US oil is back, and ExxonMobil’s $60 billion deal isn’t even the biggest signal
Workers connect drill bits and drill collars used to extract oil in the Permian basin outside of Midland, Texas.
Brittany Sowacke | Bloomberg | Getty Images
After three and a half years, a tripling in the S&P 500 Energy Index, and many soon-to-be-forgotten culture-war volleys, the U.S. Department of Energy announced Oct. 12 that U.S. crude oil production had hit an all-time high of 13.2 million barrels per day, entirely wiping out Covid-era losses of more than 3 million barrels per day.
The news came a day after a $60 billion deal between Exxon Mobil and independent oil producer Pioneer Natural Resources. The combination of recovering production, sustained pressure from Wall Street for cost containment and high stock dividends, and consolidation like the Exxon-Pioneer hookup is not a coincidence.
The energy sector’s big stock move in 2021 and 2022 was mostly a recovery from a disastrous decade for Big Oil, when tens of billions of cash flow were lost on unprofitable fracking wells, and of a consolidation that was good for company profits, dividends and shareholder returns.
The foundation of the 2010s oil business was cracking when Covid broke it, said Rob Thummel, senior portfolio manager at Tortoise Ecofin in Kansas City, Mo. Monthly production topped out at 13 million barrels per day in November 2019 and hit 9.9 million by February 2021.
“Capital discipline in the U.S. industry hasn’t gone away, and oil is at $85 to $90 a barrel,” he said.
So, what brought Big Oil back, and what’s next?
Here are seven important factors that played into U.S. oil’s recent history and will influence its future.
Why the shale drilling bust ended
Oil broke gradually and then suddenly. The S&P 500 Energy Index lost 40% of its value between 2014 and 2019. But the pandemic drove the fast part of the bust, in part by leading Wall Street to insist on further cuts in capital spending, Thummel said.
Loading chart…
What brought it back was renewed demand and higher prices.
Recessions end, and oil demand has slowly rebounded after the 2020 downturn and lingering supply-chain shock. And rising prices for WTI crude – which careened during Covid to less than $15 a barrel, shot back to $120 in 2022, and is now near $90 – can make previously-unprofitable plays work, he said.
The U.S. production rebound is more concentrated
Big Oil isn’t back all over America: Production is still down sharply in Oklahoma and North Dakota. It hasn’t changed much in Alaska, where production is in a long-term tailspin. And offshore oil drilling in the Gulf of Mexico recovered to 2 million barrels a day, but hasn’t grown.
Instead, the surge is concentrated in the Permian Basin region of Texas and New Mexico, where production costs are among the lowest in the country, said Alexandre Ramos-Peon, head of shale well research at Rystad Energy. Oil from the Permian Basin costs an average of $42 a barrel to produce, he said, with North Dakota in the high $50s to $60.
North Dakota is also hampered by weaker access to pipelines than the Permian Basin, where many producers can use pipelines that lie entirely within Texas, skirting federal regulation of interstate pipelines. That’s only one example of a relaxed regulatory environment in Texas, compared to places like climate-conscious Colorado, the nation’s No. 4 oil producer, where output is still down 3 million barrels per month, said Jay Hatfield, CEO of Infrastructure Capital Advisors in New York.
“There’s this place called Texas that doesn’t really know what energy regulation is,” he said.
Where oil companies have been spending their money
U.S. oil companies cut capital spending to $106.6 billion last year from $199.7 billion in 2014, according to Statista, contributing to the decline in oil production and arguably delaying the recovery. And they put that money to work paying higher dividends and doing stock buybacks, Thummel said.
According to Energy Department data, oil and gas companies paid out about $75 billion per quarter in the last year. The share of oil-company operating cash flow going to shareholders rose to half of operating cash flow from about 20% in 2019, the department says.
The link between Exxon-Pioneer deal and peak barrels
Offsetting the decline in capital spending is higher productivity per well — while all of the U.S. oil production is back, the closely watched Baker-Hughes rig count is barely half of 2018 levels. The average production per rig of new wells just topped 1,000 barrels a day, up from 668 four years ago, according to the Energy Department. So the industry didn’t have to add a ton of new wells or drill in as many new places to recover fully.
On CNBC last week, ExxonMobil CEO Darren Woods said the company did the merger because it thinks its technology and scale can raise the productivity of Pioneer’s fields.
“Their [Pioneer’s] capabilities, bringing in their Tier 1 acreage, our technology, our development approach, frankly, brings higher recovery at lower cost,” Woods said.
