West Texas Oil Industry Eyes Global Events as Prices Remain Volatile

Although West Texas is known for producing some of the most coveted oil globally, the prices Texans encounter at the gas station — along with the rates that energy companies earn — are influenced by factors that extend well beyond the Permian Basin.

“Oil operates within an international marketplace,” stated Nikki Kantelis, faculty director of energy commerce at Texas Tech University. “Indeed, we find ourselves in West Texas, yet the oil market operates on a worldwide scale.”

Earlier this year, a striking example of global interconnectivity emerged as escalating tensions between Israel and Iran caused oil prices to surge by almost $15 per barrel. The increase was not due to an actual lack but rather concerns about a potential one.

“Geopolitical events such as the Iran-Israel conflict tend to create a sense of unease globally,” Kantelis remarked, observing that prices have since decreased but continue to be volatile.

Even with oil prices stabilizing in recent weeks, producers in the Permian Basin are taking a cautious approach, opting to consider long-term strategies rather than hastily increasing drilling activities in anticipation of possible future fluctuations.

“They’re placing a wager not on current prices or those of the coming month, but on what they will be years down the line,” Kantelis stated.

The fluctuations in oil prices extend their impact far beyond just fuel costs, affecting the prices of various products that many consumers may not directly associate with energy expenses. “My glasses, made of plastic, are sourced from energy,” Kantelis stated. “Cosmetics, medications, athletic equipment — a multitude of products are linked to the oil and gas industry.”

The oil sector remains a cornerstone of the West Texas economy, supporting numerous jobs and generating billions in revenue. However, global demand and the choices made by organizations such as OPEC+ and leading energy firms consistently influence market dynamics.

“Businesses lack the motivation to increase oil production until certain issues are resolved,” Kantelis noted, warning that prices might surge again due to developments occurring globally.

“The price being set reflects a combination of international and local influences,” she noted. “We have no control over any of these factors, yet they all influence our expenses.”