En­ergy ex­pert: Volatile prices ahead

Daily Local News (West Chester, PA) - - BUSINESS - By David Koenig AP Busi­ness Writer

DAL­LAS >> Gaso­line prices have lev­eled off after coast­ing down­hill with the slump in oil. Fac­ing a glut of crude, OPEC mem­bers will meet next month in Vi­enna and try to write the de­tails of a plan to re­duce oil pro­duc­tion.

Columbia Univer­sity en­ergy an­a­lyst Jamie Web­ster talked with The Associated Press about prospects for mean­ing­ful ac­tion by OPEC. He doesn’t ex­pect the car­tel to cut pro­duc­tion enough to make a huge dif­fer­ence in the price of oil.

Web­ster pre­dicted a grad­ual re­cov­ery in U.S. pro­duc­tion and volatile pump prices for mo­torists. His an­swers were edited for length.

Q . OPEC mem­bers have agreed they need to cut pro­duc­tion. Can they over­come past divi­sions and pro­duce a deal?

A . We’re head­ing in the right di­rec­tion for an even­tual cut, but still it’s very much up in the air. If they agree to cut, the first ques­tion to ask is how much of a cut is it? Is it size­able enough that it’s ac­tu­ally go­ing to start help clear this mar­ket? And who is mak­ing that cut?

Q . As­sum­ing there is an OPEC agree­ment, will it be enough to raise oil prices?

A . It seems very un­likely that they’re go­ing to be will­ing to even sig­nal a cut that is big enough to ac­tu­ally bring the mar­ket into bal­ance. They an­nounced they would cut as much as 700,000 bar­rels a day, at that time the mar­ket needed close to 2 mil­lion bar­rels a day by OPEC’s own num­bers to start to equal­ize sup­ply and de­mand.

Q . Oil has crept up to about $50 a bar­rel. Will it rise enough to stim­u­late U.S. pro­duc­tion?

A . You’re cer­tainly see­ing some com­pa­nies mak­ing moves. I think they’re go­ing to see an uptick in ac­tiv­ity, but even if you get to $60 or $65, you’re not go­ing to see a sud­den ramp-up as you did in 2014, where we had pro­duc­tion growth in this coun­try of 1.4 mil­lion bar­rels a day.

Q . Should Amer­i­can mo­torists ex­pect gaso­line prices to rise?

A . What­ever price you’re fill­ing up your tank with now will not be the price a year from now. We’re likely to ex­pe­ri­ence some real ups and downs in price over the next sev­eral years. You have a good chance of hav­ing a cy­cle that goes up but then comes right back down as more pro­duc­tion starts to come on­line.

Q . Are you sur­prised that en­ergy isn’t a big­ger is­sue in the pres­i­den­tial cam­paign?

A . No. Prices are down, so peo­ple aren’t quite as fo­cused on it. The in­dus­try of­ten talks about how peo­ple need to fo­cus more on en­ergy, but the re­al­ity is for most Amer­i­cans en­ergy falls back by the way­side. We also don’t seem to be hav­ing a pres­i­den­tial cam­paign that would be fo­cused on those sorts of sub­stan­tive is­sues quite as you would have had in the past.

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