“Drill, Baby, Drill” May Be Gone Forever

Crude oil prices have surged more than 40 percent so far this year and about 50 percent from a year ago. We could see oil prices temporarily rise to $80 per barrel this summer.1 

Supply has been slow to catch up to the demand spurred by the post-pandemic economic recovery, leading to the higher prices. However, new drilling efforts by oil companies worldwide are facing significant resistance from stakeholders, causing many companies to shift their focus to renewable energy sources like solar and wind.

Oil (WTI)

Source: Markets Insider, 6/8/212

The Shift To Renewable Energy Sources

Several recent developments in the oil industry show that companies have started to shift their long-held “Drill, Baby, Drill” business model toward embracing renewable energy. 

Following Exxon Mobil’s annual shareholder meeting on May 26, the company announced that Engine No. 1, a small activist hedge fund dedicated to green energy, successfully won three out of four of its board nominations, despite owning less than a 0.02 percent ownership of the firm and facing fierce objection from the oil giant’s senior management. 

Engine No. 1 had been pushing Exxon Mobil toward renewable energy sources since December 2020, and with strong backing from fellow shareholders, particularly those at notable pension funds and asset management firms, they finally succeeded.3

Additionally, on June 1, the Biden administration suspended oil drilling leases in the Arctic National Wildlife Refuge, seeking to reverse a major initiative of the Trump administration that encouraged it.4 While the suspension alone is not guaranteed to block drilling in the area, it will deter oil companies from considering it. 

No wonder U.S. oil production is still well below the level before the pandemic.

U.S. Crude Oil Field Production
10.80M bbl/d for Wk of May 28, 2021

Source: YCharts, 6/8/215

Meanwhile, in Europe, major oil companies have already embraced renewable energy and are incorporating it into their business models. For example, on June 3, BP disclosed a plan to build a $200 million solar plant in Azerbaijan; on May 20, Total announced its agreement to supply solar power to Merck; and earlier this year, Shell agreed to supply Amazon with electricity from a wind farm.6, 7, 8

Three months ago, when Saudi Energy Minister Abdulaziz bin Salman Al Saud predicted, after an OPEC+ meeting, that “drill, baby, drill” is gone forever, many dismissed it as a wishful thinking or simply a tactic to talk up his own book.9 Since then, however, oil prices have risen approximately 10 percent, and more oil companies are embracing renewable energy.2 After all, Saudi Arabia was the lone voice that urged caution in 2008 as oil prices were approaching $150 a barrel. Meanwhile, everybody else was talking about the “oil price super cycle” and “drill, baby, drill.”


1. Patti Domm, “It could be a hot summer ahead for oil prices,”, last modified on June 2, 2021,

2. “OIL (WTI),”, last accessed on June 8, 2021,

3. Clifford Krauss, “Exxon Board to Get a Third Activist Pushing Cleaner Energy,”, published on June 2, 2021,

4. Coral Davenport, Henry Fountain, and Lisa Friedman, “Biden Suspends Drilling Leases in Arctic National Wildlife Refuge,”, published on June 1, 2021,

5. “US Crude Oil Field Production,”, last accessed on June 8, 2021,

6. Nailia Bagirova, “Azerbaijan and BP plan solar power plant in Karabakh,”, published on June 3, 2021,

7. Olivia Bugault, “Total, Merck & Co. Sign 10-Year Power Purchase Deal,”, published on May 20, 2021,

8. “Shell enters supply deal with Amazon to provide renewable energy,”, published on February 8, 2021,

9. Javier Blas, Grant Smith, and Salma El Wardany, “In a bold taunt, Saudis warn America’s frackers: ‘Drill, baby, drill is gone forever,”, published on March 5, 2021,


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