Wednesday, June 14, 2017

Pepperdine EDOL Twitter Chat: Big Oil

This post is in support of the Pepperdine EDOL Twiiter Chat for June 14th, 2017. Join the conversation using #GSEPEDOL 

Key points for tonight’s discussion:

The price of crude oil today is $46.69 and There is currently a glut in oil. At the beginning of the year the Organization of Petroleum Exporting Countries (OPEC) agreed to cut production of oil and that this would cause supplies to tighten quickly. That hasn’t been the case. The amount of oil in U.S. reserve tanks recently increased (Sider & Puko, 2017).

Crude oil prices have declined 9% in the past three weeks and 15% for the year, recently dropping below $50 a barrel. U.s Producers have rushed to fill the gap left by OPEC (Sider & Puko, 2017). At some points this year U.S. oil producers have exported up to a million barrels a day , about twice the amount during 2016. U.S. exports have increased significantly since Congress lifted the ban on oil exports in 2015 (Cook, 2017).

What does this mean for us?  In Texas for example, the elasticity of supply (Miller, Benjamin, and North, 2012) , the reaction to the amount of oil demand in relation to the price per barrel has resulted in a drop in state tax revenue from natural gas and oil production which dropped by over 48 percent in 2015. This impacted education spending in Texas, with the Texas Education Agency reducing spending from approx $28 Billion in 2014 to approx. $27 Billion in 2015 Texas Comptroller, 2017).

Big oil is here to stay for the near future. Oil demand will not peak until sometime between 2025-2040 (Cook & Cherney, 2017). OPEC decided to cut production at the beginning of the year to reduce oil reserves and increase demand to increase process. The U.S.A. is not a member of OPEC and filled the production gap left by the OPEC countries (Sider & Puko, 2017).  Because of this there is a glut of oil, plenty of supply and lower demand, which is keeping prices down. This works in our interests and against the interests of the OPEC countries.


Q1: How has oil impacted you in our area? #GSEPEDOL

Q2: How can the USA support OPEC countries? #GSEPEDOL

Q3: How do we influence OPEC countries to invest and develop clean energy technologies? #GSEPEDOL

Q4: How does Big Oil impact our national security #GSEPEDOL

Join the conversation using #GSEPEDOL


Comptroller, T. (2017). Transparency spending. Retrieved from
Cook, L. (2017). U.S. oil exports double, reshaping vast global markets. Wall Street Journal, (June 7, 2017), June 10, 2017-
Cook, L., & Cherney, E. (2017). Get ready for peak oil demand
. Wall Street Journal, (May 27 2017), 1 June 2017-
Heilbroner,Robert L.,,. (1999). The worldly philosophers : The lives, times, and ideas of the great economic thinkers
Miller, Roger LeRoy., Benjamin, Daniel K., North,Douglass C.,. (2012). The economics of public issues. Upper Saddle River, N.J: Pearson Education.

Sider, A., & Puko, T. (2017). For oil investors, early faith in a rally begins to wane. Wall Street Journal, (June 9, 2017), June 9, 2017-

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