Oil at $75 a barrel won’t affect U.S. output from shale much because investments in wells and production have already been made, said Andrew Liveris, chairman and chief executive officer of Dow Chemical Co. (DOW)
Some U.S. shale producers are already hurt by the drop in oil prices, though Dow, based in Midland, Michigan, sells enough different products that it can withstand lower crude, Liveris, the head of the largest U.S. chemical maker, said at a conference in Dubai.
Chemical companies such as Dow use oil products and natural gas to make finished goods, which they sell at prices linked to crude.
“They’re not shutting in because that’s all ’sunk costs,’” he said of U.S. shale producers. “So you’re not going to get a lot of producers stopping at 75-buck oil.”
Oil prices plunged into a bear market last month, the result of a surge in shale drilling that lifted U.S. output to a three-decade high. Rising OPEC output and increasing signs of slower demand growth contributed to a 30 percent drop in Brent crude this year.