A fracking boom made the US the world's biggest oil producer. Now its end is pushing gas prices much higher.

• Fracking lifted the US energy sector to unprecedented highs in the 2010s. It's now a major hurdle.
• The fracking boom was slowing before the pandemic as investors prioritized profits over growth.

The very boom that bolstered the US's energy independence is now making its gas-price problem much, much worse.

For much of the past decade, fracking gave the US energy sector a massive tailwind. In the so-called shale revolution, fields in New Mexico, North Dakota, and Texas became the next boomtowns for energy commodities. In just a few years, the US overtook Russia and Saudi Arabia as the world's biggest producer of crude oil and natural gas. Total domestic production of crude oil jumped from 5.4 million barrels a day in early 2010 to a record 13 million at the end of 2019, according to the Energy Information Administration.

But what was recently the industry's biggest boon has since become a massive snag at the worst possible time. Russia's invasion of Ukraine in late February quickly pushed energy prices higher around the world as investors braced for a major drop in supply. The West's sanctions against Russian energy companies lifted prices again in March.

Declining supply put more pressure on the US — which exports its oil and gas — to step in with increased production. That hasn't happened.

Relief measures, including emergency releases, dented the rally slightly through April, but with Americans' demand holding strong, prices quickly rebounded. The average price per gallon of gasoline in the US hit a record $4.95 on Wednesday, according to AAA data. Prices are even higher in the most populous states, with Californians forced to pay an average $6.39 a gallon.

The rising prices are in sharp contrast to the declines seen throughout the past decade. The US fracking boom dragged energy prices lower for much of the 2010s as supply overtook demand. Yet the production surge flashed its first signs of a slowdown in 2019. Throw the pandemic, cratered demand, and market dynamics into the mix, and fracking quickly morphed into an anchor holding US production down at a time of intense need.

How fracking powered the energy industry's biggest party — and a nasty hangover

The previous decade's fracking boom quickly turned into a sprint, with companies prioritizing all-out growth over profitability. Near the end of the 2010s, companies started to show signs of a pullback as investment slowed. Industry giants told investors in 2019 they were considering shrinking production. Shareholders pushed companies to prioritize steady profits over the rapid growth seen in prior years.

Drilling in the oil-rich Permian Basin "is going to slow down significantly over the next several years," Scott Sheffield, the CEO of the energy producer Pioneer Natural Resources, told investors in November 2019.

"I don't think OPEC has to worry that much more about US shale growth long term," he said, adding that the firm "will be more cautious" through 2025.

That all came before the pandemic hit. Energy demand plummeted through early 2020 as locked-down Americans cut back on driving and travel. Oil-futures prices even turned negative in April 2020, with traders effectively paying others to take planned barrel deliveries off their hands. Producers preparing to slow drilling suddenly found themselves in a shutdown.

Turning the lights back on hasn't been easy. Demand remained weak until spring 2021, when vaccine rollouts powered a surge in consumer spending and travel. Supply has been slow to respond. Crude production neared 11.7 million barrels a day in March, down more than 1 million barrels from the 2019 peak.

The uptrend has also been a bumpy one, as producers have been wary not to repeat the growth spree of the 2010s. Investors have continued to push profit protection over faster pumping, saying firms need to pay down debts from the prior boom. That's led to producers' free cash flow soaring amid rising prices, a typical sign that the industry is leaving cash on the table and needs to accelerate investment.

Supply-chain issues have also held the sector back from boosting production. Unique sand used for fracking is now in short supply, and prices have nearly tripled from where they stood just one year ago. That's further hobbled the industry that's crucial for matching supply with Americans' extraordinary demand.

"We can't get enough sand," Michael Oestmann, the CEO of Tall City Exploration, told Reuters in February. "We're running less than the number of [fracking] stages we could pump in a day because we've run out of sand every day."

The Biden administration has tried to put more pressure on producers to ramp up activity, but there's been little improvement. The White House called on Congress in late March to pass "use-it-or-lose-it" fees for oil firms' unused wells, saying such policy would kick-start a production surge. Such measures have yet to materialize, and each party has been content to push the blame for sky-high gas prices to the other side of the aisle.

A quick solution, then, is unlikely to arrive. Much of the energy sector is beholden to its shareholders, and investors have learned from the recent past. They're firmly in marathon mode after the growth sprint of the 2010s. But as summer travel ramps up and pumping remains below pre-pandemic levels, consumers are in dire need of more production, and fast.