• The Oil Patch
  • Posts
  • 🛢️How the Transition Caused High Oil Prices

🛢️How the Transition Caused High Oil Prices

EIA Predicts Decline in Shale Oil Output

Author

The Oilman
September 22nd, 2023

Good morning, here's what the Oilman has for you today:

  • How the Transition Caused High Oil Prices

  • EIA Predicts Decline in Shale Oil Output

  • Upcoming Oil and Gas Events

  • Tweet of the Day

EIA Predicts Decline in Shale Oil Output

Oil output from the shale patch is going to decline by 40,000 bpd in October from this month.

This would be the third consecutive monthly output decline, the EIA says.

Permian leads the drop

More than half of the expected decline is seen coming from the Permian.

Production there will fall by 26,000 bpd, the EIA predicted.

Eagle Ford output is going down, too, but the Bakken will see a modest increase.

All this after industry execs boasted higher well productivity earlier this year.

Maybe those months of rig count declines are biting in.

And it also seems drillers continued to be focused on cash returns over output growth.

Can you really blame them?

The trend may yet change

With prices where they are, this may change.

The rig count decline has already reversed, with the U.S. adding nine rigs last week.

On an annual basis, though, the rig count is 16% lower than it was this time last year.

Again, this may change if prices embolden drillers.

Nobody knows if it will.

However, the EIA still forecasts record oil and gas production for the year as a whole.

It also forecasts another record year in 2024.

Maybe it expects prices to remain elevated long enough to motivate producers to stop being that cautious.

Today’s Edition Is Brought To You By ROX Exploration

Invest in the future of energy with ROX Exploration – a family-owned, independent company dedicated to exploring, developing, and producing oil and natural gas assets. ROX's team of experts drills and operates properties throughout Oklahoma.

If you're an accredited investor looking to diversify into direct oil & gas working interest offerings, then connect with ROX Exploration today.

How the Transition Caused High Oil Prices

Energy transition efforts are discouraging oil companies from boosting production.

As a result, the supply of essential hydrocarbon gas shrunk, pushing prices higher.

Apparently, we needed the World Petroleum Congress to tell us.

The industry is playing it safe

When Goldman this week raised its oil price target to $100, it attributed it to a combination of factors.

The combination: "a significantly lower OPEC supply and higher demand more than offset significantly higher U.S. supply."

So, U.S. production is rising significantly… but not significantly enough.

This is because the industry is being cautious.

When you’re constantly being bombarded with forecasts that basically predict your death, what are you supposed to do?

Start living more cautiously, that’s what.

No one wants to die before their time, right?

You and I will foot the bill

The transition is being hailed as something done for the good of everyone.

But it’s everyone that will pay for it.

It’s questionable how many will actually benefit.

What is not questionable is that the higher energy prices we are facing now are the direct result of the transition push.

And of its impact on oil and gas industry planning.

Here’s how the Aramco CEO put it:

"The current transition shortcomings are already causing mass confusion across industries that produce and or rely on energy.”

"Long-term planners and investors do not know which way to turn."

That’s how we get high oil and gas prices.

And that’s how they stay higher for longer.

Upcoming Oil & Gas Events

Around the Global Patch

🇺🇸 Canada iInitiates Trans Mountain pipeline partial sale.
🇨🇳 China's surging coal imports from Russia and Australia.
🇷🇺 Winter crisis: Russia targets Ukraine's energy infrastructure.

Tweet of the Day

Thanks for reading today's Oil Patch!

Stay oily, my friend.

Two quick requests before you go:

  • If you found this useful, forward this email to a friend to spread the word. 👇

  • Take 1 second to answer the poll below, and please tell us what you think 👇👇

What do you think of today's edition?

Login or Subscribe to participate in polls.