Myths and Misconceptions
Last month, writing in “Oil Voice”, Art Berman sought to contradict an article on the Wall Street Journal’s editorial page entitled “Lessons from the Energy Export Boom”. While some of the details have changed since that time, it is helpful to reiterate Berman’s points which debunked some industry myths and misconceptions.
While we like to think that we are emerging as a dominant player in the global energy market, we have imported 47% of our crude needs so far this year. In fact, we are still the world’s largest importer of crude. Conversely, the real energy superpowers, Saudi Arabia and Russia, do not import oil.
Break-even prices in some shale plays are much higher than generally assumed. In fact, some producers in the Permian Basin of West Texas and New Mexico were losing money at recent prices.
Of course, reaching the milestone of exporting almost a million barrels of oil per day was hailed as a seminal event. However, it should be remembered that shale oil is extremely light and can be used by only a limited number of refiners, most of which are in the U. S. That is why West Texas Intermediate sells at a discount to Brent crude. The surge in U. S. exports last month was mostly due to production outages of Nigerian Bonny Light due to political turmoil. With Nigerian production recovering, our exports will almost certainly drop.
To read the article in its entirety, please go to https://oilvoice.com/Opinion/5829/Energy-Nonsense-From-the-Wall-Street-Journal .
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