Underwhelming U.S. Output A Significant Stressor In The Oil Price Crisis

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Riddick
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Underwhelming U.S. Output A Significant Stressor In The Oil Price Crisis

Post by Riddick » 06-19-2022 01:14 AM

As domestic crude oil output remains below pre-pandemic levels, the U.S. oil and gas industry’s lack of significant activity continues to play a major role in soaring energy prices, with analysts pointing to Washington & cash discipline as the causes.

This cash discipline has been the new normal for domestic onshore shale firms, says Campbell Faulkner, senior vice president and chief data analyst at OTC Global Holdings, the world’s largest independent institutional broker of commodities.

Globally, collective exploration and development (E&D) expenditures rose by a tepid 1 percent last year. Moreover, with some of the world’s largest banks divesting from or applying restrictions on the fossil fuel industry, it has become challenging for the fossil fuel industry to attract new investment.

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Faulkner contends greater industry activity can only become ubiquitous if the “Biden administration ceases its predatory stance against domestic oil and gas production.” Bob Bilbruck, the CEO at Captjur, a technology and strategic services firm, echoed this sentiment.

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“It’s a cute little political game they are playing with the oil industry to make it appear that they are pro-drilling, but when the rubber hits the road, they are making it very hard on these companies to get new drilling leases and operations underway,” Bilbruck said.

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Despite the rhetoric emanating from Washington, ESG and climate-related risks will start taking a backseat in the short term due to the plethora of challenges the global economy is facing, according to Jarand Rystad, CEO of Rystad Energy.

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According to the American Automobile Association (AAA), the national average price for a gallon of gasoline is up more than 61 percent year-over-year.

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The price hikes won’t end anytime soon, writes Phil Flynn, a market analyst and author of The Energy Report, citing the futures market. This, he said, will harm economic growth, consumers, and businesses.

For the global energy market to rebalance, crude prices need to average $135 a barrel in the 12 months beginning in July, Goldman Sachs analysts predicted in a new note. Prices are expected to surge to $140 this summer amid a drop in Russian output, recovering Chinese demand, and the busy U.S. driving season.

Motorists will feel like crude oil is closer to $160 per barrel because of intense bottlenecks at refineries, the investment bank warned. But should inflation continue to be stubbornly high and the economy slip into a recession, oil prices could fall back to around $100, Faulkner said.

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Chevron CEO: There May Never Be Another Oil Refinery Built in US Again

Post by Riddick » 06-19-2022 03:27 PM

Chevron CEO Mike Wirth said in a recent interview he does not believe another oil refinery will be built again in the U.S., saying government policies are a key reason why gas prices continue to rise with automotive club AAA reporting $5.01 per gallon nationwide on average, and California leading the way at $6.40 per gallon.

“There hasn’t been a refinery built in this country since the 1970s,” Wirth said during Bernstein’s Strategic Decisions Conference on June 1 when asked about more refining being added in the Gulf of Mexico. “I personally don’t believe there will be a new petroleum refinery ever built in this country again.”

Continuing further, Wirth said that the federal government’s current policy is to reduce the demand for oil, making it “very hard” in a company “where investments have a payout period of a decade or more.”

Wirth also asked rhetorically, “How do you go to your board, how do you go to your shareholders and say ‘we’re going to spend billions of dollars on new capacity in a market that is, the policy is taking you the other direction.'”

Last year, the Biden administration signed several executive orders to limit new oil drilling on federal lands, directing federal agencies to eliminate fossil fuel subsidies, and ending construction of the Keystone XL pipeline.

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A mind should not be so open that the brains fall out; however, it should not be so closed that whatever gray matter which does reside may not be reached. ART BELL

Everything Woke turns to Image
-Donald Trump Image

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