Will Central Banks Derail The Shale Boom?

30 Jun 2017   Shale Oil

The U.S. Federal Reserve has already increased interest rates several times, most recently in June, with promises to do much more. Rate hikes pose a problem for the oil industry, which has used debt to underpin a drilling boom across the U.S. shale patch. Higher rates could raise the cost of drilling. But low oil prices, and few prospects for a strong rebound in the near-term – and possibly even the medium- and long-term – undercut the rationale for higher rates. After all, inflation is soft, and low commodity prices have a lot to do with that. In fact, the decline of oil prices this year has led to even lower inflation than expected , not just in the U.S., but also in Europe. The Fed has insisted that weak inflation is “ transitory ,” but more people are starting to wonder if that is true. “ There is […]

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