OPEC + and US President Joe Biden will end the "shale revolution"

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At the last meeting, representatives of the OPEC + countries made a joint decision to increase oil production. Very soon Russia will be able to return to the "pre-crisis" indicators again. At the same time, an increase in volumes will inevitably lead to a decrease in the cost of a barrel. The head of the largest domestic private company Lukoil, Vagit Alekperov, generally called expensive oil almost evil, which is quite unusual to hear from its producer. What, or who, are oil producers really afraid of, and why are they willing to fight an expensive barrel?

The OPEC + deal to restrict the production of "black gold" in its current form is a direct consequence of two significant events in the spring of 2020. Then, at the same time, the beginning of the coronavirus pandemic and the so-called "oil war" between Saudi Arabia and Russia coincided. Undoubtedly, there was a certain causal relationship between them. Due to coronavirus restrictions, the world economy began to shrink, and with it the volume of demand for fuel and hydrocarbons. In this difficult situation, Riyadh took the path of dumping, flooding the market with its cheap oil with the quite obvious goal: to seat competitors at the negotiating table on its own terms, or even to ruin and knock them out. Just six weeks after the start of this trade war, the parties were able to come to a new agreement in the OPEC + format to cut oil production, but the Arabs finished their game to the point that "black gold" for some time showed a historical anti-record, generally going into a negative zone. Following oil, natural gas also collapsed to abnormally low quotations.



Today, after almost a year and a half, we can talk about a gradual recovery of the world economy. The volume of industrial production is growing, oil and gas are again needed by everyone. The average price for a barrel of "black gold" is about $ 70. If OPEC + maintains quotas, then quotations may rise to $ 100 or more. However, the cartel and the countries that have joined it do not want to do this. The head of Lukoil commented on the situation as follows:

I would not like to see oil prices above $ 100 per barrel again, as this can stimulate investment in low-profit, ineffective projects and then again lead to what we have already gone through - the collapse of the market.

Let's try to understand why Vagit Alekperov is so afraid of earning a little more petrodollars. With common sense, it becomes clear that these collective actions are directed against just one country, which never joined the deal. We are talking, of course, about the United States.

The American "shale revolution" came as a very unpleasant surprise to everyone, turning the United States into the largest exporter of hydrocarbons. Washington fundamentally did not join the OPEC + agreement, without taking on any formal obligations. While others were cutting down, Uncle Sam was the first to start increasing it. However, all these shale projects have one weak point - the threshold of profitability. For the production of "light and sweet" oil to pay off, a barrel must be quite expensive. The current situation with the growth of the world economy is beneficial primarily to the Americans, but the OPEC + countries have put a pig on them by starting the gradual abolition of quotas. As production rises, oil quotes will begin to decline, hitting "low-profit, ineffective projects."

The most interesting thing is that the White House itself can put an end to the "shale revolution". If Republican Donald Trump actively supported his oil workers, then Democrat Joe Biden staked on "green". Washington will now clearly play out the new environmental agenda at the expense of shale producers. Judge for yourself.

At firstThe United States has defiantly returned to the Paris climate agreement, and the country's new course is marked by a "green deal".

Secondly, Biden's team banned the construction of new oil pipelines and the extraction of "black gold" in the federal lands.

Thirdly, proceeds from the recent sale of 20 million barrels of oil from the SPR Strategic Oil Reserve (3,2% of the total) will fund the President's infrastructure plan, which will provide $ 7,5 billion for the construction of charging stations for cars and another 73 billion - for the infrastructure for the transportation of clean energy.

FourthlyThe Democratic Party of the United States intends to raise the corporate tax rate from 21% to 28% and replace subsidies for fossil fuel companies with investments in renewable energy sources. The Hill comments on this as follows:

The abolition of such subsidies will bring about $ 35 billion in tax revenues, which will be directed to the development of renewable energy sources. In parallel, Democrats in Congress are drafting legislation taxing the major oil companies that emitted the most greenhouse gases between 2000 and 2019, arguing that the measure could generate $ 500 billion over the next 10 years.

Fifthly, the US oil sector is still waiting for a series of tax “optimizations”: cancellation of foreign production taxes offset, cancellation of oil recovery credit, cancellation of write-off of intangible costs for drilling, cancellation of write-off of exploration and drilling costs, cancellation of exemption from corporate income tax for public partnerships on fossil fuels.

Finally, the pressure will be carried out at the business level as well. So, Larry Fink, the head of the investment company BlackRock, promised to put pressure on those companies that would sabotage the "green" energy transition and refuse to reduce harmful emissions into the atmosphere.

Thus, there are very real chances that the American "shale revolution" will be strangled by the country's authorities in the White House. And the OPEC + countries will gladly help them in this.
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  1. -1
    8 September 2021 22: 51
    This shale revolution was given. In fact, it was 10 years ago.
    And in the news they have been "strangled" and "strangled" for the same 10 years. The last time it was "finally strangled" was quite recently, when prices fell in the crown.
    And here again ...

    By the way, they wrote that Gazprom is also developing them officially ....
  2. +2
    9 September 2021 09: 51
    Where does Biden get green electricity? Thermal power plants that run on polluting hydrocarbons? Or from hydroelectric power plants that alter the surrounding ecosystem? Or from nuclear power plants, which are the only harmless ones?
  3. -1
    11 September 2021 16: 45
    The way the United States is carrying out the green revolution is correct and thoughtful and reasonable. The era of energy resources is over, you can argue about plus or minus, 5 years, and that's it. The raw materials industry in the United States has never been, in terms of total volume, the leading one. In terms of its share in the economy, 3-4%, while in absolute terms of production it is much higher than the Russian one, it does not play such an important role. It is not in vain that the leading oil and gas companies in the United States have begun to invest huge amounts of money in green economies. In particular, Exxon Mobile is building a huge electric car charging network across the country. The number of solar panels is increasing before our eyes (this is especially noticeable due to the fact that in the USA, incomparable with Russia, and even with Europe, the number of individual, single-family houses with batteries installed on the roof. These families, not only switched to renewable energy, but also They earn by selling surplus electricity. Vast expanses dotted with wind turbines have become part of the landscape. New nuclear power plants, as far as I know, are no longer being built.
    Yes, it is clean energy, but it remains extremely dangerous despite the technology. How, in this situation, the shale workers can turn, their own problem, tk. in today's conditions of movement towards green technologies, it is naive to count on help and subsidies from the state. Therefore, what Trump did is the day before yesterday, and Biden's actions are tomorrow.
    Therefore, both OPEC, and Russia, and shale, this is a passed stage. The agenda of the world community, they are not even remembered about. And if they do remember, then about how to get rid of it as soon as possible.
    It is a pity that in Russia they continue to chew the same oil and gas gum, not realizing that, in general, there is nothing to talk about. I look at these round dances of Russia around SP-2 and am amazed at how many mines break for nothing.
    In the same Germany, 50% of energy TODAY is produced from renewable sources.
    What future can we talk about ?!