CARLSBAD — The price of oil won’t be down for long, at least according to one wealthy expert.
As soon as December of this year, oil is predicted to be back to $70 per barrel, said T. Boone Pickens, keynote speaker at Monday’s 2015 Southeastern New Mexico Mayor’s Energy Summit.
Pickens, founder of Mesa Petroleum and current chairman of the BP Capital Management hedge fund, was welcomed by an eager audience waiting to hear the advice he had to give from many years in the business.
“I said back when the price of oil was at $40 (per barrel) that it would be $50 before it would be $30. Which it did,” Pickens said. “I thought we (the oil market) would be in better shape in September then we are, (we) are going to need some help in October to still make the $70 price in December.”
However, if oil doesn’t rebound by December, then Pickens predicted that by June 2016 it would be back.
If oil barrel prices were to increase again it would signify a rebound in the oil industry.
Pickens explained to the audience how global and national factors play into current oil prices and how those factors will not keep oil prices where they are now.
Pickens said that global issues such as the Iran Deal or Saudi Arabia not cutting their own production hurts the U.S. oil industry right now, but that it won’t be forever and, hopefully, not too much longer.
“We have more resources then any other country in the world, and when we produce, we let it rip,” he said, adding that the U.S. needs to no longer be dependent on oil from the Middle East
Pickens was asked at one point during his presentation what Eddy County should do to better attract businesses here.
“You’re doing good here and you are attracting businesses to Artesia and Carlsbad, but it’s about the price of oil. At $100 per barrel you are beautiful, but at $45 per barrel you aren’t that good looking.”
Pickens said he doesn’t believe the price of oil will stay at $45 per barrel much longer and that Saudi Arabia will cut its production to stabilize the market if it continues through the end of the year.
Saudi Arabia during previous oil collapses would be a swing oil producer, which means Saudi Arabia would cut their country’s oil production causing the global market to stabilize.
“This time they told us they weren’t cutting production, this time the U.S. is the swing producer,” Pickens said.
The U.S. cut production to somewhat stabilize global markets, which resulted in rigs being shut down, resulting in layoffs.
“Saudi Arabia wanted to hurt us doing that,” he said.
The rest of the summit focused, also, on the future of the energy sector in the state.
“The purpose of this summit has always been to tell us what’s going on. To tell us where we stand and how do we plan for the future,” Carlsbad Mayor Dale Janway said.
More than 20 different speakers, including Pickens, were at the summit.
Other speakers also acknowledged that the oil and gas industry is in a decline, and some were not as hopeful about the industry’s recovery.
Billy Munn, a private equity investments manager for Mack Energy Corporation, said that from seeing the last oil collapse in 1986, it takes a while for that oil price cut to feed back into other parts of the industry, such as the smaller business.
“I don’t know the future, but this is going to be a very different struggle coming out of this,” Munn said comparing this oil decline to the one in 1986.
Munn advised that everyone treat this downturn seriously, and bet on realism not just hope.
Also addressing the future of the energy industry, New Mexico Gov. Susana Martinez unveiled her new energy plan to harness the full energy producing potential in the state.
“The oil and gas industry makes a large investment to the state everyday, and so many New Mexicans do not know (that),” Martinez said.
This article was written by Sarah Matott from Carlsbad Current-Argus, N.M. and was legally licensed through the NewsCred publisher network.