OPEC and Russia reach an agreement with the US to cut production of 9.7 million barrels of oil a day in an effort to stop the ongoing rapid oil price collapse.
But LSU Center for Energy Studies Executive Director David Dismukes warns it’s just not enough of a reduction to save oil prices, and too little too late given the scope of the problem.
“Just the core agreements are around ten million barrels, but estimates are we are going to have excess demand anywhere from 20 to 30 million barrels a day,” says Dismukes.
Russia and OPEC ramped up production earlier this year in a move that American oil companies say was a targeted attack on their interests.
After the announcement was made the price of a barrel of oil barely budged from its holding pattern in the low 20s, and Dismukes says that is because this may be the last “big” agreement we get for a while.
“You are going to wind up seeing prices at best case end up flat, and you could even see some corrections moving downward. You have some analysts, some people out there saying we could be dropping into the teens,” says Dismukes.
For every dollar below 55 dollars a barrel, the state budget stands to lose an estimated 11-12 million dollars.
Dismukes says the deal will likely not prevent a substantial reduction in investment in new oil projects in Louisiana or the loss of more oil sector jobs locally.
“We are just at a point in history where this was just an overwhelming situation that I don’t think anyone could deal with this quickly and this effectively,” says Dismukes.
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