US shale industry will withstand post-Harvey oil glut

Significance

The Port Arthur Refinery is the largest in the United States. Tropical Storm Harvey is estimated to have closed nearly one-quarter of the country’s refining capacity, which is concentrated along the Gulf of Mexico coast. While petrol futures have risen because of the curtailment of supply, crude prices have fallen due to fears of oil inventories building up before the restoration of demand from refinery operations. Persistently weak oil prices pose a threat to the US shale oil industry’s finances and expansion plans.

Impacts

• Oil-dependent economies like Saudi Arabia, Russia and Venezuela will have to budget for sustained low oil prices.
• Consumers will enjoy relatively low fuel prices after the post-Harvey price spike subsides, freeing up spending power.
• Low oil prices will slow the market rollout of new electric and hybrid-electric model cars debuting in 2018-19.