Thanking Obama for New Oil Rigs?

by Nash Keune

Over the last few weeks, I’ve written a series of pieces about President Obama’s energy talking points. Of particular interest is the subspecies of statements that are technically true but misleading, such as his boasts about domestic oil production’s reaching its highest point in eight years (despite the fact that production on federal land is down) or the White House’s claims that it’s doing “all it can do” to support the construction of the southern leg of the Keystone pipeline (though it can’t actually do that much).

To celebrate the end of Obama’s energy tour this week, I’d like to examine one last claim. Showing a mastery over the copy-paste function that is apparently an integral part of governing, the president frequently says that “currently, the United States has a record number of oil and gas rigs operating — more than the rest of the world combined.” According to data compiled by Baker Hughes Incorporated, this is true but unremarkable. The United States historically has about as many rigs as the rest of the world combined, and often more:

The cause of the recent uptick in the number of rigs in the United States results from horizontal drilling to facilitate hydraulic fracking. More generally, the United States tends to maintain more operational rigs because our rig construction is more exploratory than it is other countries, where extraction is more centrally controlled. Despite the image of Big Oil as a monolithic, market-controlling power, 80 percent to 85 percent of American wells are drilled on private land by independent producers.

Obama also correctly claims that the number of drills has quadrupled under his administration. But this is simply the outcome of skyrocketing natural-gas production. Natural-gas production has increased 11 percent, while the price has declined by 75 percent. Furthermore, with gas selling at the equivalent of $15 per barrel, compared with $106 for oil, companies have also started focusing on new sources of oil drilling. As with the total number of U.S. rigs, this isn’t the result of Obama’s federal policies but rather the result of businesses’ responding to market signals. 

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