I typically write these articles about industry conferences to summarize all of the sessions I’ve attended. Historically, the oil & gas conference is more industry-focused than accounting and auditing conferences. However, the overall theme of this year’s oil & gas conference was pricing, and to summarize all of the sessions I attended: it’s all about price.
As everyone in the industry is well aware, prices for oil and gas are depressed, and the outlook isn’t very good because of many factors. These factors range from OPEC production, questions on whether the U.S. will export oil, and decrease in demand, among others. From 2008 - 2014, technology innovations increased oil and gas production by 74% and 44%, respectively. That is a huge increase. Increased production coupled with the decrease in consumption has created a huge inventory of oil and gas.
- Oil consumption is down nearly 60% from the peak in June 2014 of 10%.
- U.S. oil rig counts are down nearly 62% from the peak in October 2014 and down 71% for Canadian rig counts.
- 19 oil and gas producers have filed for bankruptcy in 2015.
Supply and demand sets the price. With the oversupply of oil and gas, 2016 prices are going to continue to be depressed. No one can predict the future, but the long-term price of natural gas for 2039 is projected to be $8 per million Btu. Let’s check back in 2039 to see if that price holds up.