On Bauer Business Focus—A conversation on the drop in the price of oil with Houston Public Media News 88.7 Business Reporter Andrew Schneider.
The recent drop in the price of oil and the role of North America’s production growth has received a wealth of media attention, but there may be another important contributing factor.
Michelle Michot Foss, chief energy economist at the Bureau of Economic Geology at the University of Texas, recently stopped by Bauer Business Focus to discuss the current price of oil.
In February of this year, Iraq’s production reached 3.5 million barrels per day, contributing to today’s market in the price of oil. The real dilemma is fitting Iraq’s growing production back into the global market, Foss said.
“In order to make sure that the global economy didn’t suffer a severe shock, the other members of OPEC adjusted their quotas in order to rebalance the market,” Foss said. “Now Iraq is back in the market of supplying premium oil and actually wants to grow its production to somewhere between five and six million barrels a day.”
It will take time to tell how having prices at under $60 per barrel will affect Texas production.
“Every producer is in a different place both financially and in terms of where they’re operating,” Foss said. “One thing we know is that our producers in the Eagleford Shale region are probably going to be able to at least meet their cash flow requirements and continue to operate. In other parts of the country it’s not so clear how they’ll do.”