Looking back at the oil and gas industry this past year, despite political and regulatory pressure, it fared well overall. It could have been much better without the political rhetoric. One wonders where we would be if the Keystone XL pipeline had continued, if drilling permits were allowed on federal leases, and the negative perception about fossil fuels never existed. Now that we’re seeing the consequences of incorrect policy decisions, perhaps a brighter industry may emerge over the next two years.
In Texas, industry employment and production growth continue to improve. According to the Texas Independent Producers & Royalty Owners Association (TIPRO), there are over 11,000 active job postings in Texas in the upstream, midstream and downstream segments. The Energy Information Agency (EIA) forecast production in the U.S. to hit nine million bpd this month – the country’s highest output since March 2020. However, the Strategic Petroleum Reserve (SPR) continues to be depleted with another 15 million gallons scheduled to be released. It is intended to be used for national emergencies or war, not to bring down the price of gasoline; as of now, the SPR is at the lowest level since 1984. There has been recent discussion about a windfall profit tax levied on oil and gas companies. Experts agree this type of tax will raise gasoline prices and reduce domestic oil and gas production.
The oil and gas industry plays an important role in society today. Thousands of consumer products are made from refined oil, there are a variety of petroleum products, such as diesel fuel, heating oil, jet fuel, lubricants, asphalt and, of course, gasoline that are made from crude oil. Last year, natural gas was the primary power source for electricity, followed by coal, renewable energy and nuclear power. Fossil fuels lift developing countries out of energy poverty. Without an efficient, low cost energy source, nations will not thrive. We should appreciate that we have an abundance of this natural resource.