US President Donald Trump’s efforts to lower energy costs have resulted in a sharp decline in oil prices, putting the US shale industry at risk of collapse. The US is now a net exporter of oil and employs over 2 million workers in the industry, but low prices could lead to production cuts and bankruptcies.
Just five years ago, domestic oil production was around 5 million barrels per day, but thanks to advancements in technology, production has skyrocketed to over 13 million barrels per day. The Permian Basin in Texas and New Mexico is responsible for a significant portion of this increase.
However, Trump’s demand for low energy costs has led to a sharp decline in prices, currently trading at around $63 per barrel. This could have severe consequences for the US shale industry, with Rystad Energy predicting that production could fall by one million barrels per day if prices drop below $62 per barrel.
The low oil prices are not just a result of Trump’s policies but also due to retaliatory moves from OPEC, led by Saudi Arabia. The cartel has been losing influence in recent years and is now trying to regain its market share by reducing production cuts.
The US shale industry was once hailed as the savior of American business success, innovation, and dominance. However, low oil prices threaten to undermine this status quo. As one industry expert noted, “Be careful what you wish for, Mr. President.”
Source: https://www.theglobeandmail.com/business/commentary