Investing.com — President-elect Donald Trump has promised to encourage increased oil production, reigniting debates over the nation’s energy policy. However, the prevailing trends in the energy sector suggest that such initiatives may face strong resistance, not from regulators or environmentalists, but from the oil industry itself, according to CFRA Research.

U.S. crude oil production has already surged by 50% since 2014, reaching 13.2 million barrels per day (mmb/d) in September 2024, just 1.2% shy of the all-time high recorded in August of the same year.

The U.S. remains the top crude oil producer globally, outpacing Saudi Arabia and Russia. This production growth has occurred despite relatively modest investments in new drilling. Improved technology has enabled companies to extract more oil from existing resources efficiently, rendering extensive capital spending less critical.

“Oil producers are cautious spenders because they remember 2009. And 2016. And 2020,” notes CFRA.

Companies have shifted their focus from aggressive growth to shareholder returns, with dividends and buybacks accounting for 36% of capital spending by oil-focused exploration and production firms (E&Ps) in 2024. This figure represents a significant increase from 23% in 2014, signaling a clear priority shift away from reinvestment in oilfield development.

“If anything, U.S. oil producers are diverting a smaller share of cash flow toward new production – and production is doing just fine,” CFRA said in the note.

Despite limited reinvestment, production remains robust, largely due to technological advancements.

Fracking techniques have become more efficient, with a smaller number of fracs delivering the majority of output. This efficiency, while beneficial to producers like EOG Resources (NYSE:) and Diamondback (NASDAQ:) Energy, poses challenges for oilfield services providers such as Halliburton (NYSE:), Schlumberger (NYSE:), and Baker Hughes (NASDAQ:). These firms have seen their revenue per barrel of U.S.-produced crude oil decline by 43% since 2014.

Instead of ramping up drilling, many E&Ps are turning to mergers and acquisitions to boost production. Recent deals, including Diamondback Energy’s $26 billion acquisition of Endeavor Energy, highlight the industry’s preference for inorganic growth.

“We think the turn toward inorganic growth is sensible in an environment where investors are penalizing firms that suggest robust organic spending growth,” CFRA continued. Even companies that have avoided major M&A activity are expected to achieve production growth, albeit at more modest rates.

In conclusion, while Trump’s rhetoric may call for a return to “Drill, Baby, Drill,” the industry’s focus on capital discipline, efficiency, and shareholder returns could temper any surge in new drilling activity.

(Reuters) – Russia declared a regional state of emergency on Saturday in Crimea, which it seized from Ukraine in 2014, as workers cleared tons of contaminated sand and earth on either side of the Kerch Strait following an oil spill in the Black Sea last month.

Mikhail Razvozhaev, the Russia-installed governor of the city of Sevastopol, said new traces of minor pollution required urgent elimination and declared a state of emergency in the city – giving authorities more power to take swift decisions such as ordering citizens to evacuate their homes.

The Kerch Strait runs between the Black Sea and the Sea of Azov and separates Crimea’s Kerch Peninsula from Russia’s Krasnodar region.

Rescue workers have now cleared more than 86,000 metric tons of contaminated sand and soil, the emergencies ministry said on Saturday. The oil leaked from two ageing tankers that were hit by a storm on Dec. 15. One sank and the other ran aground.

More than 10,000 people have been working to shovel up viscous, foul-smelling fuel oil from sandy beaches in and around Anapa, a summer resort. Environmental groups have reported deaths of dolphins, porpoises and sea birds.

The emergencies ministry said on the Telegram messaging app that oil-tainted soil had been collected in the broader Kuban region in Russia and in Crimea, whose annexation by Russia has not been recognised by most other countries.

The ministry published video footage of dozens of workers in protective suits loading bags of dirt onto diggers and others skimming dirt off the sand with shovels.

Russia’s transport ministry said this week experts had established that about 2,400 metric tons of oil products had spilled into the sea, a smaller spill than initially feared.

When the disaster struck, state media reported that the stricken tankers, both more than 50-years old, were carrying some 9,200 metric tons (62,000 barrels) of oil products in total.

The spill involved heavy M100-grade fuel oil that solidifies at a temperature of 25 degrees Celsius (77 degrees Fahrenheit) and, unlike other oil products, does not float to the surface but sinks to the bottom or remains suspended in the water column.

(This story has been corrected to say Razvozhaev is governor of Sevastopol, not Crimea, in paragraph 2)