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2023 May Have Been the U.S. Oil Industry’s Best Year Yet
Irina Slav

Last year, U.S. crude oil production broke another record. This in itself is not exactly news. The shale oil industry has been breaking records for breakfast for years. But that was before the pandemic.

After the pandemic, many pronounced the shale boom dead. Of course, those same people found out in 2023 that this wasn’t strictly true. Despite a continued focus on capital discipline and the flurry of cash they returned to shareholders, U.S. drillers managed to boost their overall output to over 13.2 million barrels daily in September. And they did it with fewer rigs, at that. And with zero—if not negative—support from the federal government.

“Smart money knows to never bet against this industry,” Tim Stewart, President of the US Oil & Gas Association, recently told David Blackmon, energy industry vet and Forbes author. “We are going to be around a lot longer than any politician. Why is that? Because we produce wealth while they produce nothing.”

Indeed, if 2023 proved anything that many may have suspected, it was that an industry does not need a friendly government to flourish—at least when it comes to the oil industry, that is. Alternative energy industries, on the other hand, do need government support to survive.

Yet, as Blackmon points out in his recent Forbes article, the government does produce at least something: regulations. And it produces them copiously. Right now, he notes, the federal U.S. government is preparing to slap the oil and gas industry with more stringent methane emission rules. These, some in the industry worry, could lead to a wave of bankruptcies. Related: U.S. Gasoline Prices Begin Falling Again

Oil and natural gas operations are the nation’s largest industrial source of the “super pollutant” methane, the EPA said when it announced the new regulation in December, noting that the rule would slash methane emissions by nearly 80% compared to future operations without the rule.

That’s all well and good, but smaller independents will not be able to afford the expense related to monitoring and eliminating methane emissions. This means that many will go under, and their wells will stop producing, at least for a while.

The above is one example of the challenging environment in which U.S. oil drillers operate. It is also a warning against making assumptions about future production based on previous production patterns.

For instance, after growing for five months, U.S. oil output actually dipped in November, per the latest figures from the Energy Information Administration. It was really a minuscule decline of some 4,000 barrels daily, but it should be a reality check for those expecting a continuous upward curve. These curves don’t really happen in real life.

In real life, businesses expand their production when there is demand for it and go easy on that expansion when demand is nothing to write home about. Right now, U.S. producers have a guaranteed market in Europe after the latter embargoed Russian crude, and they also have a market in Asia, which likes diversified supply.

Forecasts of weaker demand for crude this year have no doubt been duly noted by the industry, and plans have been made accordingly. As the latest Dallas Fed energy survey showed, most oil producers don’t have grand plans for output growth. They have plans to essentially maintain their current production levels.

The U.S. oil industry—and, more specifically, the shale industry—is in a post-boom era right now. Production is still growing, though the EIA expects it to have grown less than initially projected in 2023, to an average of 12.9 million bpd and not 12.92 million bpd. But it will only continue growing if producers see the point of pursuing such a strategy. It is no longer growth at all costs just to see how much they can pump out of their wells. It is smart growth, in tune with demand.

By Irina Slav for





Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.

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