As drivers face sticker shock at the pump, "CBS Mornings" is taking a closer look at how U.S. oil production relates to soaring gas prices.
AAA says the national average for a gallon of gas is now $4.24. But the benchmark price of crude oil, which is much more important to oil producers, is about $114 a barrel — a lot higher than last year.
While that's a pain for consumers, it can be a boon for small oil well operators like Columbus Oil Co. in Oklahoma — one of about 400,000 operational "stripper wells" in the U.S. Columbus Oil CEO Darlene Wallace operates 13 such wells near Seminole, producing up to 15 barrels a day.
"Well, that's why they call them stripper wells, because we are stripping the last bit of oil out of the well that we can possibly get," Wallace told CBS News correspondent Omar Villafranca.
Oil prices have been especially volatile in the last five years, and the boom and bust of the oil patch can have a major impact on small producers like Columbus Oil.
"All of our wells shut down when it went to a minus number in April and we shut everything down because you can't pay someone to come pick up your oil," Wallace said.
Her wells were shut down for two months.
"It was like not getting a paycheck," she said.
Now, with soaring gas prices, it's a different story.
"This is like my rainy day fund, so I'm going to bank money and wait for that crash to come because it will come. This business is very cyclic," Wallace said.
Ed Hirs, an energy fellow at the University of Houston, says even though oil is in a boom, it's not easy to just turn on the pumps. It can take months to get them online, and the workforce, while rebounding, has taken a beating.
In the last 10 years, the sector has lost more than 50,000 employees.
Hirs said it's "absolutely true" that the U.S. has enough domestic supply to alleviate the pain at the pump, but it requires capital.
"Our wells are not the most productive in the world. Our wells are the most expensive oil wells in the world to drill because we don't get the huge output that, say, a Saudi well does," he said. "It's just a matter of dollars and cents, and no one's going to start drilling unless they can see a path forward to getting revenue and profits."
Wallace won't slow down, and plans to keep pushing production of her small wells.
"Wells are in the rural area. They're not in urban areas," she said. "And we give people in rural areas jobs. We can't let our rural areas dissipate because there are no jobs."
Wallace says it may not help Wall Street, but it helps Main Street.
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March 24, 2022 at 12:21AM
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Soaring oil prices can be a boon for small well operators in U.S. - CBS News
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