April 27, 2018 – Financial Times
Playing with fire: Iran deal looms over rising oil price
By Ed Crooks
Jerry Flory hates it when the price of oil goes up. The co-owner of Flory’s, a small, family chain of petrol stations and convenience stores about 40 miles north of New York, he says that when fuel prices rise customers look for someone to blame. The current targets include Congress, the Iraq war and the retailers.…
Read the full article here: https://www.ft.com/content/420023f8-4978-11e8-8ae9-4b5ddcca99b3
…It was widely expected that when prices rose to current levels, production from US shale reserves would fill the gap, but it has not quite worked out that way. US oil production is indeed growing fast, and Opec expects an increase of 1.5m b/d this year, roughly equal to the entire increase in global consumption. Higher crude prices have put the shale industry on a much firmer footing, too: it appears to be generating net cash, for the first time in its 10-year history.
But the US is not able to make good all the shortfalls in the rest of the world, in part because of logistical constraints. The US oil boom is concentrated in the Permian Basin region of Texas and New Mexico, and the pipelines to take that oil to refineries or export terminals became full around the end of last year.
Producers are returning to trucking their crude to market, which is inefficient and costly, particularly at a time when a shortage of drivers mean they are earning $100,000 or more a year.
The new pipeline capacity planned and under construction in Texas will make a big difference. But it will be “well into the first half of 2019” before those pipelines are available, according to John Zanner of research group RBN Energy.
