Inflation Hits Shale Patch With Steel Costs Surging, Citi Says

It’s getting more expensive to drill in the shale patch as rising prices for steel, cement and other supplies and services lead to higher costs for explorers, according to Citigroup Inc.

Inflation could reach 12% or more by the end of this year for the sector in North America, analysts including Scott Gruber wrote Friday in a note to investors. But oilfield service companies haven’t been able to command high enough pricing to book extra profits, even though they can pass most of their costs on to the producers they serve, Citigroup said.