With oil prices still tumbling, we’re seeing more and more United States producers losing money, slashing their workforce numbers and filing for bankruptcy. As we have previously noted, the shale revolution is an expensive one, and at these prices it has become too costly for companies to continue pumping oil, a move that could cause oil prices to stabilize.
Another industry professional concurs that the U.S. shale industry is “unsustainable.”
Texan billionaire Ross Perot Jr. warned that 30 percent of this sector may shrink, especially if per barrel prices drop below $40. Right now, U.S. shale producers are producing four million barrels per day, which is more than Iraq.
“I think the world will be shocked how quickly we [shut down production] within Texas,” Perot told CNN in Davos, Switzerland during the World Economic Forum this week.
In the past week, some major oil companies in the U.S. announced they’re cutting jobs and shutting down certain operations. For instance, BHP Billiton confirmed Wednesday it would be reducing its U.S. onshore rig operations by nearly half this year, while Baker Hughes announced plans to eliminate 7,000 jobs and slash capital spending by 20 percent.
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