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Take five oil change odessa tx2/7/2024 That means that any time OPEC+ considers cutting production, it has to weigh whether U.S. into the world's top's producer and an OPEC+ rival instead of just a customer. The shale revolution has reshaped global oil politics, turning the U.S. More discipline from American oil companies is also good for the global cartel known as OPEC+. That has positive economic impacts for individual companies, for oil-producing regions like the Permian and for a major segment of the American economy. More restrained investment means oil companies are less likely to suffer the busts that used to roil the industry.Īnd while oil prices are high, companies are paying down debt, merging with rivals to strengthen their positions and churning out cash. That's good for producers, including OPEC+ And it's been growing steadily even as prices swing around. The result: Production in the Permian is still growing, but it's growing more gradually. "They want return of dividends and cash back to shareholders versus prioritizing just growing production." more discipline from these shale producers," says Gildea. NPR The number of drilling rigs active at one time is a closely watched figure, indicating how active the oil industry is. There are multiple factors keeping companies from drilling even more - supply chain shortages, trouble hiring workers, or for some companies, a lack of good sites to drill.īut a huge factor in this shift towards moderation is pressure from investors who want oil companies to share their profits with them, rather than funneling the earnings back into the ground to make more oil. And that's where they remain today, more or less leveling off. Boom, bust.īut last year, despite prices topping $100 a barrel, rig counts stayed in the mid-300s. huge price crashes and a resulting collapse in drilling activity. In previous boom times, more than 500 drilling rigs were operating simultaneously across the Permian as oil companies chased high oil prices.Īll those wells contributed to a huge growth in oil supply, which then led to a huge oversupply, which then inevitably led to. shale players would rush in and increase production to try to capture that price increase," says Angie Gildea, the head of U.S. "When there was an increase in prices, the U.S. oil industry followed a predictable pattern. but something unexpected is happeningīefore the pandemic, the U.S. The result: Big profits for companies and higher employment and wages for workers in the Permian Basin. And currently, prices are well above that level. The most recent survey from the Dallas Federal Reserve found that the average Permian producer can break even on a new well when WTI (a key reference price for oil prices) is trading at $61 a barrel. Significantly, they've consistently been high enough for most producers to drill new wells at a profit. Prices have since fallen, but they remain at or above their pre-pandemic levels. Last year, Russia's invasion of Ukraine sent crude prices soaring well past $100 a barrel, and that meant producers were making money hand over fist. Oil prices are volatile - but still very profitable Here are five things to know about this shift, and what it means. Oil companies are raking in profits, and the steadier work has also been good for workers across the region.īut the economic, geopolitical and climate implications are more complicated. This shift is doing a lot of good in the Permian, America's most prolific oil basin. Instead, a sector infamous for its booms and busts is finally learning how to embrace the one thing they've never been known for: moderation. It doesn't look much like the booms of the past, when companies would scramble to pump as much oil as possible and the region would attract so many workers it became impossible to find housing and free hotel rooms. MIDLAND, Texas - America's oil industry is booming - in a surprising way.
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