That suggests more mergers to come as rivals like Chevron also make plays to boost their presence in U.S. shale, especially in the Permian Basin, Hatfield said. Chevron already has made several shale-related acquisitions in recent years, including $7.6 billion for PDC Energy this year and $5 billion for Noble Energy in 2020. Independent producers are under more pressure than more-stable super-majors to pay very high dividends to justify the risk of oil-price fluctuations, which will mean tighter constraints on their ability to keep up in technology and scaling of operations, he said.
U.S. crude, energy security and Big Oil economics
As a result of the rebound in crude, is American repatriating its oil? A little, says Hatfield. Permian shale right now is much cheaper to produce than offshore oil, comes with much less political risk than offshore drilling in much of the developing world, and takes much less time to make a profit than offshore wells. That’s leading companies like Exxon to bet more heavily on Permian shale than offshore drilling, he said.
“The super-majors are taking capital out of offshore,” Hatfield said. “They are reducing overseas development because it is more risky.”
The biggest part of the equation is that time equals risk, Ramos-Peon said. Global oil producers aren’t squeamish about investing in parts of the world where governments change, but the years-long investment cycles in offshore drilling make the much shorter turnarounds in Texas appealing to companies like ExxonMobil, which is one of the industry’s biggest offshore players.
“In the Permian, you get your capital back in a little over a year,” Hatfield said. “The return on investment is much faster and much higher because the wells begin to produce so quickly.”
What oil’s recent trading and Israel-Hamas mean for gas prices
Gas prices tend to move in tandem with the price of crude oil, which has dropped to about $88 per barrel from $94 in September, driving a 20-cent per gallon drop in the nationwide average price for regular. But the influence of OPEC, whose coordinated production cuts in June have driven prices up 35 cents, often offsets what domestic producers do, Ramos-Peon said. And right now there is the added uncertainty of whether the Israel-Hamas war will result in a slash in production from Iran, whose government supports the Hamas rebels who launched bloody attacks into Israel, he said.
“I believe crude prices will stay around the current level in the short term, and in the long term should trend down,” he said. “If there are sanctions against Iran, that will be bad for consumers.”
Short-term shale plays, oil consumption and climate change
What’s good for oil companies in the short-term doesn’t change the longer-term trajectory of the oil market or carbon reduction.
Meeting climate goals has more to do with long-term shifts in energy use than with short-term production targets, Ramos-Peon said. Rystad expects U.S. production to rise to 13.6 million barrels per day next year and 13.9 million in 2025, he said. After that, forecasts get more difficult because so much can change, but by late this decade oil consumption should peak before beginning to ebb, he said.
Even as more cars go electric, demand from older cars and uses of oil in chemicals will keep the oil business very large, Ramos-Peon said. And the risk that the business will erode will make drillers focus on shale more than offshore drilling, Hatfield said
“In the context of not knowing for sure, why wouldn’t you want a return on your investment in three years rather than 30?” he said.
Short-term, the biggest threat to the rosy scenario is that oil-industry cash flows are falling sharply from a peak last year. The Energy Department says its survey of 139 producers, foreign and domestic, shows a 36% drop in second-quarter operating cash flows from 2022. Profits are narrowing for the first time in two years, the department said.
Then again, the price of crude has risen $16 a barrel since the end of the second quarter. And in the oil business, price rules everything.
Global energy investment is on track to hit a record $3.3 trillion in 2025, according to the new International Energy Agency’s (IEA) annual World Energy Investment report, even as the world navigates economic turbulence and rising geopolitical risks.
The lion’s share of that money – about $2.2 trillion – is heading toward clean technologies. That includes renewables, nuclear, grids, battery storage, low-emissions fuels, efficiency, and electrification. It’s twice the amount going into fossil fuels.
IEA executive director Fatih Birol says countries are working to insulate themselves from future shocks in the energy sector. “Amid the geopolitical and economic uncertainties that are clouding the outlook for the energy world, we see energy security coming through as a key driver of the growth in global investment.”
China has cemented its status as the world’s top energy investor, spending nearly as much as the US and EU combined. In 2015, it barely edged out the US. Today, it’s pulling far ahead, especially in clean energy. Over the past decade, China has boosted its share of global clean energy investment from 25% to nearly 33%, thanks to massive spending on solar, wind, hydro, nuclear, EVs, and batteries.
Solar is once again the star. Investment in both rooftop and utility-scale solar is expected to hit $450 billion this year, more than any other energy tech globally. Battery storage is also surging, projected to hit $65 billion in 2025. Nuclear is trending upward too, with capital flows rising 50% over five years to about $75 billion.
