The website “Oil Price” denied (Oil PriceThere are political motives behind the negative attitude of the American shale sector to President Joe Biden’s calls for OPEC to increase production.
“Although some observers may see the negative attitude of the oil shale sector as politically motivated, the truth is that they are, in fact, interacting with profit and fear,” the site said in a report written by Irina Slave.
The report indicated that shale oil companies are now making more profits than ever before, and while they are happy to help Biden reduce the price of gasoline, they are keen to avoid another collapse in oil prices.
When Biden first called for OPEC to raise production earlier this year, he received an angry reaction from Texas Governor Greg Abbott, who told Biden to “step back” and allow American companies to take care of the supply problem that was driving up fuel prices.
The awkward relationship between the current administration in Washington and the political right-leaning oil sector has been repeatedly highlighted in the media along with Biden’s anti-oil moves, such as the killing of the Keystone XL pipeline project and the temporary halt to drilling. About oil and gas in the US federal territory.
However, political mismatch alone cannot stand in the way of profiting from higher prices, so it is not the only, or even important, reason for the US oil sector’s production constraint, amid rising prices for both crude oil and products. In fact, there are at least two important reasons for this restriction.
The first reason is that shale drillers are making much more profit at the moment (the biggest since the start of the shale revolution).
And speaking of crashes, the second reason why shale drillers exercise restraint is OPEC. The cartel has twice shown that it has the power to cause price crashes that hurt its members, but it seems to hurt US shale oil producers even more.
After several waves of bankruptcies, it seems that the shale drillers have decided to take a different approach to production, betting on higher profits rather than higher production.
Whatever the case, production in the US shale patch is rising. Reuters reported – earlier this week – that production in the Permian Basin, located in Texas and New Mexico, was on the verge of recording a record, exceeding production levels before the epidemic next month.
Total production is also on the rise. According to the latest weekly industry update from the Energy Information Administration, the United States was producing 11.5 million barrels per day of crude, putting it first globally and representing an increase of one million barrels per day over the course of the year. This is lower than the record production rate of 13 million barrels just before the outbreak of the pandemic, according to the report.
It may come as a surprise to some that the industry is not averse to working with the federal government to make gasoline more affordable. The messages from shale are not all in the same tone, but they tend to be encouraging.
For example, Occidental Petroleum CEO Scott Sheffield has been quite outspoken in telling Biden to “back off” from the US oil industry rather than calling on OPEC to raise oil production, so American drivers can pay less at the fuel pump. Sheffield said – earlier this month – that Biden “should retract his rhetoric on future federal leases.”