top of page

Should Countries Boost Fossil Fuel Production to Reduce Reliance on Other Countries, Eliminating Political Risk? 

In the Competitive Economy section of this site, I discussed that it can be risky to rely on other countries for energy. This begs the question: instead of diversifying energy sources to reduce the dependence on other countries, why not increase fossil fuel production within the country? Theoretically, this tactic should increase energy supply and reduce costs (based on the classic supply and demand relationship). Aside from the question of where oil producers will drill, these firms also remain focused on financial long-term sustainability, which may not be achieved through short-term production boosts. According to the Dallas Fed Energy Survey, the break-even price (i.e., the price required to remain profitable) for new drilling projects ranged between $59 and $70 per barrel in 2024 (Rapier, 2025). At this time, the West Texas Intermediate (WTI) crude prices were roughly $71 per barrel, making new drilling projects somewhat profitable but not profitable to justify large-scale investments (Rapier, 2025). Many producers consider the risk of overproduction, which has historically led to price downturns and losses for companies (recall 2020) (Rapier, 2025). In addition to drilling projects being minimally profitable, in 2019, the Petroleum Services Association of Canada (PSAC) reduced their estimated forecast for oil and gas drilling activity, suggesting challenges in the industry (Canadian Broadcasting Corporation [CBC], 2019). As a result, it seems that exploration and production companies are putting their cash toward reinvesting in shareholders, decreasing debt and investing elsewhere instead of investing in new crude oil production (CBC, 2019).

Site Summary

Renewable energy sources, such as sun, wind, water and geothermal energy, are derived from resources that are replaced constantly and are not degraded when used. Traditional, non-renewable energy sources (such as coal, oil, and natural gas) exist at a finite quantity that is depleted with each use. Research has shown that the addition of non-renewable energy to the grid not only decreases consumer costs and increases supply stability but also increases company stock values (due to a variety of factors). However, most energy providers and governments are reluctant to provide an opportunity for renewables in their energy supply. This hesitation in accepting sustainable solutions may be explained by the very successful lobbying by traditional non-renewable players in the market and by the reputation renewable energy sources have as a purely green, climate change related solution. Unfortunately, with the observed slow adaptation of renewables into the power grid, energy providers are missing out on the economic potential of sustainable energy. One solution to this shortcoming could be the increased reporting and distribution of relevant study results through mainstream media to reach the general public. The information on this site is aiming at contributing to this solution at a very small scale.

bottom of page