The question of the week: What’s happening to the oil industry? It’s a tough one to answer because the response depends on who you ask as well as on what day you ask. Without doubt, the oil industry is in a state of flux with so many factors influencing the price and demand for crude. The price at the pump delights consumers, but those employed by the oil industry are nervous as belt tightening turns into job cutting. As the industry struggles to survive the conditions of the market, the Democratic Party continues to harass the industry by stepping up their efforts to make drillers accountable for suspected infractions of waste disposal regulations.
Read on, and decide whom you believe about the future of the market. The industry optimists want to keep investors happy, but the media and market analysts appear to be painting a different picture. In the end, most feel that the market will self-correct and realign with the current world economy. So, the question isn’t so much “what” as it is “when”.
U.S. Oil–Rig Shut Down Not Enough to Stop Production
A Bloomberg article by Jake Rudnitsky claims that the sharp decline in the number of working oil rigs to the fewest since August 2011 is not enough to stop production growth, according to Goldman Sachs Group Inc.
Drillers say that improvements in technology are enough to offset spending cuts.
Reuters Claims U.S. Oil Boom Will Plateau this Summer
A Reuters report by Maria Gallucci differs from Bloomberg claims. Galluci said that U.S. shale oil production is on track to plateau by May or June. By staying flat and steady, production might not nosedive in the way that analysts feared for the second half of the year, according to the article.
Republicans Not Rushing Keystone Veto
A WSB Radio blog by Jamie Dupree noted that the recently passed bill authorizing the start of construction of the Keystone XL pipeline has yet to be delivered to President Obama.
Republicans decided to hold on to the bill while lawmakers are away on a President’s Day break so they will all be present to publicly respond when the President vetoes the plan, which will demonstrate Obama’s disregard for creating much needed jobs. Maybe the delay will give the President and the uninformed environmentalists time to watch the fires from the West Virginia train wreck continue to burn and re-think the common sense of building an environmentally safe pipeline. A map of the natural gas pipelines already crossing the country that have been in place and operating for decades without incident tells us that a pipeline is the safest way to transport oil and gas. We can only hope that our President has the courage to change his mind and not pander the NIMBYs who are afraid of losing votes.
Congressional Democrats Press Fracturing Oversight
An Associated Press article reports that Democrats on a congressional oversight panel are stepping up their investigation into how well states are regulating the disposal of oil and gas waste by drillers, citing environmental concerns. Republicans on the committee are not taking a position on the investigation.
Price Rally Puts U.S. Shale on a More Sustainable Course
According to a Reuters Newswire report by John Kemp, U.S. shale oil producers responded to lower oil prices more quickly than analysts expected. Their response should ensure shale production reaching a plateau by May or June rather than falling in the second half of the year. The report agrees with other media analysts, while oil industry pundits claim that production will steadily increase as prices recover.
On and Offshore: U.S. Oil Production is Slowing
In yet another article on the state of U.S. oil production, United Press writer Daniel J. Graeber claims that quarterly reports for offshore and U.S. shale companies show a slowdown in production behind market swings.
Declining prices and demand for product has forced oil services companies like Haliburton to cut spending in half. The ripple effect of plummeting prices, although they have showed signs of recovery, caused the Apache Corporation to cut the number of rigs by 70 percent and reduce hydraulic fracturing staff by half.