It is no surprise that Texas, especially the Houston economy has been going through a sensitive time. With the continuing ambiguity of the oil prices, there have been questions regarding future expectations and its impacts. In order to help answer some of these questions, the American Turkic Business Council in partnership with the Bilateral US-Arab Chamber of Commerce hosted a luncheon where keynote speaker Ron Higgins, the Vice President of Gulf Publishing Company, talked about how he foresees the future of oil prices, and how it will impact the economy of Texas, more specifically the economy of Houston.
Mr. Higgins began his keynote by talking about the standpoint of future oil prices. He said that these prices are a guess at best. In 2014 when oil prices began to decline, world oil prices were about $100 per barrel. A group of experts were predicting that oil would be back to $100 per barrel after that initial decline at the end of 2015. Goldman Sachs, another group, had said the price of oil would be in the low $20 in the first part of 2016. These predictions show you that even among the “best” experts, there is a huge gap between predictions of $100 and $20. So, it is safe to say that oil prices are only predictable going out a few weeks.
Mr. Higgins said we constantly hear that U.S., Russia, Saudi Arabia, as well as some OPEC countries are the cause of the downfall of oil prices, but in reality the main cause of excess oil is that the oil and gas industry has become so efficient in finding and extracting oil, that in the next several years, he doesn’t see the demand catching up to and exceeding the supply.
Mr. Higgins emphasized that it is fair to state that the world oil industry is a victim of its own success. In an already over supplied market, oil producing countries continue to ramp up production which disallows the rules of supply and demand to apply.
The luncheon ended with a successful Questions & Answers session where the attendees had the opportunity to direct their questions for Mr. Higgins to answer.