As you search news outlets and find political problems around the world, it’s hard to understand the exact way they’ll impact real life.
While it’s easy to feel far removed from those news stories, the oil industry is something that affects your daily life, no matter how eco-conscious you aim to be.
Demystifying the ramifications of foreign trade issues and political moves as they affect the oil and gas industry trends doesn’t have to be a full-time job.
Here are 5 trends in the industry you can take a look at right now.
1. Possible Supply Problems
OPEC, or the Organization of the Petroleum Exporting Countries, has predicted for years a serious shortage of crude oil by the end of the decade. They warn that demand will continue to increase, while the supply won’t be able to meet it, creating energy problems worldwide.
Yet as we approach the end of the decade in a few short months, the supply and demand seem to have relative stability for now.
While current supplies decrease on an average of 4% a year, there are still oil reserves and inventory. Additionally, companies still discover new oil on a regular basis, largely because of the innovation in the industry, which impacts the supply.
2. Worker Shortage
Oil companies have had to cut their workforce down to save money when the oil industry took some turns for the worst. They haven’t all boosted their employee numbers up yet, and looking for skilled workers can be tough.
Not all unemployed workers know their oil field industry rights, so they aren’t as willing to seek out employment in those types of positions.
Another reason there’s a worker shortage in the oil industry is that maintenance isn’t being done as it needs to be.
That means equipment doesn’t work as well as companies had hoped, so production goes down or gets stalled. More maintenance workers can help solve the problem, but it takes training and specialization to understand how to diagnose problems and find creative solutions.
Innovative ways to search for oil are in high demand.
Underwater and hard-to-access places on Earth may have the oil people need, but they don’t have the tools yet to get there, and so innovators and engineering talent become key. As the oil demand continues, the industry needs new ways to search for oil.
3. Continued Demand
Despite eco energy sources like solar power and wind power, there is still a big demand for oil, natural gas, and petroleum.
Big pushes for tax incentives help drive consumers to make better environmental decisions, like buying hybrid or electric vehicles. Some are even converting vehicles to run on recycled oil products like waste vegetable oil from restaurants.
Yet these types of alternative solutions are still just that–alternative. They aren’t as mainstream as some would like to see, and the world still needs petroleum for pharmaceuticals and other industries. The industry isn’t losing steam any time soon.
Transportation is only one facet of the equation. You also have heating needs and electricity needs, along with materials for constructing roads and other infrastructure like asphalt.
Even more vital to daily needs is petroleum, which is part of many chemicals and plastics.
It’s used in everyday items like clothing, tires, vitamin capsules, soap, fishing lures, and some yarn, along with so many more products we don’t even think about. To eliminate the need for petroleum, the world needs plenty of other green alternatives besides transportation.
4. Energy Policy Changes
The U.S. administration warned about sanctions in early 2018 and followed through in May when they withdrew from the 2015 nuclear deal.
Since then, they’ve been even more strict about the sanctions, even threatening to sanction any country that buys oil from Iran. Without Iran’s oil, the U.S. hasn’t noticed a large difference, because most of the supply comes from Canada and Latin America.
Iran, however, is noticing a big difference, with a big economic decline. As a result of the sanctions, Iran’s production fell from around 3.6 million barrels a day to about 2.75 million.
And while Iran’s currency, the rial, was worth about 42,000 per U.S. dollar, as of April 2018 it had plummeted to about 143,000 rials per dollar.
Though a few countries received a six-month exception and continued to buy Iranian oil, they will have to find other options now or risk sanctions as well.
Policy changes like these affect the global economy in ways that can be unpredictable.
5. Oil Prices
Every type of oil sells for a different price, so you can’t compare any barrel to any other barrel. Look at the difference: West Texas crude oil is down to around $56 a barrel right now, far from long-ago projected rates of $100 a barrel.
Yet Brent oil, which seems to be a better measuring stick for comparing rates in the global market, has decreased to about $60 a barrel. Shale oil, on the other hand, produced using a different, much longer process, gives you a synthetic oil.
The longer process means a higher price, although you can use it for the same purposes as crude oil. Yet with setbacks in recent months, shale oil prices keep plummeting along with the rest.
The Future of Energy: Oil and Gas Industry Trends
If you want to point a finger and assign blame for recent oil and gas industry trends, it’s easy to look to the social and political changes happening around the world.
But you also need to keep in mind the trends over longer periods of time and how even 1 year can make a big difference. As environmental protection becomes more of a priority, the oil trends will continue shifting.
Watch carefully through future changes. Rising trends mean new needs and changeovers to keep an eye on.
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