| America's shale industry is about to undergo its latest transformation, and this time, consumers aren't going to come out on top. Javier Blas visited Midland, Texas, the capital of the Permian Basin and an epicenter of US oil production. What he found there was an interesting consensus: Output will likely reach its peak in a few years and remain flat. That leaves the question of what a post-peak planet will look like — and right now it looks like shareholders are going to be the big winners of the shale slowdown. As Liam Denning notes, fracking enabled tremendous growth in US oil production. But investors have discovered that reinvesting that their money in growing the industry meant they weren't making profits. The once famously fragmented shale industry is ripe for M&A, and it's going to mean big money for massive conglomerates like Exxon Mobil (which, Javier writes, is in the enviable position of having lots and lots of cash) and ConocoPhillips that have deep pockets to prioritize efficiency over growth. In the grand global energy scheme, oil has been a tumultuous commodity, Isabelle Lee writes, "largely blamed for the great spike in global inflation." OPEC+'s most recent output cut — which comes alongside forecasts for greater demand — also put an end to a recent stabilization in oil prices, and it's further stoking fears of economic trouble ahead. It's a complicated crossroads for energy markets: Countries and companies alike are coming up quickly on new deadlines to curb their fossil-fuel emissions, and electric-vehicle businesses are making incredible headway with car buyers around the world. Yet petrochemicals will continue to prop up oil demand even as our gasoline consumption wanes. The fracking boom rejuvenated America's energy market, and it meant lower prices for happy consumers. But fracking's environmental and agricultural impacts — and, perhaps most consequential of all, unsatisfactory profits for investors — fly in the face of efforts to curb climate change. What will Midland look like in 10 years? It's anyone's guess. Notes: To contact the author of this newsletter, email bsample1@bloomberg.net. This is the Theme of the Week edition of Bloomberg Opinion Today, a digest of our top commentary published every Sunday. Follow us on Instagram, TikTok, Twitter and Facebook. | 
No comments:
Post a Comment