Oil producers need help to refinance, restructure coronavirus-induced debt: Senator
FOX Business Blake Burman talks about Texas Gov. Greg Abbott’s efforts to reopen the Lone Star State. Sen. Kevin Cramer, R-North Dakota, discusses whether the oil and gas industry needs a bailout during the coronavirus pandemic.
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The U.S. natural gas market has become the latest victim of the coronavirus. The shutdown of the global economy due to the pandemic put a massive hit on our country, energy jobs and our global natural gas dominance.
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|UNG||UNITED STATES NATURAL GAS FUND LP UNIT (POST REV SPLIT)||12.64||-0.52||-3.95%|
Before the virus hit, the United States was the number one natural gas producer in the world. That made U.S. natural gas prices among the cheapest around the globe. And natural gas dominance opened the door to natural gas exports, once thought to be impossible a decade ago because before the "shale revolution."
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Low natural gas price was an invitation to factories that wanted to access cheap natural gas. That created jobs in the United States and helped U.S. factories prosper. Yet after the COVID-19 economic shocks, everything changed. The shutdown of economies in Europe and Asia reduced the demand for natural gas. So supplies in those countries started to build. In the United States, a pullback in production made U.S. gas more expensive than it is overseas. In fact, it is far cheaper to import natural gas than it is to use our vast supply.
Even though the price of oil has stabilized after a price war between Saudi Arabia and Russia compounded by the sudden drop in demand for gas , many producers to shut down shale oil wells where the byproduct, in most cases, was natural gas.
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And the situation is deteriorating.
The number of rigs drilling for oil and gas fell by 408, last week, according to Baker Hughes rig count. That was the seventh week in a row and the fewest operational rigs since 2016. We are witnessing drilling retracement which is signaling more U.S. natural gas production decreases. Oil-directed drilling declined by 53 rigs, with four natural gas-directed platforms that focused only on natural gas were shut. Even offshore gas production was down. The U.S. was the biggest producer in the world, but because of well-shut ins due to coronavirus, that will soon change.
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That's why it is critical for the U.S. shale industry to regain its dominance. It creates jobs not only in the energy industry but because it feeds other businesses with cheap natural gas, more hiring can be done in user industries too.
The Trump administration needs to do what it can to help the natural gas industry through these tough times because a strong gas industry is good for America and American jobs.
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Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at firstname.lastname@example.org.
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