Oil and gas rig count dropped by one-fifth in 2023
Breanne Deppisch
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The number of United States oil and natural gas rigs dropped by 157, or about one-fifth, in 2023, according to new data released Friday by energy services firm Baker Hughes, reversing course after two years of growth.
The U.S. added two oil rigs and no natural gas rigs in the week ending Friday, bringing the count to 622, according to Baker Hughes, whose report has long served as an indicator of future output.
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The U.S. added 193 oil and gas rigs in 2022, and 235 oil and gas rigs in 2021, per the firm.
The decline in drilling rigs comes amid sustained criticism from the industry and Republicans that the Biden administration has discouraged domestic fossil fuel production.
Yet oil production is at an all-time high, above 13 million barrels per day in December, according to the Energy Information Administration.
The record-high output does not fit well into the messaging promoted by either party. It complicates accusations from Republicans that President Joe Biden has carried out a war on energy, and it runs counter to Biden’s campaign trail pledge in 2020 to “transition from the oil industry.”
Republicans have been sharply critical of the Biden administration’s actions on energy production, including its decision to ban oil and gas drilling on 13 million acres in Alaska’s National Petroleum Reserve, the cancellation of seven planned lease sales in Alaska’s North Slope, and its proposed change to its Public Lands Rule that would allow it to include conservation and restoration in its existing “multiple use” framework that governs the use of federal acres.
Domestic oil producers have also complained about these policy actions, which they say have held them back from investing in additional production.
Most recently, the administration sparked anger in publishing its five-year leasing plan that authorized just three offshore oil and gas drilling sales to be held in the Gulf of Mexico through 2030, the lowest number of sales in the history of the leasing program.
At the same time, Biden’s environmentalist allies have been dismayed that he would allow any lease sales after pledging on the campaign trail not to do so, including the administration’s encouragement of oil companies to ramp up short-term production and increase rig counts following Russia’s invasion of Ukraine.
Oil and gas prices are expected to drop further in 2024, thanks to weaker global demand for crude and the record U.S. oil production.
Markets have also recovered from some of the shock surrounding Russia’s invasion of Ukraine, which sent oil prices soaring as high as $134 per barrel, and U.S. gas prices rising to a record-high national average of $5.02 per gallon.
The gas price tracking company GasBuddy estimated this week that U.S. gas prices will fall to an average of $3.38 per gallon in 2024 — a 13-cent drop from 2023, and a 57-cent drop compared to average prices in 2022.
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“I think some of the shockwaves from Russia’s war in Ukraine have continued to fade into the rearview,” GasBuddy’s head of petroleum analysis, Patrick De Haan, told the Washington Examiner in an interview.
That will “give a little bit more breathing room for oil prices to be lower this year,” he added.