Aug. 24 (UPI) -- With U.S. crude oil production on the rise, it's clear the production agreement from OPEC hasn't worked as intended, an economist in Texas said.
The Organization of Petroleum Exporting Countries and a handful of non-member state producers in January started a plan to pull global crude oil inventories closer to the five-year average. A market surplus last year pushed crude oil prices to historic lows, slowed capital streams toward exploration and production and hurt the financial well-being of producers and producing states alike.
The state economy in Texas last year faced headwinds because of weak energy market conditions, but has since shown clear indications of recovery. Though oil prices are still half what they were about three years ago, Karr Ingham, an economist with the Texas Alliance of Energy Producers, said it's clear that U.S. shale producers are resilient.
"OPEC production curtailments did not achieve the desired price outcome, and once again Texas and the US are the chief offenders - and I say that with great pride," he said in a statement. "Oil supplies remain plentiful because domestic producers are becoming increasingly efficient at producing crude oil at lower costs, so a $45 per barrel oil market provides more incentive than in the past."
West Texas Intermediate, the U.S. benchmark for the price of crude oil, was around $48 per barrel early Thursday.
Ingham's group reported Texas crude oil production was about 5.7 percent higher than it was last year. In terms of value, that means crude oil produced in Texas was also worth more. For Texans, meanwhile, about 9.9 percent more were on the payroll in the oil and gas industry than last year, though the level is still about 28 percent lower than the peak in late 2014.
A July report from the Federal Reserve Bank of Dallas found job growth in the state was 3.6 percent and the overall forecast for the year was 2.8 percent, an upward revision from 2.6 expected in its last forecast.
The Permian shale region in Texas is expected to represent about 30 percent of total U.S. crude oil production next year. Exploration and production in Texas, reported as rig counts, peaked in 2008 at 946. Current levels are about half that, but more than double the level from this time last year.
"Make no mistake about it, U.S. producers - and Texas producers, in particular - have backed OPEC and other producers around the world into a corner from which there seems to be no easy escape," he said.