Crude oil prices hit a new high Wednesday. MTPR's Edward O’Brien has more on what that means for consumers and what’s left of Montana’s oil producers
U.S. crude notched above $61 a barrel, Wednesday. That’s the first time that’s happened in two-and-a-half years.
According to the Montana Petroleum Association Alan Olson, that’s encouraging news for the industry.
"We’re cautiously optimistic that it’s going to continue on an upward slope," Olson says.
The oil price spike is being fueled by strong economic activity from the United States and Germany and, in part, by growing political unrest in Iran. Iran produces nearly 4 million barrels a day, and any disruption there could send prices higher.
The Director of the University of Montana’s Bureau of Business and Economic Research, Patrick Barkey, says oil production is booming in Texas and North Dakota; not so much in Montana.
"The way oil production capacity is commonly measured is by the number of drilling rigs out in the field," Barkey says. "In Montana that number has been less than five – even zero – for many months over the last few years."
The Petroleum Association’s Alan Olson hopes this boom in oil prices and production works its way down to Montana producers.
“We were sitting at zero drilling rigs in Montana for a long time. I’ve never seen it this bad and I’ve been involved in the industry for about 40 years now and I haven’t seen a downturn like this in Montana until the last couple of years. We’ve got two active drilling rigs currently working in Montana. My discussions with them is that they’re going to keep on drilling.”
What could this oil price spike mean for consumers? The BBER’s Patrick Barkey points out that crude oil prices are only one of many factors that determine the cost of gas and diesel at the pump.
“They’re affected by events at refineries. Certainly, the hurricanes had an effect, because they took out a lot of refinery capacity, particularly in other parts of the country. The price we pay at the pump is not independent of crude oil prices. A lot of other things go into that as well.”
Crude oil futures prices Wednesday closed at $61.63 cents a barrel on the New York Mercantile Exchange.