HOUSTON — Even as oil and gasoline prices rise, industry executives are resisting their usual impulse to pump more oil out of the ground, which could keep energy prices moving up as the economy recovers.
The oil industry is predictably cyclical: When oil prices climb, producers race to drill — until the world is swimming in petroleum and prices fall. Then, energy companies that overextended themselves tumble into bankruptcy.
That wash-rinse-repeat cycle has played out repeatedly over the last century, three times in the last 14 years alone. But, at least for the moment, oil and gas companies are not following those old stage directions.
An accelerating rollout of vaccines in the United States is expected to turbocharge the American economy this spring and summer, encouraging people to travel, shop and commute. In addition, President Biden’s coronavirus relief package will put more money in the pockets of consumers, especially those who are still out of work.
to less than zero.
That bizarre day seems to have become seared into the memories of oil executives. The industry was forced to idle hundreds of rigs and throttle many wells shut, some for good. Roughly 120,000 American oil and gas workers lost their jobs over the last year or so, and companies are expected to lay off 10,000 workers this year, according to Rystad Energy, a consulting firm.
Yet, even as they are making more money thanks to the higher prices, industry executives pledged at a recent energy conference that they would not expand production significantly. They also promised to pay down debt and hand out more of their profits to shareholders in the form of dividends.
“I think the worst thing that could happen right now is U.S. producers start growing rapidly again,” Ryan Lance, chairman and chief executive of ConocoPhillips, said at the IHS CERAweek conference, an annual gathering that was virtual this year.
several million barrels of oil off the market. OPEC’s 13 members and nine partners are pumping roughly 780,000 barrels of oil a day less than at the beginning of the year even though prices have risen by 30 percent in recent months.