Should Houston Oil Companies fear Shale?


Crude oil has been up and it hit a three year high Monday. But we're getting really good at harvesting shale oil and that could lead to another oil glut, which is good for drivers but not so much for Houston's oil producers.

Energy analyst Mike Lynch says shale is on course to make the U.S. the world's biggest oil producer this year.

"The companies have figured out how to produce a lot more shale oil at current prices and even lower."

Lynch is optimistic, at least for drivers.

"I think the odds are for lower prices this year rather than higher; you could have problems in countries like Venezuela or Libya that would drive prices up but there's a lot of shedding capacity around the world that could offset that."

Many expect gasoline prices to rise by as much as 30 cents by spring, but Lynch says that probably won't last.

"I think what we're going to see going out is whether or not either the Saudis say 'we need to raise production and moderate prices somewhat' or some of the smaller producers start cheating which triggers a mini-price war or a price skirmish."

Many analysts say $60 a barrel is about where we need to be to make oil production profitable but keep gasoline prices reasonably low.


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