Page 19 - NBIZ June2021

be met by OPEC, Russia, and other nations. OPEC still has 6
Global Crude Consump on to 8 million barrels per day of spare capacity and Russia will
105 not let environmental concerns interfere with the chance to
Million Barrels Per Day 95 role to play, providing the state-run oil companies with the
sell more crude on global markets. Yet, Houston still has a
100
technology they need to find and produce the crude needed
90
until the world transitions from carbon-based fuels to other
85
sources of energy. Even then, Houston will have a role to play
80
75
the World. Then, as now, Houston will work to be at the heart
'10'11 '12'13 '14'15 '16'17 '18'19 '20'21 '22 as the region recasts itself as the Energy Transition Capital of
of the global energy industry.
Source: U.S. Energy Informa on Administra on
CONCLUSION

was about to go sour and cut back on production. They As the Partnership put the finishing touches on this
failed to see the surge in remodeling or the boom in new report, Dr. Anthony Fauci, the nation’s leading expert on
home construction. A fire at a Japanese chip-making infectious diseases, announced the Biden administration
factory, the shutdown of U.S. factories during the February should reach its goal of vaccinating 70 percent of Ameri-
freeze, under-investment in new manufacturing capacity, can adults with at least one COVID-19 shot by July 4. Fauci
and U.S. sanctions on China have led to a global chip short- limited his comments to just the U.S. He notes that other
age. With bars and restaurants closed during the pandemic, nations are not there yet.
breweries had to shift their packaging from 16-gallon kegs
to 12-ounce containers ramping up the demand for alumi- Case in point: The World Economic Forum (WEF) is nor-
num cans. A massive shipping container shortage has made mally held in the Swiss ski resort of Davos each year. About
it difficult for Brazil to export its coffee beans and China to 3,000 political, business, and civil society leaders meet to
export furniture. The shortages mean consumers will have discuss global economic, political, and environmental con-
to pay more, wait longer, and may face a limited selection of cerns. The pandemic in Europe prompted a decision to move
products. These are also one of the reasons why economists this year’s event to the Asian city-state of Singapore, which
are worried about inflation, at least in the short run. appeared to have the virus under control. But on May 17,
the organizers canceled the event. The coronavirus situa-
OIL’S OUTLOOK tion in Singapore had worsened, making it unsafe for world
leaders to attend. The cancelation serves as a reminder that
There is no shortage yet, but the global recovery has the virus still has the potential to derail global recovery. N
driven up the demand for crude, taking prices up with it. The
world now consumes about 96 million barrels per day, up In preparing this analysis, the Partnership used reports
from 80 million barrels at the pandemic trough but still below and data from the following: Baker Hughes, Bloomberg,
the 102 million barrels per day of the December 2019 peak. The Conference Board, The Economist, Federal Reserve
Prices have risen with demand, breaching $40 per Bank of Dallas, Houston Airport System, Institute for
barrel in July, $45 in late November, $50 in January, and Supply Management-Houston Chapter, International Labor
$60 in May. There is always a lag between when oil prices Organization, International Monetary Fund, Investopedia,
recover and when the rig count begins rising again. McKinsey & Company, Moody’s Investor Service, NAI
According to a recent survey by the Federal Reserve Bank Houston, National Association of Manufacturers,
of Dallas, the average breakeven prices to profitably drill a Organization for Petroleum Exporting Countries, Our
new well in the U.S. ranges from $46 to $58 per barrel. The World in Data, Oxford Economics, Peterson Institute for
rig count did not begin to recover until late August just a International Economics, Pew Research Center, Port of
few weeks after crude topped $45 per barrel. Houston Authority, Texas Workforce Commission (TWC),
As of mid-May, the U.S. rig count stood at 455, well U.S. Energy Information Administration, U.S. International
below the 790 working at the start of the pandemic. Trade Administration, United Nations Council on Trade
Though more rigs are working, the U.S. is unlikely to and Development, The Wall Street Journal, WISERTrade,
return to its previous production peak of 12.9 million The World Bank and The World Trade Organization.
barrels per day reached in November 2019. Wells currently
being drilled or slated for the future must first replace Elizabeth Balderrama, Heather Duran, Annaissa Flores,
production from depleted older wells. Patrick Jankowski, Roel Gabe Martinez, and Josh Pherigo
The EIA expects global demand to top 102 million barrels contributed to the research and writing of this report.
per day by the end of 2022. Based on EIA forecasts, 18 months
from now, U.S. production will still be 600,000 barrels shy of For further information, please contact Patrick at
pre-pandemic levels. Any increase in global demand will likely pjankowski@houston.org or visit www.houston.org.

NBIZ ■ June 2021 19