Expert comment: US may be tempted to protect shale industry amid price war, but problems run deeper

Published:  21 April, 2020

Expert comment from Warwick Business School: Professor David Elmes, who leads the Global Energy Research Network at Warwick Business School and has more than 20 years experience in the energy and management consulting industries, said:

"It's not just the price per barrel that will be alarming for oil producers, it's the wider short and long-term challenges facing the industry.

"Coronavirus has reduced demand, but some industry forecasts acknowledged that long-term demand was flattening off last year, before the pandemic began.

"If these unprecedented low prices continue, the US shale industry will be calling for government support to avoid their debts dragging them under.

"The accusation that this is a price war supported by foreign states will offer a tempting opportunity for protectionism, when the shale industry is really a self-inflicted debt bubble caused by rapid growth in US production."

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