Texas Insider Report: AUSTIN Texas As anyone who is filling up their gas tank knows oil prices have fallen. In Texas we know that this is a double-edged sword. While it feels great to pay under $2 for a gallon of gas we also know that our states largest industry is taking a hit. We know that this may have ripple effects throughout our state.
While some businesses and industries will enjoy and even thrive with cheaper energy others may struggle. While many people will have a few more dollars in their pocket thanks to less money to fill their tank others may be hit due to lower employment in regions tied heavily to the energy business. It is the reality of economics around energy. The big question on everyones mind is... what is happening with energy prices?
Needless to say that this is a very complicated question and receives many complicated answers. However at the highest level it is basic supply and demand. Thanks to the expansion in oil and gas production over the past few years due in large part to horizontal drilling and hydraulic fracturing the United States and in particular Texas has stabilized the supply of energy. This stability will keep energy prices in check and provide a strong overall economic environment for the entire nation. However this stability in supply and demand just like any commodity translates into lower prices. When the supplies became even greater a few months ago when Saudi Arabia and OPEC announced their plans to keep production at current levels prices began their steep decline.
How long with this situation remain? That is the other difficult question to answer. The short version is that the oversupply will remain until the low prices forces some production out of the market. This could take anywhere from 6 months to 2 years depending on the ultimate prices that the market settles at. However any move by OPEC to reduce production could make a substantial change to supply and have a much quicker and more dramatic impact on prices. While we dont know the answer exactly we do know which things to watch.
Earlier this month I was sworn into office as Texas 49th Texas Railroad Commissioner. This past week I participated in our first conference meeting in which we reviewed and voted on nearly 700 items. My staff and I spent days reviewing the items asking questions and gathering information to make sure that I was prepared to represent our state well. On several cases we discussed technical issues such as pressurization rates and hydrogen sulfide levels. I felt very blessed to have been able to put my engineering background to use serving the state and just wanted to thank all of you for giving me the opportunity to do so.
As always if you have any questions for me our staff or the Railroad Commission please dont hesitate to reach out. I look forward to talking with you soon.
Texas Insider Report: AUSTIN Texas As anyone who is filling up their gas tank knows oil prices have fallen. In Texas we know that this is a double-edged sword. While it feels great to pay under $2 for a gallon of gas we also know that our states largest industry is taking a hit. We know that this may have ripple effects throughout our state.
While some businesses and industries will enjoy and even thrive with cheaper energy others may struggle. While many people will have a few more dollars in their pocket thanks to less money to fill their tank others may be hit due to lower employment in regions tied heavily to the energy business. It is the reality of economics around energy. The big question on everyones mind is... what is happening with energy prices?
Needless to say that this is a very complicated question and receives many complicated answers. However at the highest level it is basic supply and demand. Thanks to the expansion in oil and gas production over the past few years due in large part to horizontal drilling and hydraulic fracturing the United States and in particular Texas has stabilized the supply of energy. This stability will keep energy prices in check and provide a strong overall economic environment for the entire nation. However this stability in supply and demand just like any commodity translates into lower prices. When the supplies became even greater a few months ago when Saudi Arabia and OPEC announced their plans to keep production at current levels prices began their steep decline.
How long with this situation remain? That is the other difficult question to answer. The short version is that the oversupply will remain until the low prices forces some production out of the market. This could take anywhere from 6 months to 2 years depending on the ultimate prices that the market settles at. However any move by OPEC to reduce production could make a substantial change to supply and have a much quicker and more dramatic impact on prices. While we dont know the answer exactly we do know which things to watch.
Earlier this month I was sworn into office as Texas 49th Texas Railroad Commissioner. This past week I participated in our first conference meeting in which we reviewed and voted on nearly 700 items. My staff and I spent days reviewing the items asking questions and gathering information to make sure that I was prepared to represent our state well. On several cases we discussed technical issues such as pressurization rates and hydrogen sulfide levels. I felt very blessed to have been able to put my engineering background to use serving the state and just wanted to thank all of you for giving me the opportunity to do so.
As always if you have any questions for me our staff or the Railroad Commission please dont hesitate to reach out. I look forward to talking with you soon.
