Saudi Arabia’s decision to flood the oil market and drive down prices is affecting the bottom line of American oil producers=, but the price war may force the industry to grow more disciplined.
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“It’s hard to imagine making money at $30 or below $30 [per barrel],” American Gas Association president Karen Harbert told FOX Business’ Connell McShane.
Over the course of the last month, the price of oil has fallen from a high of nearly $54 a barrel to more than $30 per barrel, according to data from GasBuddy. As a result, the average price of one gallon of gasoline in the United States fell to $2.34 from a high of less than $2.50 in the course of a month.
Saudi Arabia, as recently as five years ago, increased its oil production, driving down the price for American producers, according to Harbert. The American natural gas and oil industries were able to weather the storms then, she added.
“What that forced our industry to do is to get more focused, more self-disciplined and we came out if it as the largest oil and natural gas producer in the world,” Harbert said.
American oil producers in the Permian Basin are able to make short cycle decisions allowing them to increase production in more efficient wells, she argued.
Harbert also made clear that the oil industry is not asking for a handout. The industry, she said, is focused on providing energy to the first responders, hospitals and 179 million Americans who rely every day on the natural gas in their homes.
While the low price of oil presents her industry a challenge, Harbert noted cheap energy has a positive effect on the economy's foundation. She also commended the industry for its ability to continue production despite coronavirus, continuing to provide Americans with energy.
“Thirty dollars [per barrel] is not ideal. One dollar, sixty cents for natural gas is not ideal," Harbert said. "But that’s really focusing us to be more self-disciplined and to plan for the longer term.”