As the CEO of an independent oil and gas services company, I often get asked my opinion on the falling price of oil. So I thought I’d go “on the record” here and share a bit of my stance. In a nutshell, my message would be: Don’t Panic.
Yes, we’re experiencing turbulence in the energy market due to the drop in oil prices. And yes, this has certainly placed challenges on the oil and gas industry. Throughout the sector, companies are adjusting outlooks to react to external influences that remain outside our control, and some reactions are causing concern. As I mentioned in a recent CNN Money interview, a main factor to this concern is a “battle royale” between OPEC and US shale producers. Watch the entire piece here:
But take heart! Price fluctuations are a given in the oil and gas segment. Although most market experts agree that we won’t see oil prices back in the $100 per barrel range anytime soon, technological advances and increased efficiencies in the supply chain means that the industry can absolutely continue to operate – and profitably so – in the $65-$75 range. Even the US Energy Information Administration’s January 2015 Drilling Productivity Report for key tight oil and shale gas regions shows that rig count is down and yet production continues to grow in response to our technological efficiencies.
The uncertainty surrounding the innumerable factors that influence oil prices is unnerving, and forecasting the future of the market is unrealistic. But amid all these unknowns, one thing is certain: Our industry is particularly cyclical. We can expect that, just as prices are falling, they will go back up. The businesses that have succeeded through multiple cycles don’t get by on luck – they employ smart planning to leverage the peaks and valleys for long-term sustainability.