The U.S. produced more oil in 2023 than has ever been produced in any year by any country, according to the U.S. Energy Information Administration.
Big Oil has become more productive as horizontal drilling and hydraulic fracturing, which is also known as fracking, have seen technological breakthroughs.
U.S. oil production hit a low of 5 million barrels per day in 2008 before the industry adopted horizontal drilling and fracking techniques. In August 2024, U.S. oil production hit a record 13.4 million barrels per day.
This comes as the Biden administration has led an expansion into subsidies for renewable energy projects through the Inflation Reduction Act of 2022, which included $369 billion to combat climate change.
The majority of that funding is delivered through tax incentives.
“U.S. energy policy has been largely oriented towards the tax code. That’s how a lot of the renewable energy deployment that’s happened to date has come about,” Daniel Bresette, president of the Environmental and Energy Study Institute, told CNBC.
The fossil fuel industry benefits from tax incentives, such as the intangible drilling costs tax credit, that are built into the tax code.
The intangible drilling costs incentive “is the most active subsidy they get and it’s a tax credit,” Amy Myers Jaffe, director of New York University’s Energy, Climate Justice and Sustainability Lab, told CNBC.
The intangible drilling costs tax break is expected to benefit oil and gas companies by $1.7 billion in 2025 and $9.7 billion through 2034, according to the White House Budget for Fiscal Year 2025.
Watch the video above to learn more about the complicated landscape of U.S. energy subsidies, how the U.S. was able to produce more oil than ever and what this means for the billions of dollars being spent on the green energy transition.