The U.S. shale revolution is over. Russia and Saudi Arabia are thrilled – by Eric Reguly (Globe and Mail – April 1, 2020)

https://www.theglobeandmail.com/

For more than a decade, the American shale oil industry played a high-stakes game of chicken with Saudi Arabia and Russia – and kept on winning. In March, its luck ran out, big time, and the good ol’ boys in Texas are already pleading for mercy as oil prices plunge at unprecedented speed.

Any sense that the shale companies can tough it out as they did during the last great oil price downturn, in 2014 and 2015, is vanishing, even if a few stalwart optimists believe a rebound is inevitable, because the best cure for low prices is low prices.

They are right. But when? The V-shaped recovery seen in the previous price collapse could prove elusive as COVID-19 acts like an indiscriminate economic wrecking ball.

On Monday, two prominent Texan shale players, Pioneer Natural Resources and Parsley Energy, formally asked Texas regulators to approve co-ordinated output reductions to avoid “wasteful production.” The product that Texans once called “black gold” is becoming almost worthless.

By this week, West Texas Intermediate, the U.S. benchmark, was trading at about US$20 a barrel, down from its 12-month high of US$66. The price of some minor grades of U.S. crude, such as the thick oil used to pave roads, actually turned negative, meaning the producer was paying the buyer to cart the guck away.

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