Despite some recent good news from Europe, their current energy crisis still poses dangers and gas prices over there are six times higher than their long-run average. Gasoline prices here will most likely be climbing again as well and all that while Energy companies’ profits are surging. President Biden, who came into office promising to reduce the use of fossil fuels, has effectively joined the “drill, baby, drill” chorus and Europe would love to end its dependence on Russia. But most U.S. oil businesses are not eager to capitalize on this moment by pumping more oil.

Production of oil by U.S. energy companies is essentially flat and unlikely to increase substantially for at least another year or two. If Europe stops buying Russian oil and natural gas as some of its leaders have promised, they won’t be able to replace that energy with fuels from the United States anytime soon.

The biggest reason oil production isn’t increasing is that U.S. energy companies and Wall Street investors are not sure that prices will stay high long enough for them to make a profit from drilling lots of new wells. Many remember how abruptly and sharply oil prices crashed two years ago, forcing companies to lay off thousands of employees, shut down wells and even seek bankruptcy protection. Exxon Mobile, the 4th largest oil producer in the world lost $22,4 billion that year.

“There is a tremendous amount of muscle memory from Covid and the dramatic drop in prices,” said Ben Shepperd, president of the Permian Basin Petroleum Association in Midland, Texas. “If we were convinced oil prices would hold at levels of $75 a barrel or more for another three years, you would see a higher level of capital deployment.”

U.S. oil companies are not alone. Saudi Arabia, the United Arab Emirates and other members of the Organization of the Petroleum Exporting Countries have also refused to pump a lot more oil since Russia’s war in Ukraine began in late February.

This deep-seated reluctance stands in contrast to how the oil industry has typically behaved when prices have surged.

Over the last two decades, oil companies almost always responded to higher prices by investing and pumping more. A drilling frenzy accompanied the rise in prices in the early 2000s, and again in the recovery that followed the 2008 financial crisis. U.S. oil production has doubled since 2006, and the country has become a major exporter of oil, natural gas and petroleum products like gasoline and diesel.

But every price boom was followed by a huge crash — three in just the last 14 years. Scores of companies have filed bankruptcy cases. Only two years ago, oil prices plummeted by more than $50 a barrel in a single day to less than zero as the pandemic took hold and producers had no place to store oil that nobody needed to buy.

Exxon Mobil’s stock fell so much that the keepers of the Dow Jones industrial average kicked it off the index where it had been since 1928.

Oil executives and investors cite a number of outcomes under which prices could again fall quickly. For example, Russia could lose the war and must retreat. Covid-19 outbreaks and lockdowns in China could hobble that country’s economy, driving down global growth and demand for energy. A new nuclear deal with Iran could open a spigot of oil exports.

Oil executives also argue that they are spending a lot of money on new oil and gas production but that inflation is undercutting their efforts. Exploration and production spending will rise more than 20 percent this year, but about two-thirds of that increase will go toward paying higher prices for labor, materials and services, among other costs.

Smaller private companies, financed by private equity, are responsible for much of the new activity. According to the Dallas Fed survey, the median growth rate for companies that produce fewer than 10,000 barrels a day was projected at 15 percent this year, compared with only 6 percent for firms that produce more than 10,000.

Larger oil companies complain that even if they wanted to invest more, it would be hard because Wall Street isn’t keen on financing new fossil fuel projects. Some investors are putting their money into renewable energy, electric cars and other businesses instead.

It is not that investors have become environmentalists. Many have run the numbers and concluded that the recent jump in fossil fuel prices will be short-lived and that they are better off investing in companies and industries that they believe have a brighter future.

Many oil executives also complain that the future of their industry is clouded by political and regulatory uncertainty. They acknowledge that Biden has been calling on them to produce more, but they fear that his administration will go back to emphasizing the need for less oil and gas when prices fall.

“We just can’t transition to green energy in a way that leaves us and our allies dependent on the oil of geopolitical rivals,” said Evan Ellis, a researcher at the U.S. Army War College and former State Department planner. “The ability of the U.S. to put more oil and gas into the market would be a useful weapon, enabling the Europeans to wean themselves off of Russian energy.” One would think that the world has learned a lesson from Germany’s energy policy mistakes over the last few years but as we know, learning from mistakes is not a strong suit of politicians.

The United States alone would have the capacity to export more than six million barrels of oil a day, roughly twice what it is exporting now. The industry could produce 16 million barrels a day by 2027, four million barrels more than now, assuming prices remain high and investments increase.

The truth is that there is no real incentive for these companies currently. They are profitable doing what they’re doing right now, and they are reluctant to boost capital budgets even with the promise of higher cash flow. The risk of a potentially falling oil price and political overreaction to climate change are not a risk they want or need to take. Canada, the 4th largest oil producing country in the world is in the same boat and companies like Canadian Natural Resources and Suncor Energy are focused on producing existing assets as efficiently as possible to drive down costs.