A big gas boom is taking its toll on the energy sector.
As more and more companies tap the shale gas revolution, the sector’s share of the nation’s total oil and gas production has fallen to less than 3% from about 7% just a few years ago.
A new report from energy consultancy IHS Global Insight finds that the shale revolution is not slowing down, but it is placing an increasingly heavy financial burden on the industry.
The report found that the industry has seen a 30% drop in revenue for the last five years, and a 9% decline in earnings since 2010.
As a result, the industry is facing a shortfall of more than $1 trillion in revenue, according to the report.
In order to keep its financial edge, the gas and oil industry has started shifting more of its assets overseas to avoid US tax requirements.
It is also facing a growing number of lawsuits from disgruntled employees and consumers who claim the industry failed to properly disclose the risks associated with the shale boom.
To meet the growing demand for shale gas, the oil and natural gas industries have expanded production at a steady pace.
This is due to the boom in the gas drilling industry, which is in the midst of its sixth year of growth.
This growth has been accompanied by a massive rise in the cost of drilling, which has forced companies to slash costs to make up for the shortfall in revenues.
There are now more than 30 new US shale gas companies operating in the state, with most of the growth coming in the past five years.
However, the new companies, which have a combined $12.5 billion in revenue in 2016, have been facing mounting pressure to cut costs, especially with the fracking boom still in its infancy.
Despite these pressures, the IHS report found there is no sign of slowing down.
“In spite of the slowdown, the shale oil and shale gas industry remains the most valuable source of oil and coal to the United States,” IHS said.
While the sector has suffered from declining revenue, IHS expects the industry to see a big boost in future years as the shale bonanza continues to fuel the economy.
For now, the boom is here to stay.
[Image credit: Bloomberg via Getty Images]