So what are the trade offs for developing a petroleum industry from scratch. There is a finite resource available to the Japanese Govt. US oil will always undercut you on the world market so there is no external revenue, in fact given the relative costs its a greater drain on own resources than importing from the USA.
Can you cut back on fuel useage? all those tanks and trucks and planes in use in China, all the supplies being moved from Japan to the war front. A fleet swinging at anchor is a fleet whose skills are deteriorating.
Not saying it can't be done but that there are opportunity costs to this course of action. Whats the trade off - couple of CV? couple of divisions - the head of the minister that agrees to this?
And if the embargo proves ineffective whats the US next move?
The trade off is not that bad. Shipyard and Shipyard workers are not close subsitutes for oilmen. Sometimes people just make dumb decisions. Likely the cost saving from not buying foreign oil makes up for the development costs. And it does not have to be all or nothing. Japan can still import a lot of oil, as long Daqing covers most military needs under wise usage rules, it takes away a lot of the pressure. Now the actual sacrifice varies.
1) Cut of oil produced. Normally 50/50 split back then with Texas land men. They provide the capital and drill field. Likely do refinery. Costs will be paying 1 USD per barrel for half the oil produced. So Japan saves 50 cents on dollar under this plan, but has to swallow a little pride. It is how Saudi got going. How Italy would have gotten going until WW2 intervened.
2) Develop locally. You can squander almost unlimited money looking for oil (Wildcating), but if we assume the field has been found, then it goes down a lot. Well under 1 USD per barrel, so again some cost savings. Oil is a lot like gold. If you have found the gold, you can find a way to develop at profit.