraction on federal lands, the media has repeatedly highlighted the awkward relationship between the Washington government and the right-leaning oil industry.

However, political inconsistency alone cannot prevent the oil industry from profiting from high oil prices, so this is not the only reason, or even an important reason, for the US oil industry to restrict production in the context of soaring crude oil and petroleum product prices. In fact, there are at least two more important reasons for this production restriction.

First, shale gas drillers, in particular, are making more lucrative profits at current production levels. According to Deloitte calculations cited by Bloomberg's Kevin Crowley (KevinCrowley), it concludes that U.S. shale oil operators' current profits are the highest since the shale oil revolution began. Shale block development is called a revolution because it has happened so quickly, and it has happened so quickly because it has been very profitable for a period of time.

Shale drillers, especially Volkswagen Drilling, have made higher profits in the past few years, and shareholders are certainly happy because everyone is doing their best to increase production during the money-burning phase of the previous shale revolution, which led to the last two price collapses.

Another reason for shale companies to refrain from mining is OPEC.

The group has twice shown that it has the ability to send shale gas prices plummeting, which, while it may hurt its members, seems to hurt U.S. shale producers more. After several waves of bankruptcies, shale drillers appear to have decided to operate differently, betting on more lucrative profits rather than higher production.

Still, production in the U.S. shale region is rising. Reuters reported earlier this week that production in the Permian Basin is about to hit a record and will exceed pre-epidemic production levels next month. This is because the Permian Basin has been the darling of the shale industry for many years, with the lowest production costs in some areas and attracting more capital than other shale industries.

Total shale gas production is also rising. According to the latest weekly industry update from the Energy Information Administration, the United States produces 11.5 million barrels of crude oil per day, ranking first in the world, up 1 million barrels year-on-year. That's down from the previous record of 13 million barrels, but it's not a small amount.

And, perhaps to some people's surprise, the auto industry is not averse to working with the federal government to lower oil prices. Not all the news from the shale oil industry is the same, but they are indeed exciting.

For example, the CEO of Occidental Petroleum Corporation (OccidentalPetroleum) bluntly told Biden to "withdraw" from the US oil industry, instead of calling on OPEC to increase oil production in order to make US oil prices lower. Earlier this month, the company's chairman, Scott Sheffield (ScottSheffield), said Biden "has to retract his rhetoric about federal leases".

Vicky Horb (VickiHollub) of Occidental Petroleum Company was more cautious this week. In response to a question about whether Biden was wrong to call for OPEC to increase production, she said, "If I want to solve the problem, I will start to do the immediate thing first. Instead of seeking external forces."

"I think we should first seek changes at home and use domestic forces to solve problems. If we can't, we should contact and cooperate with other countries," Huobu told CNBC."

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