In response to OPEC announcing last Wednesday that it planned to cut oil production, which in turn sent oil prices skyrocketing, American oil companies took immediate action to let the organization know that America’s fate was not in its hands anymore.
“U.S. oil and gas companies put more drilling rigs into operation this week as oil climbed to its highest price of the year after this week’s agreement by OPEC to cut production,” the Houston Chronicle reported.
According to The Daily Caller, included among these American oil companies were Chevron, which activated seven new rigs in West Texas, and Continental Resources, which activated two new rigs in South Texas.
Likewise, the stock prices for numerous oil companies — including EOG Resources, Devon Energy and Whiting Petrol — had begun to soar.
“The shale producers will be the ones who benefit” most from OPEC’s announcement, energy-consulting firm Perry Management’s chief strategist Charles Perry told MarketWatch.
“Shale drillers have good backlogs of undrilled but proven leases, and they can get rigs and other equipment quickly,” he added. “So even if OPEC cuts production for a limited period of time, the shale drillers can quickly jump in and drill some new wells.”
In other words, American oil companies were not at the mercy of OPEC, though this had not necessarily been the case in 2014, when the organization reportedly began flooding the marketplace with oil to drive prices down and also respond to competition from those oil producers engaging in hydraulic fracking.
Thankfully, the effort ultimately failed, as American oil companies fired back by making their outfits more efficient. In the process, however, the companies reportedly dropped their oil rigs from a 2014 high of 1,309 to a 2015 low of 475, though their overall production rate plummeted by only eight percent.
Times have changed, and this time around it seems unlikely that OPEC’s moves will do much — if anything at all — to oil operations in the United States, except spur them into being even bigger and better.
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