for Shale Oil
However, it isn’t clear that newfound interest in a variety of shale plays outside of West Texas will prove durable.
Shale executives have repeatedly proclaimed their commitment to capital discipline, promising not to return to profligate spending in pursuit of growth at all costs. But output is growing sharply, poised to reach 12 Mbd in 2019.
Retail gasoline prices are forecast this year to reach their highest summer average since 2014, potentially wiping out household gains from last year’s tax cut.
Some commentators argue that due to the rapid rise in shale production, reliance on petroleum is not a national economic and security threat. But oil dependence remains a strategic vulnerability for U.S. consumers and businesses.
North Dakota is looking to manage its resources and finances prudently to keep as much damage from oil price volatility at bay and develop longer-term sustainable growth through deeper economic diversification.
Small independent shale producers are dealing with a the possibility of another oil price plunge with aggressive hedging, a development that should allow output to grow.
Despite continued rapid growth in U.S. shale, the global oil market could see price spikes and increased volatility at the beginning of next decade.
Exxon and other oil majors are still giving the green light to a handful of complex and risky but potentially highly profitable projects offshore, while at the same time increasingly shifting more resources into safer, smaller-scale shale drilling.
While U.S. crude production hasn’t fully recovered, it has increased by more than 300,000 b/d since September to average just under 9 million barrels per day. As a result, the OPEC-fueled boom in prices has stalled for the time being.
Under the border-adjustment tax, U.S. oil would be exempted from taxes if it is exported abroad, making it much more competitive. The tax, however, will have difficulty passing in Congress since it would also likely raise pump prices.