Industry analysts are expecting a major leap ahead for U.S. exports. This leap is related to a ramp up in oil production that has now virtually eliminated reliance upon foreign oil and exceeded domestic demand. Through increased oil export, the U.S. is positioned to become a major energy power, and to impact and control the growing oil market. With increased demand for oil worldwide, this will likely be both politically and economically advantageous.
Oil Price Increases in the Wake of Harvey
Following a slow but steady recovery process, oil prices sharply increased to over $50 per barrel following Hurricane Harvey. This occurred after a slowdown in Texas oil production after the natural disaster, and concerns that reduced production may continue for some time. Additionally, this occurred after OPEC, particularly Saudi Arabia, reduced its own oil production. Saudi Arabia has since made moves to reduce its economic focus on oil, painting a better and brighter picture for the North American market. This has ultimately resulted in a stronger oil market, as prices continue to increase as stockpiles are utilized.
Demand for Oil Continues to Grow
Though it’s true that oil production is now at its highest, it’s similarly true that oil demand has also never been higher. With more countries switching to, and taking advantage of, affordable oil (and an increased need for energy) demand is steadily increasing, showing no signs of slowing. With an increased per barrel price, companies have more of an impetus to ramp up production where they can, and the Gulf refineries will additionally begin operation again shortly.
The Market May Need to Diversify
Harvey was damaging to the market because it struck at an area where 22 percent of the refining capacity was controlled. Though it would cost a tremendous amount to move away from the gulf (and such a move may not presently be warranted) current events will likely spurn oil and gas companies towards expanding in new areas and generally diversifying their operations. New technologies and processes have made oil recovery easier from previously inaccessible areas, and also made it possible for companies to move into areas in which they were previously denied. Diversification will reduce the impact of these types of disasters in the future and create a more stable energy future overall.
Two concerns regarding oil exporting is that domestic producers may deplete the US market or that the fast production could reduce the overall cost of oil, generating less revenue for oil companies. Both of these concerns are controlled by the oil market itself. Oil companies have it in their best interest to fulfill domestic demand before international demand, and cheaper oil benefits the economy as a whole while still affording oil producers the chance to make money based on quantity.
Regardless of the elements that remain uncertain within the domestic market, it’s inarguable that the market is expanding rapidly and that companies within it are now facing significant competition. Companies looking to purchase the best in reliable and affordable equipment can connect with Tiger General, LLC to find out about their options. From winch trucks to swab master rigs, Tiger General, LLC has the equipment necessary for companies that want to grow.