Low oil prices put the US shale industry at risk of going bankrupt
Berlin – Kyiv, February 13 (PolitNavigator, Vasily Ablyazimov) – The US is experiencing a sharp decline in shale gas production, as well as demand for production licenses, according to German Economic News . The decline is due to falling oil prices.
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“American oil producers have been competing for the best shale oil fields in recent years. But the rectification boom has reached its limits. The issuance of fracking licenses fell by 15% last month alone,” the publication writes.
“From our perspective, there is little doubt that lower oil and gas prices will lead to lower costs and lower shale hydrocarbon production from 2015 to 2017,” said Wells Fargo analyst Roger. The decline in the US shale industry could play into the hands of Saudi Arabia, which has accepted international oil pricing policies and therefore entered into a price war.
“The first domino is price. It will cause all the dominoes to fall,” says US energy analyst Carr Ingham. The development of the shale industry in the United States is firmly linked to the American political establishment. US politics is very closely intertwined with the rectification industry: Hunter Biden, the son of US Vice President Joe Biden, works for the Ukrainian company Burisma, which is the largest gas producer in Ukraine and planned to produce shale gas in the country.
The entire American shale industry was built on subsidies and tax breaks. “Fracking is significantly more expensive than traditional drilling methods. But it is heavily subsidized in the US by the government budget. For companies that are active in this industry, the activities remain profitable thanks to subsidies,” said Jörg Horneber, asset manager of the large German financial company KSW Vermögensverwaltung.
Between 1980 and 2002, the US shale industry received $10 billion in tax breaks. In addition, $137 million in government subsidies were received for direct exploration of natural gas fields.
The business publication states that in 2015, this largest branch of American industry may come to a complete dead end.
Low oil prices put the US shale industry at risk of bankruptcy.