What’s Happening on the Rig? Texas Oil Predictions for 2019
From February to March of 2019, Texas oil refineries produced between 13,6605 and 15,1054 monthly thousand barrels according to U.S. Energy Information Administration.
The price of crude oil was pretty predictable. In today’s world market, the price of oil is volatile. Read on to learn about the predictions for Texas and world oil production and prices.
Who Sets the Price of Oil
Global oil is set by oil produced by two companies. The first, West Texas Intermediate (WTI) that sets the benchmark for U.S. oil prices. The second is Brent North Sea oil. It sets the price for global oil prices out of Northwest Europe.
Texas Oil Predictions
Read on to learn 8 of the top predictions in 2019, given the unpredictability of today’s oil prices, these are only predictions.
- A fall in the U.S. oil rig count. Click here to watch daily counts.
- The price of WTI will rise again, potentially over $200 per barrel.
- U.S. Oil will set new-all time records for production. Production is high because there is no government or industry oversight to slow them down. (Read on for a prime example from Pecos and Orla below).
- Technology will allow for improvements in production and will break current bottlenecks. Half of the drilling will continue to be in Texas.
- Natural gas prices fell in early 2019 and are not expected to rise.
- The U.S. economic growth will support investments in industries that use Natural Gas to harness the abundance of that resource.
- Exports of U.S. Crude Oil will continue and reach record highs.
Increases in US Oil Productions limit OPEC’s Ability to Dictate Prices
The oil industry has historically been stable with predictable seasonal swings. Increases in prices in the spring, to gain the bump in profits from summer travelers. Prices fell in the fall and winter. The price of crude oil is no longer predictable due to significant changes in the industry.
4 Major Changes in the Oil Industry
Although there have been many changes in the oil industry these are the top 4.
- The U.S. Oil industry has become more efficient at extracting oil. This increases the production and eliminates the need, and expense, of capping wells.
- The Organization of the Petroleum Exporting Countries (OPEC) has not been willing to cut output to create the lowest common price in the industry. Historically OPEC set the oil prices and maintained production at $70 per barrel prices. With the increase in U.S. production, they are no longer able to do that.
- All oil transactions are paid in U.S. dollars. The increase in the value of the dollar internationally has caused some of the decline in prices for exporting countries.
- Global demand has slowed. China’s growth has been the cause of most of the increases in demand. Its current trade war with the U.S has slowed growth and decreased demand, globally.
New Reserves Found in West Texas- Greater Supply and Higher Risks
West Texas is setting U.S. oil prices and influencing the global oil market but that influence is coming at a cost.
Expansion of West Texas Production
“I wanted you to see this mess. I wanted you to see the miles of traffic that back up. It’s miserable. But if you have a pulse you can make $100,000. So, naturally, we’re here,” Jesse tells me. Read more about the risks associated with the expanding oil fields, here.
All you have to do is look at the boom in the area from Pecos to Orla, Texas. The Permian Basin is ripe with oil but not necessarily the supporting infrastructure necessary to harvest it from the ground. The current push to extract and produce oil from this area is putting a heavy burden on the region.
Oil requires heavy equipment to move the raw materials (sand and water) to the oil field and move the crude oil to refineries. This damages road not intended to support the traffic.
Increases in the human population without increases in housing has resulted in the use of portable housing for workers. Workers typically work 21 days on and 7 days off and 100 hour weeks. The risk of injuries and death is high.
Finally, electricity demands. Pulling oil from the ground takes a lot of energy. This area of Texas puts a huge drain on the local power grid resulting in rolling blackouts in 100-degree heat.
High Costs for Those Companies Failing to Play by the Rules
The U.S. Oil Industry is not regulated by the government or by itself. As a result, the oil industry tends to be a version of the Wild, Wild West. High demand and a race to the market pushes dangerous working conditions with long hours with high risks. The rewards for the employees can be high (see above) but so is the risk of injury and death.
The lack of oversight allows some in the industry to act unethically and breach contracts with employees and sub-contractors. While the big oil companies may see a momentary increase in their bottom line there are some that are looking to stop those injustices.
For example, just the end of last month, $11.2 Million was awarded to the two men to created and patented The Wiper.
When an offshore pipe becomes stuck it shuts down the rig at a cost of $1.5 million a day. The Wiper reduces the time that pipe remains out of order from 10 days to 32 hours.
Warrior Energy Services Corp withheld payment to the men of their share of the profits of the Wiper promised under their employment agreement.
The reality in the oil business is that often the employees are hurt in the pursuit of profit. If you are hurt or your employer does not honor your employment contract. Contact an Oil Rig Injury Lawyer. They have the experience to make sure you are adequately compensated.
The Next 100 Years?
While no one can predict the future, Texas Oil will continue to dictate world crude oil prices globally. Increases in production from West Texas will continue to influence the oil industry well into the future.
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