Drill Baby, Drill – Update

According to a recent report published by S&P Global Commodity Insights, the US is currently producing more oil than any country in history. This spike in US output has been driven by smarter and more efficient operations in the oil industry.  Part of the gain is due to the industry’s ability to squeeze more oil out of the ground without dramatically increasing drilling.

Investors should recognize that any discussion of oil is usually mired in politics.  Generally, government has little influence on domestic oil production.  Unlike OPEC and other nations, US oil output is largely set by the free market.

That being said, high gasoline prices are not politically acceptable.  Hence, relatively ineffective political posturing is to be expected, if events result in price spikes.

All comments and suggestions are welcome.

Walter J. Kirchberger CFA