Friday, May 27, 2016
1012 C Street  •  Floresville, TX 78114  •  Phone: 830-216-4519  •  Fax: 830-393-3219  • 

WCN Site Search


Preview the Paper Preview the Paper

Preview this week's Paper
A limited number of pages are displayed in this preview.
Preview this Week’s Issue ›
Subscribe Today ›

Lost & Found


VideoMISSING TORTOISE from S. Palo Alto Dr. in Estates of Eagle Creek on May 17th. If you see him, please contact us @ (210) 913-4558 or (830) 393-4030.

VideoFound: Shepherd mix, showed up near C.R. 307 and C.R. 317, La Vernia, about one week ago, has orange collar with no tags. 210-385-2892.
Reward! Lost: Fox Terrier, white and orange female, named Sara, no collar, went missing May 1, near F.M. 775 and 3432. Call Lindsay at 210-284-0094.
More Lost & Found ads ›

Help Wanted

*Fair Housing notice. All help wanted advertising in this newspaper is subject to the Fair Housing Act which makes it illegal to advertise "any preference limitation or discrimination based on race, color, religion, sex, handicap, familial status, or national origin, or an intention, to make any such preference limitation or discrimination." This newspaper will not knowingly accept any advertising for help wanted ads, which is in violation of the law. Our readers are hereby informed that all dwellings advertised in this newspaper are available on an equal opportunity basis.
Caregivers needed. Call 830-625-0444.
More Help Wanted ads ›

Featured Videos





Video Vault ›
TNMCRichardson Chevrolet homeRE/MAX home
You’ve been granted free access to this subscribers only article.

Section A: General News


Eagle Ford: An analysis: Supply, demand, events influence oil prices then and now




E-Mail this Story to a Friend
Print this Story
Dr. M. Ray Perryman
November 27, 2013 | 6,284 views | Post a comment

It’s no secret that Texas is currently enjoying an oil boom, encouraged by high prices and technological advances. I’m in the middle of our annual Economic Outlook Conference Series (for the 30th year, by the way), and the Q&A always includes a query or two about oil prices. The industry is notoriously cyclical, and folks want to know if today’s prices are here to stay. The short answer to that is a definite “probably.”

As with any product or service, the price of oil is ultimately driven by supply and demand. Add to that the wrinkle of the OPEC (Organization of the Petroleum Exporting Countries) cartel, whereby a number of huge Middle Eastern and other oil-producing nations try to hold down production (as a group) so they can keep global prices elevated. The actual process is quite complex, but that’s the essential framework.

Back in the early 1970s, the price of oil was bouncing around at just under $20. (I’m using an inflation-adjusted series of annual costs of a barrel of imported oil maintained by the U.S. Energy Information Administration; everything is expressed as of today’s dollars, accounting for inflation over the past few decades and allowing for comparisons of costs that make sense.) In October 1973, Egyptian and Syrian forces attacked Israel on Yom Kippur, the holiest day in the Jewish calendar, in an effort to regain territory lost to Israel during the third Arab-Israeli war several years prior. On October 17, OPEC declared that it would refuse to sell oil to any nation that had supported Israel in the Yom Kippur war, which included the United States.

Taking this huge block of the supply off the table (even though it still made its way into the market) and near simultaneous overall OPEC production cuts caused a dramatic spike in prices, which essentially tripled in a matter of months. Then, in 1979, the Iranian Revolution again caused a drop in supply, and prices pushed past the $95/barrel range and stayed there for a couple of years (keep in mind that these are inflation-adjusted dollars). The oil price shocks of the 1970s caused major problems for the global economy, and the United States was one of many nations plagued by both a stagnant economy and inflation (the infamous “stagflation”).

Fortunately, the embargo didn’t last forever and the OPEC cartel was unable to hold together completely. Production quotas were regularly exceeded by some nations, bringing welcome relief as supplies rose and prices fell. By 1986, prices had dropped below $30 per barrel.

