The oil and gas industry, and the economy, in general, has been booming for the last several years. But economists aren’t so sure this will stick around. In fact, many are predicting a recession to hit sometime in the next fiscal year.
One area that’s expected to take a hit is oil and gas. Oil rigs and sites may struggle as the economy takes a different turn, and everything from their pump packages to their political influence will have to be monitored carefully. Here’s what those in the oil and gas industry can expect in the coming year.
Oil Price Decline
Unfortunately, the market is not leaning in favor of the oil and gas industry. Experts predict that 2020 will bring a significant slump in pricing for oil, and the Energy Minister for Saudi Arabia, Abdulaziz bin Salman, agreed with this thought in a recent press conference.
The Energy Minister and others agreed that they would be considering deeper production cuts, and this is largely attributed to struggles with the Organization of the Petroleum Exporting Countries (OPEC), which largely governs the industry.
A supply glut is an economic term to explain what happens when an excess of supply in relation to demand occurs. There’s currently more oil and gas in the industry than there is purchasers to consume it. This is a major reason that prices will decline.
Experts are looking at the possibility of supply gluts in many categories since there could be an economic recession in the forecast for next year. The market will be relatively balanced through the remainder of this year, but we’ll see slashed output in the coming months.
Alternative Energy Increases
Over the last few years, several enemies to the oil industry have emerged. One is alternative energy, but it hasn’t been considered a real threat until recently. It will likely become more of a threat in the coming years as well.
For starters, there have been more electric vehicles than ever before. It’s difficult to find a parking lot in modern cities without electric charging stations because so many have adopted this cleaner way of driving.
Additionally, many forward-thinking millennials are pushing for alternative energy. Their loud voices seem to be making a difference in the oil and gas industry, and this could be a big contributor to the increase in supply and decrease in demand.
Political Influence Against Oil
One of the biggest enemies to oil production are those in political positions. They use anti-oil platforms to get a leg up in the political arena, and their views make a difference in public opinion. The landscape of oil and gas is ever-changing based on public perception, and it’s all industry tycoons can do to keep up.