The Source: What Will Oil Tumble Mean For South Texas?
Oil prices are down--way down--from their June peak. The release of the oil reserve figures last week from the U.S. Energy Information Agency, showed the country's reserves of 36 billion barrels in 2013, a 35 year high, 10 billion barrels more than just five years before. As global production remains strong, the glut of oil will remain, sending prices--and stocks--tumbling further.
Oil prices are at their lowest level in five years with West Texas Intermediate at $61 per barrel and Brent pegged at $63 per barrel. The price of gas continues to fall across the country, with an average gallon of gas costing $2.63/g nationally. In San Antonio you can find it for as low as $2.19/g.
San Antonio's economy weathered the Great Recession in part on the strength of tight oil production in the Eagle Ford shale. Will it remain strong through 2015 at these prices?
The EIA is forcasting an oil price average of $68 per barrel through next year. According to a study done a month ago by industry analyst IHS, tight oil production remains largely profitable down to $50 per barrel.
On Wednesday, the Dow Jones fell 268 points largely on the news of a decline in oil price. Will we see production slowdown on investor worries? Who is most vulnerable to these price drops?
Mexico just completed revolutionary reforms to its energy sector, opening itself up to outside investment and expertise. Did they just miss the boom boat?
- Thomas Tunstall, research director at the Institute for Economic Development at the University of TExas San Antonio.
- Russell Gold, energy reporter for the Wall Street Journal and author of the book "The Boom: How Fracking Ignited the American Energy Revolution and Changed the World."