A Sputtering Growth Engine Could Ignite an M&A Boom in This Sector

The U.S. oil industry had been growing by leaps and bounds until this year. Output in the country averaged 12.23 million barrels per day (BPD) last year, more than double the production rate of a decade ago and shattering the previous record of 9.64 million BPD set in 1970. Industry forecasters expected that upward trend to continue, with estimates that production would grow to 13.2 million BPD this year and hit 13.6 million BPD by 2021. 

However, COVID-19 obliterated that forecast by upending demand, which forced the industry to cut back on supplies. Visions of continued growth for the pipeline sector have evaporated, which will probably cause it to shift gears. The next logical phase is consolidation, which would enable pipeline companies to cut costs and increase their scale so that they can endure what will likely be several more lean ahead years. 

Business people shaking hands overlaying upward pointing arrows.

Image source: Getty Images.

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