FT News Briefing Soaring oil prices put US shale in a bind
Feb 16, 2022
Markets surged as Russia announced troop withdrawals, boosting US and European shares. Meanwhile, Eric Schmidt is launching a $125 million fund aimed at solving tough AI challenges. On the energy front, US shale companies face a dilemma: with oil prices nearing $100 a barrel, they must choose between maximizing profits and exercising production restraint. This situation has sparked intense debate within the industry about its long-term sustainability.
AI Snips
Chapters
Transcript
Episode notes
Shale's Dilemma
- Shale oil companies are hesitant to increase production despite rising oil prices.
- This restraint stems from past financial struggles and pressure from Wall Street investors.
Shifting Priorities in Shale
- Previously, shale producers prioritized oil production volume over profits, leading to financial difficulties.
- Now, they are focusing on profitability, resulting in higher dividends and renewed investor interest.
Balancing Growth and Profits
- The shale industry aims to modestly increase production without flooding the market while maintaining profitability.
- However, there are concerns that rising oil prices will tempt companies to return to their old habits of prioritizing production over profits.