US oil exploration is set to drill in the Arctic National Wildlife Refuge in Alaska. This is being done to make full use of the oil believed to be hidden beneath the Arctic, particularly that past of it owned by the US – Alaska. This could generate a great deal of oil to add to the world’s market.
OPEC believes that the US is threatening the world’s oil prices by its overproduction. Not only is the US continuing to accelerate oil production while OPEC is cutting back to maintain oil prices, but it is doing so with cheap loans. It is also threatening the animal refuge that the ANWF is intended to be. All this in spite of its own large unused stockpile of crude oil! Nevertheless, many believe US oil exploration to be essential for the country.
This level of US oil exploration may be aimed at OPEC’s attempts to cut back on oil production in order to reduce stocks and maintain prices. It may also be aimed at making the best it can of America’s natural resources in the Arctic while the going is good and cheap finance is available. There is nothing wrong with this – other than exploiting a national wildlife refuge.
Many believe that American oil output is too high and is threatening oil prices worldwide. Its shale oil industry benefits from low-interest finance even though it has reserves that the president seems intent on selling. US crude oil production is forecast to average 9.3 million barrels per day 2017 and almost 10.0 million in 2018. Further Arctic exploration in Alaska may upset the ecology of the area and also affect oil prices
Not only is the US continuing exploration and opening new shale fields, but shale drillers are receiving cheap credit from lenders to do so. They can continue drilling while prices remain high enough to keep it profitable. In spite of OPEC’s commitment to maintain oil prices regardless of rising crude stocks, the growth of the shale industry depends on cheap credit. Even exploration firms can get credit at just 7% on the high yield bond market.
Without this, shale oil firms would not be able to continue at the current rate of production. Cheap credit is able to provide the cash, not only to maintain current production levels, but also to explore fracking in other US states. And to drill in a national wildlife refuge!
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