A survey conducted by the Federal Reserve Bank of Dallas indicates that oil companies are expressing greater optimism about their prospects in 2016, buoyed in part by rising crude oil and natural gas prices. The Dallas Fed Energy Survey is released quarterly and provides a snapshot of the current views and attitudes of oil producing companies in the region. While production remains low, recent price stabilizations in the commodities market have returned many Texas energy firms to the black side of the ledger and have spurred new drilling efforts in many areas of the state. This resurgence is expected to provide added work for oil and gas risk assessment firms and other companies involved in the support infrastructure for the Gulf energy industry.
Rising Fuel Prices a Boon to Industry
According to the Dallas Fed Energy Survey, most companies indicated that their break-even points hovered between $50 and $62 per barrel of crude oil. Crude oil prices hit a significant milestone in February 2016, falling to below $35 a barrel and prompting fears of an industry-wide collapse. Even in the past two months, those prices have fallen below $40, making it difficult for many energy firms to maintain their current operations. A relatively steady rise in prices in the last month, however, has generated hopes of prices as high as $55 per barrel by the end of the year. This could provide real help for companies struggling to stay afloat in the current energy marketplace.
Why Oil Prices Have Fallen
The downturn in energy prices has been attributed to a number of factors that include the following:
- Slower growth and development in China and other emerging markets has reduced global demand for crude oil in these areas of the world.
- Some economic experts believe that oil was an overvalued commodity and that recent declines in the market price of crude oil reflect a much-needed correction of this situation.
- Enhanced technologies have made it cost-effective and practical to extract oil from shale in the Bakken formation and in previously abandoned areas of the historic Texas oil fields. This has increased production throughout the U.S. and has reduced demand for foreign oil.
- OPEC has thus far proven unwilling to slow production of oil to maintain the high prices once commonplace throughout the energy marketplace.
These developments have created new challenges for the oil industry in Texas and around the world, leading to leaner operations and increased reliance on new technologies and tools.
Increased Efficiency a Key to Survival
To stay viable in these tough economic times, many companies are upgrading to advanced technologies and investing in educational programs for their staff members. Oil and gas training courses can provide oil workers and managers with the skills necessary to assess current reserves and to determine the best times to sell and to expand in the energy industry. Topics typically cover exploration, geological factors and risk analysis, allowing companies to make more efficient use of their available resources. Petroleum economics courses are ideal for managers and decision-makers; these educational resources can provide the perspective and insights necessary to achieve greater success even when faced with downturns in the price of oil and other economic challenges.
The recent uptick in oil prices is likely to spur many Houston companies to increase production and to expand their drilling and extraction operations. By taking steps to increase the efficiency of their efforts and to ensure the highest degree of education for their key staff members, modern oil companies can reduce their operating costs and ensure the highest return on investment for their drilling sites. Oil and gas risk evaluation courses can provide added support for key employees in achieving greater profitability in the current energy industry.