Houston is often praised as one of the most diverse economic environments in the country, but anyone in the oil industry would tell you that things have been tough here the past few years. As OPEC made the decision to continue producing oil in a time of surplus, many of the local oil operations in and around Houston have held on tight.
We’re seeing signs of change in the coming year for oil
Regardless of your political affiliation – one thing is clear. Oil will be a major topic moving forward with the new Trump administration. The President Elect has made some fairly aggressive remarks in the past regarding OPEC, which has implemented very damaging policies to the Texas oil industry.
Here’s what Trump had to say in his book, “Crippled America”:
“I’ve never understood why, with all of our own reserves, we’ve allowed this country to be held hostage by OPEC, the cartel of oil-producing countries, some of which are hostile to America.”
That type of aggressive language towards OPEC will most likely come as a welcome message for many in the local energy sector. Less reliance on imported oil may create an opportunity for American production to compete without being suffocated by manipulated OPEC production that we have seen for the last few years.
Rick Perry is Donald Trump’s pick for energy secretary
Even though Rick Perry’s last major political campaign fizzled out when he forgot the last of the three organizations he wanted to disband (which happens to be the one he will now lead), he is back in the limelight now after Trump selected him as the Energy Secretary moving forward.
Rick Perry has often ran on job creation in the past, which leads many to believe that he will focus on removing regulations and supporting the gas and coal industries. We aren’t sure exactly what direction he will take, but many in the Texas oil community and energy industry will likely see this as a positive sign for 2017 and beyond.
OPEC is cutting production in 2017
This is the most important piece of information we’ve seen on oil this week. According to a recent CNBC article, the OPEC nations met in November and agreed to cut production by 1.2 million barrels per day. In addition, 11 other non-OPEC countries have agreed to cut over 500,000 barrels a day.
In a move to reduce the oil surplus and in anticipation of a higher than normal demand for crude in 2017, OPEC is looking to rebalance the oil market. This should come as welcome news to Texas oil production, as prices may rise again and allow more companies that have halted operations to compete.
The economy as a whole may be getting stronger
With the recent Fed rate hike, we may be seeing signs that the economy can operate in a higher interest rate environment moving forward. It’s hard to tell if the Fed will continue to raise interest rates through 2017, but we will watch this very closely. We’ve already seen a large shift in gold prices and a surging dollar strength in reaction to the rate hike decision.
Let’s hope 2017 is the light at the end of the tunnel for oil!