The growth of America’s shale fields is slowing as producers in the Permian Basin, a major oil-producing area in West Texas, are pumping less oil per foot drilled in each new well and output guidance from leading companies has shown that growth is coming in at the low end of expectations, according to analysts. The Permian Basin, which has provided 90% of global oil output growth in the past decade, could reach a production plateau within five years, adding to concerns over the US’s ability to be a swing oil supplier. The slowdown will complicate the Biden administration’s efforts to tame pump prices, and could hand more power back to OPEC as Russia’s invasion of Ukraine upends oil and gas supply.
Decelerating growth in shale production will eventually lift prices for oil and gas moving forward. This may not be an issue in 2023 and decelerating economic growth crushed demand, but coming out of the forthcoming downturn, oil and gas prices are primed to move much higher.
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