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How Worried Should Texas’ Oil Industry Be About This Week’s Drop In Crude Prices?

The drop to about $45 a barrel comes after U.S. government data showed stockpiles of oil surged more than 14 million barrels last week.

Oil prices fell again this week after news of a large increase in American oil stockpiles.
Oil prices fell again this week after news of a large increase in American oil stockpiles.

The price of crude oil fell to its lowest point since September this week, diminishing hopes of a recovery for the Texas oil industry.

The drop to about $45 a barrel comes after U.S. government data showed stockpiles of oil surged more than 14 million barrels last week.

It had surpassed $50 after the Organization of the Petroleum Exporting Countries in September pledged to cut production.

But that deal seems to be falling apart now.

Ed Hirs, an energy economist at the University of Houston, is not surprised by the dip in oil prices.

“Just based on a statement, it seems like the market was getting ahead of itself,” he said. “And I think, at this point, we’re back to reality as opposed to rumor and spin.”

He said oil and gas companies have been cautious and haven’t made any significant moves based on rising crude prices.

But this week’s news probably postpones the recovery for the oil industry here in Texas, Hirs said.

Jim Krane, an energy analyst at Rice University’s Baker Institute, agrees.

“There was a little uptick in activity when oil was above $50,” he said. “Now that it’s a few dollars below that, I don’t think it’s going to be a huge deal.”

But it has changed some industry forecasts to be more pessimistic, Krane said, and that could have a negative effect on investment.

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Florian Martin

Business Reporter

Florian Martin is currently the News 88.7 business reporter. Florian’s stories can frequently be heard on other public radio stations throughout Texas and on NPR nationwide. Some of them have earned him awards from Texas AP Broadcasters, the Houston Press Club, National Association of Real Estate Editors, and Public Radio...

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