After many decades of stability, consumers have started seeing higher-than-usual fluctuations in oil prices. Billions of gallons of oil are consumed on a daily basis all around the world. In fact, 2018 was one of those years where oil was consumed the most on a global scale.
In the past, the United States has contributed to the global markets in many ways. One of which is the export of energy resources. Now policymakers in the country are thinking of reducing their exports of crude oil in 2019. Our government is also focusing on generating returns through export of natural gas, which may shift how we study the United States crude oil market.
Low carbon emission policy
As governments all over the world realize the effect of carbon emission on their local citizens, they are exploring new avenues to generate energy. The United States has been one of those few countries that have implemented strong laws on the use of alternative energy resources.
To reduce carbon emission from consumer assets, like cars and engineering plants and machinery, the country has started to explore natural gas resources. LNG, or Liquid Natural Gas, emits a lower amount of carbon dioxide, is cheaper than petroleum, and is abundant in the United States. How this shift will impact the United States and the global economy is yet to be seen.
One of the major challenges that upstream and downstream players have witnessed in the US oil industry is high exploration and distribution costs. With the advent of the internet, smart machines, and wireless communication, the oil industry has found a way to reduce its production costs.
In 2019, many large and small corporations plan to implement artificial intelligent machines, robots, and IoT at their facilities. This will not only make the energy exploration and distribution process faster, but will also reduce oil prices in the country.
Effect of Geopolitical environment on US oil prices
The US has been involved with many different governments and private projects around the globe, impacting our local economy as well. When the country put sanctions on Iran due to its nuclear plan, Saudi Arabia moved in to strengthen its economic relationship with the US, one of the largest shale and oil gas producers in the world.
OPEC, on the other hand, has not asked the United States to cut down its local oil production. This has helped both developed and emerging markets acquire oil at relatively low prices. Besides that, the strengthening of the US dollar caused by heavy trading of the currency in forex markets helped international exporters as well.
Since there are multiple factors influencing oil prices in the United States and around the world, it is too early to say how oil prices will fluctuate in the United States in 2019. One thing is certain though; the country will be investing a lot in alternative energy resources and in making the best use of technology to bring down its production and distribution costs