The U.S. energy industry is rebounding after a glut of OPEC oil on the market caused prices to plummet in mid-2015. But while prices have recovered slightly and production is increasing, don’t expect oil prices to approach anywhere near the 2014 record-highs of $100 per barrel, says David Dismukes, director of the LSU Center for Energy Studies.
“I don’t think we will ever return to where we see prices much above where they are today,” which is between $50 and $55 per barrel, Dismukes said, speaking to the Baton Rouge Rotary Club today. “Not unless something very expected happens with the national economy. But even then, those blips would likely be short-lived.”
Dismukes said there are several reasons prices will stay relatively low. Oil production has increased to levels nearly as high as those prior to the price crash of 2015, and U.S. production is expected to continue climbing to more than 10 million barrels per day by 2018.
Also, there’s an abundance of oil and natural gas in storage, and a lot of potential in U.S. wells that have only been partially drilled.
While the abundant supply may seem like a cause for concern, Dismukes said the big takeaway from the experience of the past three years is that U.S. producers during the downturn became more efficient and they’re able to sustain production at oil’s current price point.
“OPEC tried to force U.S. producers out of the market but it didn’t work,” Dismukes says, noting that the U.S. drilling rig count has risen for the past 18 consecutive weeks. “We’re seeing workers get back into the U.S. oil fields.”
Dismukes also predicts natural gas prices will continue to remain low, which is good for Louisiana and the industrial plants along the Mississippi River that use natural gas as their feedstock. He predicts natural gas prices will remain below $4 per MMBTU through 2018.
“So, good story, overall, I think,” he says.
—Stephanie Riegel