In Texas, we experienced these historical events in an upside-down way in terms of their economic effects. As a large oil producer back in the 1970s, the state benefitted enormously from the oil price shocks. The nation’s “shock” was, in fact, our “boom” here in the Lone Star State. The relief of the mid-1980s was our big “bust” and real estate crisis (with a little help from some tax law and financial regulation shenanigans). This one was helped along by a rift in the cartel in which Saudi Arabia no longer tolerated the “cheating” of its partners on their quotas.

In the early 2000s, with economic growth around the world, prices trended upward, peaking in 2008 at almost $101/barrel. Demand fell markedly during the recent recession, resulting in a fairly sharp drop in prices to $64 in 2009 (these are annual averages; the day-to-day peaks are even more volatile). However, prices jumped back up in a fairly short amount of time and were back over $100 in 2011. Even though many of the world’s economies are dealing with sluggish growth and fiscal problems, prices are staying at high levels.

The key question, then, is whether the current price picture has the potential to turn into a mid-1980s freefall (or, alternatively, an extreme escalation). Without a doubt, the energy industry is cyclical and we can expect price reactions in response to global events. However, the situation has changed in important ways since the 1970s. Today’s prices are stemming from a far more stable supply-demand relationship. The global economy (particularly the advanced segments) has developed many industries that aren’t quite as reliant on crude to generate value (such as technology). Also, after the era of cheap oil and gasoline ended in such dramatic fashion in the 1970s, concerted efforts (including energy conservation and development of domestic production capacity and sources of supply in nations whose interests more closely align with our own, such as Canada) were made to try to become less vulnerable to similar events.

At the moment, there is some upward pressure on price from unplanned supply disruptions in Libya and Iraq. The situation with Iran also has the potential to derail and cause some tension in the region (and, thus, some upward movement). On the other side of the equation, production in the United States is rising, thereby working to dampen these upward price pressures. Also, global demand has been somewhat weaker thanks to slower economic growth, further contributing to lower prices (a situation that is reversing itself as the less-developed countries become more industrialized). These counterbalancing effects are keeping prices at relatively elevated levels.

A perfect storm could lead to drastic changes. If demand drops off, things calm down in the Middle East, U.S. production keeps rising, and we cement deals for supply from our allies (such as the Keystone Pipeline), prices could fall sharply. If OPEC decreases production or war breaks out in the region, look for a big jump. On balance, however, my best estimate is that there will continue to be forces working in opposition for a while, keeping prices fluctuating in a relatively narrow range.

Dr. M. Ray Perryman is president and chief executive officer of The Perryman Group (www.perrymangroup.com). He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.
 

Your Opinions and Comments


Be the first to comment on this story!


You must be logged in to post a comment.




Not a subscriber?
Subscriber, but no password?
Forgot password?

