“We believe we are at a tipping point for U.S. oil production at current commodity prices,”
Travis Stice, CEO, Diamondback Energy
I have some hopeful news to pass along. This week, a headline in the Wall Street Journal made my day: “U.S. Drillers Say Peak Shale Has Arrived.” Here is a gift link to the article, ICMYI. By definition, if we are at the peak, then the valley is coming…and less oil means lower heat-trapping emissions. Let’s go!
A surprising admission from oil executives
Notably, this prediction is coming from the oil drillers themselves. Despite favorable policies for fossil fuels lately, U.S. oil companies are planning to cut spending and scale back production. Why? For them, it comes down to simple economics.
Setting the price of crude oil is a complex, international process. Uncertainty in the global economy, new tariff pressures, and OPEC’s decision to pump more oil have all helped drive prices down. Profits have been tumbling this year, and U.S. oil companies and their shareholders aren’t amused. Typically, lower prices at the pump follow, but gas prices are actually up since the start of the year, so consumers aren’t thrilled either.
According to the CEO of Ring Energy, Paul McKinney, prices need to be at least $85 a barrel to incentivize drilling. A barrel of oil is now around $60, so the financial incentive just isn’t there. There will be fluctuations in price, but once companies scale back production and close rigs, it’s very challenging and costly to scale back up.
We had been heading toward peak oil demand already because of the booming renewable energy industry around the world. Compounding that trend with this new set of market pressures is expected to shorten the timeline for our breakup with oil.
This begs the question: Where should we invest our time, energy, and money? It seems logical to invest in the future (clean energy) rather than looking in the rearview mirror. I’m hopeful this is another sign pointing us in a better future.
Two quick notes:
- Please join me in remembering the women and men who sacrificed their lives for our country.
- I’m taking a brief hiatus for some travel, but will be back soon. Enjoy your MDW!
Let’s do something about climate change. Learn about it. Talk about it. Help solve it.