Midland stands at the epicenter of an economic phenomenon of global importance which has created an enormous opportunity for the area. With proactive efforts, Midland can prepare for the challenges ahead and ensure the opportunities associated with oil and gas and related activity benefit the full community.
For the first time in nearly a year, West Texas Intermediate crude closed above $50 a barrel; Dr. Perryman takes a look at what that means for Texas.
The price of gasoline remains elevated, with the national average briefly surpassing $5 per gallon before retreating modestly. In parts of the country (particularly those distant from refineries), it's already well above that level. Unfortunately, I think that prices will generally stay relatively high through the summer driving season before abating to some extent.
Since the coronavirus outbreak began, slack has developed in demand for crude oil. Disruptions and quarantines have caused economic growth in China and elsewhere to slow. With the huge Chinese economy expanding less, slower growth has rippled out, and areas with significant outbreaks have experienced even greater negative effects. The result has been falling demand for oil and natural gas, and therefore downward pressure on prices. Early in the year, prices were in the $63 per barrel range; they had fallen to less than $42 by March 6.
Advances in technology have reduced the cost to produce oil, contributing to the current high level of activity in truly amazing ways. Only three years ago, $70 per barrel almost shut down the industry; today, it accelerates an ongoing surge.
In some ways, 2016 was a tumultuous year. It will likely be remembered for a divisive Presidential election, but also a record high stock market. Terror attacks in several nations, but global enjoyment of the Olympic Games. For the economy, 2016 brought both continued improvement and notable changes, including long-awaited decisions from the Federal Reserve and OPEC.
On October 19, Saudi Arabia held its first international bond sale - EVER! The sale, which received orders of $67 billion for the $17.5 billion in bonds offered, is the largest to date from an emerging market economy. Investors eagerly welcomed the offering as a way to achieve further exposure in the Middle East given recent expectations that the price of oil will rebound next year. The kingdom offered dollar-denominated bonds with yields slightly higher than US Treasuries with similar maturities. In total, Saudi Arabia raised $5.5 billion of both 5- and 10-year bonds and another $6.5 billion in 30-year bonds.