Texas Energy Report by Railroad Commission of Texas Commissioner Ryan Sitton 5/26/2017
The OPEC cartel’s plan to continue its production cuts for nine more months means that two worlds — energy and politics — are once again colliding. Energy observers today are feverishly trying to anticipate what will happen with the basic cost of energy, which has the ability to upset manufacturing capabilities, trade practices, and even entire economic markets. With all the uncertainty, one thing is clear. American energy production is disrupting OPEC plans and influencing energy prices more than it has in a generation.
As a Texas energy regulator, I am often asked about the impact of Texas oil and gas on the rest of the world’s oil activities. Throughout my 20 years as an engineer working in the energy industry, I’ve had the opportunity to travel all over the world and witness Texas’ influence firsthand. Today, one quarter of all U.S. oil output comes from the Permian Basin, and projections show that number will continue to rise.. On May 25 we watched as the advances of the shale producers in Texas and the U.S. forced the hand of the OPEC nations – and they extended cuts to support prices.
So what can we glean from the cartel’s action? First, OPEC nations are indicating that they believe the market can come into supply and demand balance based on existing production levels. Second, it appears that OPEC countries are accepting the current price environment. Last and most notably, OPEC nations are beginning to bump up against their limits in controlling prices.
What that means for Texas oil and gas producers is that there’s more global demand that they can fill at current pricing levels. Energy exports of oil, liquefied natural gas, chemicals and refined products hold enormous opportunities for our country.
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