DALLAS (AP) — 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?
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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?
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?
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?
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?
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.