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North America Watch: Five Things to Know about Declining Oil Prices

Article by George W. Bush Presidential Center January 16, 2015 //   3 minute read

This isn’t the first dip, by any stretch

As many in the Oil Patch know, the 1980s were a big bust. But so did the boom times of the 1930s suffer a downturn. That included when the East Texas oil fields were closed to stop overproduction.

But it pays to worry

If this downturn continues, jobs will disappear. Growth in states like Texas will slow down. And some over-extended energy companies will shrink or disappear. Mexico’s opening up of its energy industry could slow down, too.

There is an upside

Consumers will pay less at the pump, generating more disposable income. Fuel-sensitive industries like trucking and airlines will pay less for oil. And travel budgets should grow, helping the tourism business from Cancun to Hawaii to Padre Island. Spring break could be crazy, come to think of it.

Predictions are only that: Predictions

Predictions about oil and gas prices can be all over the place. The answer is no one knows for sure.

Markets are responsive to many pressures, including OPEC decisions to keep pumping at current or greater levels. On the other hand, supplies will dwindle some as the number of shale-oil producers thin out. Eventually, the slackening of oil and gas supplies could boost prices per barrel.

So, hang tight. The price of oil remains a jump ball.

Fracking will remain

The process of retrieving oil and gas from shale formations is about as popular in some circles as the overriding of Dez Bryant's goal-line catch was in Cowboy-land Sunday.

Still, the fracking revolution has spawned new supplies of natural gas, a cleaner fuel. The growth in oil and gas supplies have started to make North America less vulnerable to turbulent geopolitics. And the revolution has grown many a job.

Plus, efficiencies are coming on line. Finding ways to improve the use of water in the fracking process is one example.

Some may wish fracking would go away, but this revolution is too valuable to let die.