TUESDAY, JANUARY 12: This is a transcript of our discussion on the drop in oil prices and outlooks for the future, with reporter Lorne Matalon and host Tom Michael.
MICHAEL: Monday was a rough day for oil and gas markets. Prices fell more than 6 percent to 12-year lows. At one point yesterday, U.S. West Texas Intermediate crude dipped below $32 a barrel. One of the lowest points since December 2003. Our Fronteras Desk reporter Lorne Matalon is in Austin today, surrounded by energy policy experts, academics, and other industry insiders. We go to him now. Hello, Lorne.
MATALON: Hello, Tom.
MICHAEL: So, what are you doing there in Austin?
MATALON: On behalf of the station, myself, and morning anchor Travis Bubenik, (we) are invitees at UT Austin’s first annual Energy Journalism Conference. Real “A-List” energy reporters like Russell Gold from the Wall Street Journal and Clifford Krauss from the NY Times, now based in Houston
MICHAEL: What are some of the factors behind this sell-off?
MATALON: The bottom line, to answer your question directly, is there’s a persistent global glut of crude. And Tom, it continues to weigh on the market. Oil prices have plunged since mid-2014. They’re down more than 10% already this year. It’s the talk of this conference.
MATALON: And the energy rout has frankly roiled the global market for energy, as energy producing companies and certain countries have struggled to cut costs as revenue falls.
MATALON: Drivers – they’re enjoying the cheapest gasoline prices in years, with prices at the pump averaging in the United States under two dollars a gallon, as of the close yesterday, that’s Monday.
MATALON: And the other problem that we’re really talking about here is that oil production is outpacing the global demand, even though producers have already cut a lot in terms of spending, and even though they sharply reduced, as we’ve been covering here on the station. They’ve sharply reduced new drilling.
MATALON: Then you add another part of this perfect negative storm, and that’s ongoing turmoil in the Chinese markets. It’s fueled economic concerns about a slowdown in China, the number-two oil producer after the United States.
MATALON: Then you move to Wall Street. Wall Street and its analysts - they’re adjusting their oil price forecast lower, catching up with a market that’s already traded lower, pretty much everyday this year.
MATALON: So, forecasters are now saying that prices will fall to around $30 or less. One of the speakers here today said that he predicts it will fall to the mid-20s, which is not encouraging news.
MATALON: At the same time, we saw computer models about how this slowdown, (and I’m being charitable about this, of course, it’s much worse than that) will actually turn around.
MICHAEL: Fascinating predictions from the policy experts there. Lorne, thank you so much.
MATALON: Great to be with you, Tom.
MICHAEL: That’s our reporter Lorne Matalon, with a look at the energy market.