Hurricane Harvey highlights biggest impact of shale-oil revolution

A historic hurricane wreaking havoc on offshore Gulf of Mexico oil production isn’t the rally maker it once was. Energy traders say it’s mostly due to the shale revolution.

“U.S. shale has made us much less dependent on Gulf oil and gas production,” said Phil Flynn, senior market analyst at Price Futures Group.

U.S. oil futures












CLV7, +0.47%










 slumped Monday, with West Texas Intermediate crude dropping 2.5% to $46.67 a barrel on the New York Mercantile Exchange, as market participants assessed the impact of Tropical Storm Harvey, which slammed into the Texas Gulf Coast late Friday as a Category 4 hurricane.

The Gulf of Mexico region accounts for 17% of total U.S. crude-oil production and 5% of total domestic dry natural-gas production, according to the latest figures from Energy Information Administration.

That’s a contrast to roughly 48% of the nation’s total crude-oil production in 2016 coming from tight oil resources, where oil is derived from rock formations, including shale, according to the Energy Information Administration. About 60% of last year’s total U.S. dry natural-gas production also came from tight oil resources.

A decade ago, before the ramp-up in shale output, the Gulf accounted for closer to 30% of U.S. crude output, noted Michael Tran, analyst at RBC Capital Markets, in a Monday note.

“Simply put, there are fewer barrels at risk from an aggregate percentage of U.S. production. In fact, many U.S. offshore Gulf of Mexico barrels have been exported to Asia this year,” Tran said.

Read: Here’s what’s pinning oil prices in a narrow range at $40 to $50 a barrel

But what the Gulf of Mexico lacks when it comes to the energy production share of the market, it…

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