Oil prices are extremely low right now, and that’s a cause of concern for investors and oil companies alike. The prices today are lower than they have been in years, and many do not know just where the bottom line will be when it comes to the prices. To get a better idea of what’s happening now, it’s important to look at the history of why things are the way they are, and why OPEC will not back down on their output.
In the past, Saudi Arabia, and other countries that are a part of OPEC, was at the top of the food chain when it came to the oil market throughout the world. However, over the past couple of years, there has been a boom in the shale oil market in the United States, and this has changed things on a global scale. It means that the US is able to produce more oil and does not need to rely as much on foreign oil. Naturally, this does not sit well with OPEC, as they want to remain at the top of the game.
When the supply would outweigh the demand before, OPEC would cut production to get the prices back to what they felt were normal. This time, they aren’t doing that. They’ve been adamant that they will not reduce their output until the prices drop to $20 a barrel or less. They know that many of their producers will still be able to make a profit at that price, but that much of the competition will have to cut back or fold entirely.
It’s a dangerous pricing game, and it is one that could cause many businesses and their employees to suffer. Still, some are really enjoying these low prices, and with some good reason, as you will see.
Who really benefits though? Mostly, it’s the consumer at the pump. People are able to save upwards of $700 to $1000 a year with the prices as low as they are right now. This means that they could potentially take that saved money, turn around, and put it back into the economy, which could help the country overall. However, it’s still too early to tell just what this effect will have. Still, many drivers out there are quite thrilled that they are able to save a bit of money when they fill up at the gas station.
About Oil Works Inc.
Oil Works, Inc. is a complete drilling rig equipment manufacturer and service provider based in the Permian Basin for over 20 years. OWI’s product and service offerings include Derricks, Substructures, Drawworks, Mud Systems, Walking Systems, Power Generation, Control Systems, Iron Roughneck Repair and Upgrades and complete Rig Solutions built to API and ISO standards. OWI is also proud to offer 24/7 Service and Support.