Oil reaches $100 a barrel: Five winners, five losers
With the price of energy soaring – oil passed $100 per barrel on Tuesday – long-haul truckers are hurting, but hybrid manufacturers are smiling. Californians feel the pinch at the pump while Midwesterners, closer to large fuel inventories, wonder what all the fuss is about. With gasoline now at $3.37 per gallon – 20 cents higher than last week, and rising daily – who is profiting from higher prices and who is not?
Winner: US domestic oil producers
US domestic oil producers, especially those in high-cost reclamation areas such as the shale deposits in North Dakota and Montana, are poised to profit big from the rising price of oil. According to the North Dakota Department of Commerce, as much as 20 billion barrels of recoverable oil – double the capacity of Alaska’s North Slope – could lurk in the Bakken Shale formation.
Recovering that oil is expensive – and requires extensive engineering – because the formation is deep below the surface. As long as the price of oil is higher than $60 a barrel, it makes economic sense to recover it, says Paul Govig, interim commissioner at the North Dakota Department of Commerce in Bismarck.
Oil production in North Dakota is now as much as 375,000 barrels per day. “If prices continue to rise and the economics continue the way they are, we have talked of the possibility of up 700,000 barrels oil per day,” says Mr. Govig.
Drilling brings jobs to the state, as well: In 2005, about 5,000 people worked in the industry; four years later, 18,000 did.