Easter is the Christian celebration of the resurrection of Jesus Christ. Now, we won’t get into a religious discussion here. However, this holiday weekend has struck a chord for our organization.
Though not truly comparable, on the notion of resurrection we couldn’t help but think of our domestic oil and natural gas market.
The oil and natural gas industry has seen many peaks and valleys over the course of American history. In the 21st century, the U.S. saw amazing growth between 2000-2008. Prices were well over $100 per barrel due to increased demand in emerging markets such as China and India and production cuts made by the Organization of Petroleum Exporting Countries (OPEC). By late 2008, however, a global recession slowed demand and caused a slump in oil prices.
Then, an economic recovery in 2009 brought oil prices back to over the $100 per barrel mark, which sustained until 2014.
According to Investopedia, numerous factors played a role in another sleep drop in oil prices in 2014. Emerging countries with an unending need for oil and gas resources saw a drop in demand during the early years of the second decade of the 21st century. Additionally, attractive prices in the global energy market spurred growth in domestic oil and gas production, further driven by the use for hydraulic fracturing. With the increased production, the U.S. sharply decreased oil imports, putting further pressure on the global energy market. Finally, OPEC had a decision to make: cut production to raise global oil prices or continue production to keep market share. The organization chose the latter in hopes that lower profits would halt production in the North American countries and distinguish the growth in popularity of the use of fracing.
In the end, however, the lowered global oil prices took their toll on the Middle Eastern oil producing nations and in November 2016 the organization announced it would cut production to stabilize the global market.
During that slump, though, the U.S. oil and gas industry, forced by lower profits and unsustainable production costs in the market during that time realized innovation was the only way to survive and grow in the downturn.
The oil and gas industry has seen a resurrection in the recent months as exports increase and production steadily grows. Meanwhile, producers have used the downturn to pinpoint key efficiencies through the use of new technologies and big data. No the industry wasn’t dead, but it had seen better days.
Now, we have the opportunity to witness a resurgence of our domestic oil and gas industry as we move into being the top oil producer in 2019 as estimated by the International Energy Agency (IEA) and a net energy exporter by 2022 according to the Energy Department.