Why the U.S. can (and must) shake up the oil industry

Why the U.S. can (and must) shake up the oil industry

Five years ago, natural gas prices in North America were so high many chemical manufacturers left their U.S. operations to move their bases overseas. However, with a new focus on American oil and oil interests, there are signs things could soon change – as new technologies and business models are being discussed by those at the upper levels of the oil and gas industry.
Consider what oil companies’ profits were a few year ago.
As American Progress notes: “Big Oil’s $93 billion in profits in 2013—impressive by any standard—were nonetheless a 27 percent reduction in profits compared to 2012, primarily because gasoline averaged 16 cents per gallon—or 4 percent—less. Despite the decreases, Exxon Mobil, Shell, and Chevron still had the first, seventh, and eighth, respectively, highest profits of any global public company on the 2013 Fortune 500 list.”
And yet, with the advent of new processes in obtaining oil, this prices could be better for oil companies. This means the maintenance of job security and financial benefits for more countries.
The Financial Times summarizes this important advance:
“Few issues are more significant for the future of the world economy. Threats to global crude supplies have risen this year, with turmoil in Iraq, mounting tensions between Russia and the west, and unrest in other oil-producing countries such as Libya. Yet prices have fallen, with internationally traded Brent crude dropping from about $108 per barrel at the start of the year to about $102 today.
In large part, that has been a result of booming US production. Between 2011 and 2013, the US raised its output by 2.2m b/d, more than the entire increase in global demand.”
Shale well discovery and oil production is a large part of why this has changed. However, shale wells are different to conventional wells since their production drops off much more quickly.
Roy Lipski, CEO of Velocys notes that today abundant supplies of shale gas have lowered American gas prices to a fraction of those in many other countries.
“The International Energy Agency now predicts that these supplies will fuel the U.S. economy for the next two decades. American companies in energy-intensive industries are currently enjoying a significant competitive advantage, and the same tailwind is luring manufacturers back to the USA from India, China and other developing countries where wages and other costs have been steadily rising.”
Of course much can change and suddenly. This is exactly why Lipski and others will be discussing this at the upcoming Oil Council North American Assembly. At this and other upcoming events, major players in the industry will be focusing their time and attention on the future of the oil and gas industry, recognising the impact of shale and the depleting resources from other areas. The careers and job security of employees are priority, as well as technological innovations.
American companies are poised to lead and help improve the future in this extent. And considering the financial impact on everyone that oil has – as commodity and as economic factor – it’s important for everyone to care about what such companies will decide.
The openness of such conferences, like the North American Assembly, is one clear way to obtain information straight from the horse’s mouth and get information first.
For further information, visit www.oilcouncil.com
Oil and Gas Press

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