BP chief likens US oil sector to ‘market without brain’

The US shale oil sector needs to sell at between $40 to $60 a barrel to make money and moves to stop operating rigs quickly when they become unprofitable. (Getty Images)
Updated 27 February 2019

BP chief likens US oil sector to ‘market without brain’

  • Bob Dudley: The US is the only country that completely responds to market signals ... like a market without a brain. It just responds to price signals
  • Dudley: Unlike Saudi Arabia and Russia, which adjust their output in response to gluts or shortages in oil supplies, the US shale market responds purely to oil prices

LONDON: BP Chief Executive Bob Dudley described the high-pace US shale oil sector as a “market without a brain” that, unlike Saudi Arabia and Russia, only responds to market signals.
The US shale oil sector, which has helped the country to become the world’s biggest oil producer last year, needs oil to sell at between $40 to $60 a barrel to make money and moves to stop operating rigs quickly when they become unprofitable.
In its biggest deal in around 20 years, BP bought US assets from BHP for $10.5 billion last year.

 

 “The US is the only country that completely responds to market signals ... like a market without a brain. It just responds to price signals,” Dudley told the International Petroleum Week conference in London.
“Unlike Saudi Arabia and Russia, which adjust their output in response to gluts or shortages in oil supplies, the US shale market responds purely to oil prices.”
Not least in reaction to surging US output, Russia joined a global supply cut deal with the members of OPEC to prop up prices.
Overall US crude production has climbed to a weekly record of 12 million barrels per day (bpd), the US Energy Information Administration said in its latest report, mainly due to increases in the Permian and the Bakken in North Dakota.
Crude stockpiles have built for a fifth straight week to their highest since October 2017 and exports hit an all-time high.

FASTFACTS

12m - Overall US crude production has climbed to a weekly record of 12 million barrels per day (bpd).


France ready to take Trump’s tariff threat to WTO

Updated 08 December 2019

France ready to take Trump’s tariff threat to WTO

  • Macron government will discuss a global digital tax with Washington at the OECD, says finance minister

PARIS: France is ready to go to the World Trade Organization to challenge US President Donald Trump’s threat to put tariffs on French goods in a row over a French tax on internet companies, its finance minister said on Sunday.

“We are ready to take this to an international court, notably the WTO, because the national tax on digital companies touches US companies in the same way as EU or French companies or Chinese. It is not discriminatory,” Finance Minister Bruno Le Maire told France 3 television. Paris has long complained about US digital companies not paying enough tax on revenues earned in France.

In July, the French government decided to apply a 3 percent levy on revenue from digital services earned in France by firms with more than €25 million in French revenue and €750 million ($845 million) worldwide. It is due to kick in retroactively from the start of 2019.

Washington is threatening to retaliate with heavy duties on imports of French cheeses and luxury handbags, but France and the EU say they are ready to retaliate in turn if Trump carries out the threat. Le Maire said France was willing to discuss a global digital tax with the US at the Organization for Economic Cooperation and Development (OECD), but that such a tax could not be optional for internet companies.

“If there is agreement at the OECD, all the better, then we will finally have a global digital tax. If there is no agreement at OECD level, we will restart talks at EU level,” Le Maire said.

He added that new EU Commissioner for Economy Paolo Gentiloni had already proposed to restart such talks.

France pushed ahead with its digital tax after EU member states, under the previous executive European Commission, failed to agree on a levy valid across the bloc after opposition from Ireland, Denmark, Sweden and Finland.

The new European Commission assumed office on Dec. 1.