So, folks like the GOP contingent of the Texas Legislature, especially Lite Guv Dan Patrick and his Texas Senate GOP minions, along with Comptroller Glenn Hegar, need to listen up to Rex's latest message.
He says oil will stay at $55 through at least part of 2017. Yes, two full years or more of oil (I presume he means WTI, not Brent) at an average of $55/barrel. BP's Bob Dudley is saying the same.
Both cite expected low demand growth and a world that is still awash with supplies over that whole time. On the demand side, besides Europe's and Japan's economies still being slow, and China slowing down, let's not forget that more stringent CAFE standards here in the US will kick in during the years ahead, dampening need here.
Meanwhile, as I blogged a couple of weeks ago, domestic storage at Cushing, Okla., continues to fill up, and will probably max out by the end of May. Commodities speculators are already buying storage elsewhere, but, given the words of Tillerson and Dudley, look ever more to be making losing bets. Because, we're awash in supply and prices haven't soared even with the speculators taking that much oil off the market. It's amazing how dumb some of these people can be.
Indeed, Tillerson said in another interview that Cushing maxing out could push prices even lower. Others, like Tom Kloza of OPIS, a respected name in oil analysis, are saying the same — that a Cushing maxout could push WTI back to $40/bbl. Inventories are already at an 80-year high and climbing.
Of course, spring and summer gas blending and other things mean that there will be ups and downs around that center point of $55. In fact, Tillerson said elsewhere he expects some volatility ahead.
That said, oil companies in the past have tried to buy up production when worried about that, or buy up overlaps if that might produce efficiencies. And, in what would be the mother of all non-nationalized oil companies, speculation continues to mount that Exxon is eyeballing a BP takeover.
And, as for claims that OPEC is dead? Tosh. The Gulf states, at least, have lower overhead than non-nationalized US oil companies, even in dying conventional plays, and certainly for tight oil.
Update: The city of Houston is getting a bracing dose of reality, too, as housing sales tumble.