Despite high oil prices, America’s shale drillers are holding back on new drilling in the face of what they fear will be a war on their businesses from the Biden White House. Jamie Smyth and Amanda Chu report for the Financial Times:
America’s shale pioneers have vowed to keep a lid on drilling even if oil hits $100 a barrel, citing a need to maintain capital discipline and what they claim is a “war” on fossil fuels waged by the Joe Biden administration.
The price of Brent crude has surged more than 25 per cent to $95 a barrel since June following co-ordinated cuts in production by Saudi Arabia and Russia. This has pushed up petrol prices and complicated efforts by the US Federal Reserve to rein in inflation, presenting a political challenge to President Joe Biden as he seeks re-election next year.
Last year, when oil prices surged to record highs following Russia’s full-scale invasion of Ukraine, the Biden administration urged shale drillers to pump more oil. But they have largely ignored these pleas. There are few signs the industry plans to plough the extra profits generated by the recent upswing in prices back into new exploration or production.
“I just don’t see producers getting all excited about near-term price and I think we are going to see continued [price] volatility,” said Rick Muncrief, chief executive of Devon Energy, an Oklahoma City-based company.
He said futures markets showed oil prices moderating six months to a year from now, adding that there were many uncertainties, including whether higher oil prices would tip economies into recession and destroy demand.
“By nature, most of us will just say ‘lets stay disciplined. Let’s keep our production flat’,” Muncrief said.
Read more here.