PBS News Hour

point of 2023.

And, not coincidentally,# domestic oil production is at a record high.

William Brangham looks at what's behind# the big changes and the implications.

WILLIAM BRANGHAM: Geoff, the# average price of gas is $3.12## a gallon.

That is far below the nearly# $4.00-a-gallon highs we saw this fall.

At the same time, the U.S. is producing# an unprecedented amount of oil,## some 13.5 million barrels a day.

Moreover, big# energy companies are merging as they try to get## more production out of the Permian Basin in Texas# and in New Mexico.

Exxon plans to buy shale giant# Pioneer Natural Resources for nearly $60 billion,# and Chevron plans to buy Hess for $53 billion.

This record production of oil and# these big mergers come at the very## same time when the U.S. government# is trying to wean the nation off## of fossil fuels, because using them# is dangerously warming the planet.

Clifford Krauss is the national energy# correspondent for The New York Times,## and he joins me now.

Cliff, great to have you b Explain to us, how did we get# here from this plummeting ma rket during the pandemic# to now these record highs?

CLIFFORD KRAUSS, The New York Times:# Great to be with you again, William.

Really, the story begins about 15# years ago with fracking, right,## where, suddenly, the United States# became a production powerhouse.

And## it's had its ups and downs,# but, in the last year or so,## there has been almost an unprecedented increase# in production, actually the most s And so at this point, the United States,# as you mentioned, is producing about 13.5## million barrels a day, and we're heading# towards 14 million barrels a day.

That is## more oil than any country in the world.# That is a record for the United States,## and it may well be the record# for any country in the world.

And we are now, after Saudi Arabia,## the biggest -- we are we're exporting more oil# than any member of OPEC, save Saud WILLIAM BRANGHAM: And is that# just a function of companies## ramping up production?

Is it as simple as that?

CLIFFORD KRAUSS: No, it isn't.# Actually, it's very interesting.

The very large companies,# the Exxons and have actually tried to be very disciplined.

They# don't want to repeat the mistakes of where they would pump a lot# of oil when prices were high,## only to see the price collapse.

And, of# course, that's what they don't want to see.

So, while they have been disciplined, the smaller# companies financed by private capital mostly,## they are basically pressing on the gas,# so to speak.

And we're producing more## oil from these small producers.

And# this looks like it will continue.

Actually, what happened was, with# the Russian invasion of Ukraine,## when the price of all the commodities, but# especially oil and gas, went up, these companies## got a signal from the market to start pumping# more.

And that's exactly what they have done.

WILLIAM BRANGHAM: As you mentioned, I# know we export a great deal of that oil,## but is all of this domestic production also# responsible for the drop in gas prices,## which I take it also came as a bit of a surprise?

CLIFFORD KRAUSS: It is.

There's an abundance of oil go are linked with global oil prices.

And those# prices are going down for a variety of reasons,## both demand and supply.

Demand from China and# Europe has been low.

Production is not only up## in the United States.

It's up in Canada, Guyana,# Brazil, and a few other producing countries.

So although OPEC Plus is cutting back# on the production, that is more than## compensated by the United States and# other producers that are not in OPEC.

WILLIAM BRANGHAM: Let's talk a little# bit about these two big mergers.

Are these, as some critics argue, the# last gasp of the fos trying to squeeze every last profit?

Or is# it a bet by these companies for a bright,## robust future for fossil# fuels?

Or is it something else?

CLIFFORD KRAUSS: Yes, I see# it as being something else.

I mean, the oil companies realize --# and this is no the American oil companies, but the international# state-owned oil companies -- that probably## oil demand in the United States and the# world is going to plateau and come down.

And so the cheapest barrels are the barrels# that will survive on the market.

Saudi Arabia## is the cheapest.

Actually, the Permian Basin is# pretty cheap as well.

And when these companies## consolidate and merge, because of the economics# of scale -- the economies of scale, they are## actually saving themselves money and thereby# squeezing more profit from their production.

By the way, the Exxon deal is for the# Permian mostly.

The Chevron deal is to## get a piece of the action in Guyana, which is# the fastest-growing oil province in the world.

WILLIAM BRANGHAM: As I mentioned at the beginning,## all of this beefed-up oil producti administration's desire to use less oil and# to use less gas and to use more renewables.

How does -- how do we as a nation# square that seeming contradiction?

CLIFFORD KRAUSS: That's a tough one,## because the United States has On e goal is geopolitical and to take --# basically to provide gas and oil for Europe## and other countries that were dependent on# Russia, also to keep our gasoline prices low,## so -- to try to fight inflation.

But at# the same time, we're trying to pivot.

How you do those two things at once is a# contradiction.

The Republicans are attacking## this administration for making a war on oil, even# though our oil production is at record levels.

But## it's hard to see this administration saying, look# at us, the United States is the top oil producer## in the world, when you want environmentalists# and young voters to vote Democratic.

WILLIAM BRANGHAM: That is the# essential contradiction right there.

CLIFFORD KRAUSS: Yes, it is.

CLIFFORD KRAUSS: Thank you for having me.