Oil and gas drilling in the U.S. falls 12% from peak

Articles — By forcechange on December 16, 2008 9:40 am

A recent report from oil services company, Baker Hughes Inc., shows that the number of oil and gas drilling rigs in the U.S. that are online has fallen by 12% from this September’s peak and is down 2% from this time last year.  The total number of working drilling rigs currently sits at 1,790.

This slowdown in domestic oil and gas production (sub req) is being attributed to falling energy prices and tight credit.  Higher cost wells and fields are being taken offline and less cash is available to pursue general operations.

As we’ve noted before, all of this is setting up a situation where another big spike in energy prices could be on the horizon.  Decreased capacity means that when the global economy recovers, supplies will lag behind demand.  Bringing oil production and development back online is a lot harder than cutting it.

Although current energy demands have fallen, and may not recover for a couple of years, the market is already anticipating a turn-around in prices– futures contracts for oil to be delivered several years from now, are selling at significantly higher prices than for oil to be delivered next year. (sub req)

Whether we refocus our efforts to develop clean alternatives, or sit and wait for the impending storm to return, is up to us and our leaders.

[Here is a link to the Baker Hughes interactive drilling map.]