The Oil and Gas Industry’s Worst Year Finally Approaches An End

December 17, 2020

This past year has been a struggle across the board for just about every industry. However, the oil and gas industry arguably took the worst hit. We can all remember back in April, when the price for West Texas Intermediate turned deeply negative – falling as low as -$37.63 per barrel. A drop never before seen in this country.

Forbes reports:

Suffice it to say that no one in the oil business will be sorry to see this year finally come to a merciful end.

Comparisons between 2020 and 1985 seem especially relevant since the collapse in oil prices that took place in both years initially germinated for the same reason: An effort by Saudi Arabia to flood the global market with crude motivated both by a desire to reclaim lost market share and to slow a booming upstream industry in the United States.

It’s tempting to blame the 2020 price collapse on the COVID-19 pandemic, mainly because that is a true story in large part. But no one should discount the price war between Saudi Arabia and Russia that broke out on March 4 due to the collapse of the OPEC+ agreement as a big factor in taking an already-deteriorating situation and turning it into an existential crisis for many companies.

While COVID-19 dramatically enhanced the collapse of the crude oil market, the price war between Saudi Arabia and Russia motivated fears among traders that lead to the dramatic drop in the market. The two country’s energy independence gave them the ability to affect our nations market to that extent.

This is important to highlight because the power energy independence brings to a country is the ultimate diplomatic influence. Every nation needs power. The United States’ ability to supply reliable and affordable energy domestically is something that should not be taken for granted.

Unfortunately, the new administration coming in sees the industry as a problem to be fixed rather than a bargaining power in our country’s arsenal.

President-elect Biden’s administration has made promises to implement policies hostile to all segments of the oil and gas business in the U.S. While we await the consequences of the eco-left’s radical policies, the resilient oil and gas industry remains optimistic. And as Forbes concluded, “In this industry, hope is a great thing to have.”