By Zoe Thomas

Petrol at one Michigan service station hit 47 cents (33 pence) a gallon last Sunday as a price war between local stations forced the owner to reduce prices to levels not seen in decades.

The sub-dollar level is unusual even in the US, where the average national price on Sunday was $1.89, according to the American Automobile Association.

But the steep drop in Michigan is indicative of the struggle engulfing the oil industry in the US and globally. Growing competition, excess supply and shrinking demand are forcing the price of oil to record lows.

In the US, perhaps, no group understands this more clearly than the hydraulic fracturing (fracking) industry – the producers of shale oil and gas.

Fracking took off in the US in 2010 as a means to extract large reserves of oil from within hard rock.

The industry had support from the government as a means of achieving energy independence and bringing down prices at the pump.

As a worldwide oversupply has grown and the price of oil has dropped to a 12-year low – below $30 a barrel – many shale oil producers have been forced to shut their doors or make cuts to keep costs down.

By November last year, 93,800 people had been laid off by US-based energy companies in 2015, according to research compiled by Challenger, Gray & Christmas.

“All the companies that survive will be leaner and be able to do more with less,” says Sam Ori, executive director of The Energy Policy Institute at the University of Chicago.

According to law firm Haynes & Boone, 42 oil and gas companies filed for bankruptcy in North America in 2015. This number is expected to increase this year as the industry struggles to cope with mounting corporate debt and oil prices that have dropped 70% in 18 months.

A third of US oil and gas companies could be gone by the middle of 2017, according to Wolfe Research.

Continue reading at BBC…

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Areas of Focus: Energy Markets
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Energy Markets
Well-functioning markets are essential for providing access to reliable, affordable energy. EPIC research is uncovering the policies, prices and information needed to help energy markets work efficiently.
Fossil Fuels
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Climate Change
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Climate Change
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Hydraulic Fracturing
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Hydraulic Fracturing
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