The global energy mix continues to shift. In 2015, fossil fuel investment outpaced electricity spending by 30%. But this year, electricity investments, which include generation, grids, and storage, are expected to be 50% higher than what’s being spent on oil, gas, and coal.
But not everything is trending in the right direction. Grid investments, at $400 billion a year, aren’t keeping up with the pace of new generation and electrification. That’s a red flag for electricity security. The IEA warns that grid spending needs to catch up fast, but bottlenecks like permitting delays and tight supply chains for cables and transformers are slowing progress.
China and India also continue to invest in coal. In 2024, China began construction on nearly 100 gigawatts of new coal-fired power plants, pushing global coal project approvals to their highest levels since 2015.
Meanwhile, oil investment is expected to dip 6% this year – the first drop since the COVID crash in 2020. That’s mostly due to less spending on US tight oil – oil extracted using fracking, which is processed into gasoline, diesel, and jet fuels. On the flip side, investment in liquefied natural gas (LNG) is booming, especially in the US, Qatar, and Canada. Between 2026 and 2028, LNG capacity is set to see its largest ever capacity growth.
One of the report’s most troubling takeaways: Africa is being left behind. Despite accounting for 20% of the world’s population, the continent attracts just 2% of global clean energy investment. Overall energy investment in Africa has fallen by a third in the past decade. The IEA says public finance needs to scale up fast to help unlock private capital and close the gap in developing economies.
The bottom line: Clean energy is surging, solar continues to lead, and China is dominating global spending. But if grid upgrades don’t catch up and the investment gap in the Global South isn’t closed, energy access and climate goals could fall behind.
Read more: 1 in 4 cars sold in 2025 will be EVs, and that’s just the beginning
If you live in an area that has frequent natural disaster events, and are interested in making your home more resilient to power outages, consider going solar and adding a battery storage system. To make sure you find a trusted, reliable solar installer near you that offers competitive pricing, check out EnergySage, a free service that makes it easy for you to go solar. They have hundreds of pre-vetted solar installers competing for your business, ensuring you get high quality solutions and save 20-30% compared to going it alone. Plus, it’s free to use and you won’t get sales calls until you select an installer and share your phone number with them.
Your personalized solar quotes are easy to compare online and you’ll get access to unbiased Energy Advisers to help you every step of the way. Get started here. –trusted affiliate link*
FTC: We use income earning auto affiliate links. More.
Amazon is about to start testing humanoid robots for package delivery. The goal is for the robots to come out of the Rivian electric delivery vans and bring packages to your door.
Over 20,000 Rivian electric vans are currently used to deliver Amazon packages, and the number is expected to increase to 100,000 by the end of the decade.
For now, humans are driving them and delivering the packages to doors, but humanoid robots may soon handle the latter.
The Information released a new report revealing that Amazon has built a new facility to test humanoid robots in an environment mimicking deliveries in the real world:
As part of the project, Amazon is putting the finishing touches on a “humanoid park,” an indoor obstacle course at one of the company’s San Francisco offices where it will soon test such robots, this person said.
The online retailer reportedly has a Rivian electric delivery van on site to test robots as they come in and out of the van, bringing packages to customers’ doors.
“Amazon hopes humanoid robots will be able to hitch a ride in the back of Amazon’s electric Rivian vans and spring out to deliver packages.”
Amazon plans to test several different humanoid robots, but the report only mentions one from China-based Unitree.
Amazon has extensive experience utilizing autonomous robots in its operations, but this experience is primarily limited to purpose-built robots.
Its experience with humanoid robots is more limited, but the company has used humanoid robots from Agility Robotics:
The big difference is that these robots were used in Amazon’s own warehouses, which are closed environments.
This new test program is to test humanoid robots that will go into the real word to deliver packages to customers.
For now, Amazon plans to test them in its obstacle course, but “field trips” in the real world are already being discussed.
While the online retail giant plans to test several different humanoid robots, it is reportedly working on its own software to power them based DeepSeek-VL2, made by a China-based quant fund, and Qwen, made by China-based Alibaba.
FTC: We use income earning auto affiliate links. More.
With tax refund season behind us and tariff talks taking a back seat to other dystopian headlines, the month of May gave us our first “clean” look at the US car market in 2025 – and the verdict is in: hybrids are leading the charge while EVs are a mixed bag.