Section A: General News Archives


Full article available to Wilson County News subscribers only. Click here to subscribe. American Legion ceremony (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Annexation for fire services will be on November ballot (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Boy Scouts, Girl Scouts to honor fallen heroes (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Camino Real plans Open House events (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Chief Hull resigns from Poth police (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. County sets sights on new tax (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Court Update (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editorial: Grim choices have put America in a grave situation (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editorial: On the other side of politics in a world of digital divide (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Fire, EMS services — Who’s got you covered? (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. It’s okay to take control (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: Free ride over hard work … a no-brainer! (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: Housing Foundation expresses gratitude (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: Mainstream media ‘brainwashing’ Hispanic/Latino voters (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Meeting Watch: Wilson County Memorial Hospital District (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Memorial Day office closures (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. One viewpoint: Making Floresville marketable with recreational facilities (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Parish plans Cemetery Ceremony (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Police arrest man in case of burned body (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Police Blotter (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Police ticket six for violating cell phone ban (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Post 539 service (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Poth electric vehicle users could be in for a shock (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Poth High School students earn awards (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Severe storms shred Wilson County (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. SSCA ceremony (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Teacher salaries, student lunch prices on the rise (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Tejano music to fill the air during Labor Day event (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Turner: New businesses coming to Floresville (May 25, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Berger earns Ph.D. from Columbia University (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Brahma Happenings (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Burning body spurs murder investigation (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Can I negotiate? (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Court Update (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editorial: Narrow views promote intellectual, moral dry rot (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editorial: The political climate in America goes from bad to worse (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Falls City ISD’s new K-12 building almost complete (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Floresville parks master plan would relocate ball fields (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Floresville parks plan wins council approval (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Foundation awards $9K in grants (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Foundation opens health grant process (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Graco recalls booster seats (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Grass fires on the rise (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: An open letter to Congress (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: Illegal immigration: Who will laugh last? (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: What Hispanic vote? (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Lone Star Greys to meet (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Meeting Watch: La Vernia City Council (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Meeting Watch: Poth ISD (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Police Blotter (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Police recover one of two stolen trucks (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Register for free watercolor lesson (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Stockdale campus to get upgrade soon (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Stockdale City Council approves electronic payment processing (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. TAMU-SA matches student scholarships (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Time to make plans to attend Jubilee (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Want fire protection? Attend May 19 hearing (May 18, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Acme Gold Buyers marks fifth year in Floresville (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. All Veterans Job Fair (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Cemetery group to meet (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Children’s Alliance enhances care services (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. China Grove mayor, police chief trade barbs at meeting (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Commissioners lukewarm toward hot coffee at library (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Competency and integrity (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Court Update (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Coy to get Ranger Cross (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Cub Scout Roundup (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Donate blood in May (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editor: Trump’s candidacy sets in motion affliction in future elections (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editorial: The voters have spoken — well, some of them have! (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Former Sutherland Springs VFD considered as a substation (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Free caregivers class starts May 26 (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Information sought in Walmart theft (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Lack of super majority vote keeps Clean Water Rule flowing (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Leetter: The government is a terrible investor (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: Injection well site is near river, creeks (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: Stop being negative (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. LV youths win new wheels at Bike Rodeo (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Meeting Watch: La Vernia ISD (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Mineral rights workshop set (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Miss LV Pageant, Bluebonnet Parade, graduation fill La Vernia calendar (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. New Wilson County justice center nears completion (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Personalized brick for Veterans Memorial (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Police Blotter (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Precinct 3 primary runoff is May 24 (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Rangers to honor Lorenz (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Rohrs takes over Floresville athletics (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Tanneberger qualifies for Executive Club membership (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Voters respond: One bond passes, another fails (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Wednesday morning crash injures nine (May 11, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. AACOG plans public meeting (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Accident injures two drivers (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. AgriLife offers tips to protect from Zika, other mosquito-borne diseases (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Behind the lens: Solitary stillness (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Celebration Mass June 12 (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Cemetery association meeting (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Condos are fine, but do your research (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Court Update (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Crime Stoppers aids police anonymously (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. DA, DPS bust nets 86 charges (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Debate over citizens comments dominates Floresville council (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Dwellings At Home offers lodge, ranch furnishings, more (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editorial: Overbearing city council threatens boards’ independence (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editorial: Taking personal responsibility will bring possibilities (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Editorial: Trump is the same old song with one more verse (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. FEDC tables recommendation of master parks plan (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. FELPS tornado repair continues as FEMA help stalls (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Floresville Chamber Luncheon May 18 (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Hall of Fame inductees: Joe Kotwig, Malcolm and Beverly Talley (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Letter: Alamo Colleges: A bust for Floresville (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Local nursing homes plan Senior Olympics May 9-13 (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Look twice for motorcycle riders (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Lyssy’s vault earns gold, sets records! (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Medicaid, CHIP application assistance (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Meeting Watch: Wilson County Commissioners Court (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. National Day of Prayer May 5 (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Police Blotter (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Ramirez promoted to colonel (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Reserve a seat for SA Tea Party (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Tanneberger tops in sales (May 4, 2016)
Full article available to Wilson County News subscribers only. Click here to subscribe. Treviño prepares to take reins of East Central athletics (May 4, 2016)