Oil Price Prediction – Is It Going To Be High Enough?
Oil prices are a delicate balance in the Louisiana economy. We all enjoy paying less for gasoline and products which use petroleum as an element of their production. We also like the good paying jobs the oil and gas industry provides to our local economy.
The United States Department of Energy has issued their prediction for oil prices in 2017. While those prices will be slightly higher than they have been, the question is really this. Will those prices be high enough to spark hiring across the oil patch?
Associate Director of the Tulane Energy Institute Eric Smith told the Louisiana Radio Network the predicted price of $52.50 per barrel will bring about a good news, bad news situation.
This is good news if you’re in the shale oil business, it’s not bad news for the Gulf Coast, just underwhelming if you were hoping to see a big growth in offshore deep water exploration.
The price prediction is about an $9 improvement over 2016. That is certainly a positive but it's not quite getting the cake and being able to eat it too.
The Energy Department's forecast for 2018 suggests prices will continue to slowly rise in the oil and gas sector. By 2018 the forecast price will be $55.18. Smith says that's still not quite high enough to spark the kind of job production the state's oil and gas industry really needs.
But to get it back to the kind of boiling and going kind of posture, you’re going to need sustained prices north of $62.
Another caveat to consider in these oil price forecasts. These forecasts assume a stable world economy and no major tropical storm or hurricane threats in the major oil-producing regions of the world. Either one of those situations could certainly create an instant spike in oil prices.
That's why those in the oil business are used to riding a roller coaster into the dark because you never know what's going to be around the next curve, at the bottom of the last hill, or hitting you in the face while you're not looking.