While falling gas prices could be good for Lubbock residents, it might not be so great for Midland residents, a Texas Tech economics professor said Tuesday.
Michael Noel, an associate professor in the department of economics, said Iran is predicting that within the next few months, it will be able to double its exports, increasing the world’s oil supply and depressing prices.
But, he said, “remember that Iran is still a member of OPEC.”
It remains to be seen if OPEC, or the Organization of the Petroleum Exporting Countries, will accommodate Iran’s increase in production or restrict it.
Even though there is some oil production in the Lubbock area, Noel said Lubbock residents will have a few extra dollars in their pockets if oil falls an expected $8 per barrel. He said that could translate to about 20-cents per gallon less at the pump.
Lubbock’s smaller amount of oil production and its economic reliance on universities, hospitals and cotton insulates it from a reduction in oil prices.
“Midland is a different thing,” Noel said. “You would expect to see more rigs close down.”
Many rigs closed down last fall when oil prices fell from $110 per barrel to about $40 per barrel, Noel said. There was some recovery and prices now hover between $50-60 per barrel, he said, but an extra $8 per barrel decrease in oil value will result in more rigs shutting down. He said the difference will not be as drastic as seen last fall.
Diversification of businesses in Midland could help it to weather the lows of being an oil town, he said, but it seems unlikely to happen.
“It’s not a logical place for it,” Noel said.
He predicted that many people drawn to the Midland area oil fields will probably move back to Dallas or Houston to find jobs in another industry.
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This article was written by Karen Michael from Lubbock Avalanche-Journal, Texas and was legally licensed through the NewsCred publisher network.