As ever, there are plenty of ways to organize stories like this, and there are more comprehensive sources out there that will give you a deep, model-by-model dive into sales. That said, I’m focusing on the standout performers and “usual suspects” when it comes to EVs and hybrids – but don’t let that stop you from leaving your better ideas in the comments (y’all know I read ’em).
Kia posted 79,007 units in May for a 5.0% YOY gain and the brand’s eighth consecutive month of year-over-year gains. That number was helped along with a record month for the Carnival minivan and both the Telluride and Sportage SUVs. Two car lines that didn’t help were the Kia EV6 and the brand’s flagship EV9 three-row SUV, which sold just 37 units last month.
Some of that is inventory-based, as Kia shifts EV9 production from South Korea to its new EV factory in Gerogia – but no matter the reason, Kia dealers are eager to move their EVs. That means buyers killer deals on the brand EVs and still solid deals on the Kia Sportage Hybrid and Sorrento Plug-in Hybrid, too.
Hyundai also had a killer month, with total up 8% YOY and 3.7% from April, which works out to a massive 84,521 unit sales for the month of May.
“This period really marks our regular annual pricing review,” Randy Parker, CEO of Hyundai Motor America, told a Reuters reporter yesterday. “We take a look at market dynamics, consumer demand, independent of tariffs.”
Car Dealership Guy reports that those gains were driven by Hyundai’s Elantra N (+141%), and the Venue (+74%), Tucson (+15%), and Palisade (+10%) SUVs, which all set May records. Even the IONIQ 6 electric sedan – my pick as the top Tesla Model 3 alternative – was up 9% YOY, while the first examples of the brand’s three-row IONIQ 9 SUV finally began. Hyundai’s hybrid sales, too, were up 5% for the year.
Toyota saw a massive gain last month as well, delivering nearly 119,000 “electrified” vehicles in May. That number represents a gain of 39% compared to the same month last year, and accounted for almost half of the brand’s total volume for an 11% gain YOY.
Toyota, of course, is the OG in the hybrid space, and in 2025 – nearly thirty years after the launch of the original Toyota Prius in Japan – almost all of the brand’s vehicles are hybrid-only or available as hybrids, including the iconic Corolla and Camry brands, the Sierra minivan, and even the Tacoma and Tundra hybrid pickups.
Over at Ford, CNBC is reporting that sales of the company’s cars were up an impressive 17.2% YOY, driven partly by the brand’s employee pricing deals but even more partly (?) by an absolutely massive 29% jump in the sale of the company’s Ford and Lincoln hybrid models. Lincoln posted its best month of 2025, up 39% YOY.
Sales of the Ford Mustang Mach-E electric crossover held relatively steady, while Ford F-150 Lightning and E-Transit van sales were down some 25% YOY.
On the wrong side of the growth table, Subaru sales dipped more than 10% YOY and 6.6% compared to April, while experience the biggest dip of all the legacy brands, down 18.6% YoY and 23.2% vs April. It’s worth noting that Tesla does not release monthly sales data in the US, but its overseas sales are even worse than that. CNEVPost is reporting that sales are down 15% in China for May, while Tesla sales in Germany fell by more than a third in May, even though EV sales overall rose 44.9% YOY.
Cox Auto’s forecast for May puts the 2025 sales pace at about 16 million unit sales, up slightly from a year earlier but a significant decline from March’s projected sales pace of 17.8 million and April’s 17.3 million unit projected pace.
SOURCES: source links throughout the article.
Did you know: grid-connected solar systems automatically shut off when the grid fails? That means you won’t have power in a blackout, even with solar panels.
To keep the lights on, you’ll need a whole home backup battery – your personalized solar and battery quotes are easy to compare online and you’ll get access to unbiased Energy Advisors to help you every step of the way. The best part? No one will call you until after you’ve decided to move forward. Get started today, hassle-free, by clicking here.
FTC: We use income earning auto affiliate links. More.
-
Sports3 years ago‘Storybook stuff’: Inside the night Bryce Harper sent the Phillies to the World Series
-
Sports1 year agoStory injured on diving stop, exits Red Sox game
-
Sports2 years agoGame 1 of WS least-watched in recorded history
-
Sports2 years agoMLB Rank 2023: Ranking baseball’s top 100 players
-
Sports4 years ago
Team Europe easily wins 4th straight Laver Cup
-
Environment2 years agoJapan and South Korea have a lot at stake in a free and open South China Sea
-
Environment2 years agoGame-changing Lectric XPedition launched as affordable electric cargo bike
-
Business3 years agoBank of England’s extraordinary response to government policy is almost unthinkable | Ed Conway