The decline in crude oil prices that began just over a month ago has continued, with West Texas Crude recently seeing a 12-day losing streak to fall about 20-percent since its peak in early October. As of Wednesday, the price of crude sat at around $56 a barrel. While analysts agree that strong worldwide supply is the reason for the price plunge, there are differing views on what is driving the supply surge. Some credit President Trump for threatening sanctions on Iran, only to weaken them with waivers at the last minute after OPEC had driven up production in anticipation. But at least one oil economist places the credit for cheaper oil right here in Texas.
"Texas has continued to supply enough for pretty much all of the world's oil demand growth, virtually all of that, and compensate for production losses by OPEC countries," says Dean Foreman, chief economist at the American Petroleum Institute. Indeed, Texas oil exports surpassed imports for the first time ever earlier this year, and the Lone Star State is now pumping out about 11.5 million barrels per day.
The increased production from the U.S.--and Texas in particular--has lessened the power of OPEC nations and forced them to rethink their output levels. "From Saudi Arabia to Russia to the rest of OPEC, they're having to adjust to a different operating model on that basis," says Foreman. "They're cutting back (on production) because they don't feel the world needs the additional barrels, and they didn't going all the way back to last summer."
The bottom line: Regardless of OPEC production cuts or Iran sanctions, the U.S. is now producing enough oil to meet the world's demand.