Current Market Snapshot Case Analysis

Texas’ history with oil starts much earlier than the 1901 Spindletop gusher. As early as 1543, there were reports of natural oil seeps along the coast of Texas which was used as both medical treatments and caulking for boats by Spanish explorers (Wooster). In 1866, the first of Texas’ oil producing wells was drilled in Nacogdoches County, however the supply and profit was not high enough to justify further development. In 1895 in Corsicana, Texas there was a minor oil find that led to the creation of Texas’ first oil refinery in Nacogdoches, Texas. Another large oil find is the East Texas Oil Field which spans 140,000 acres and is considered to be the largest oil field in the United States (excluding Alaska); this oil field has produced over 5.2 billion barrels from its 30,340 historic and active oil wells (Smith).

The pipeline is 1,172 mile long and it will transport approximately 470,000 barrels of oil per

While originally designed to meet the needs of Canadian citizens, shrewd US businessmen saw an opportunity and formed a US company, TransCanada Pipelines, in 1954,

The Keystone XL Pipeline will provide a secure and reliable source of oil for the United States. The southern portion of the pipeline alone can “ transport 830,000 bpd of crude from Cushing, Oklahoma to Gulf Coast refineries” (Kalen). The Keystone XL pipeline is necessary to keep up with consumer demand as the supply from Mexico and Venezuela decreases continually. The oil imports from Mexico and Venezuela are unreliable and are continually declining; therefore, the Keystone XL Pipeline will provide a reliable source of oil for

However, most of the oil imports to the U.S. come from Canada, Saudi Arabia, Mexico, Venezuela, and Nigeria. The Organization of the Petroleum Exporting Countries or OPEC is part of where the Unites States imports their oil. OPEC countries only produce a small portion of American oil; the U.S. obtains most of its oil from Mexico and Canada. However, over the years Canadian oil production has risen while Mexico’s has fallen. It is obvious that it would be better to have a reliable, long-term supply of crude from Canada than rely on overseas suppliers, whether they are part of OPEC or not.

Canada became a net oil exporter in the early 1980s and has since grown to become the world’s fifth largest producer of crude oil (US Energy Information Adminstration 2015). In 1981 Canada’s net trade surplus in energy goods relative to its GDP sat at around 0.6 percent and by 2000 it had increased to 3.3 per cent (Stuber 2001). Canada produces about 4.4 per cent of the world’s oil; owns close to 10 percent of the world’s oil reserves and consumes roughly 2.5 per cent of the world’s oil (KPMG-SECOR November 2013). The US is currently Canada’s top importer of crude oil, importing close to 37 per cent of oil in 2014 (US Energy Information Adminstration 2015).

The Gulf of Mexico, an ocean basin mostly surrounded by the North America continental, is generally referred as the south coast of America and one of the major regions for source and infrastructure of oil and gas supply in the United States. Four of the states including Texas, Louisiana, Mississippi, and Alabama on the Gulf of Mexico consist of the significant petroleum-producing area. According to the data provided by the Energy Information Administration [1], the Gulf of Mexico offshore oil and natural gas production account for 17% and 5% respectively of the total U.S. crude oil and dry gas production. Additionally, about 45% of the petroleum refining and 51% of the natural gas processing capacity in the United States are spread out on the Gulf of Mexico.

Venezuela’s reputation has been well established regarding its supply of oil and how it was being used for medicinal use and other purposes. It was not until the first oil well was drilled in 1912, when Venezuela became the world’s second largest oil producer behind the US, and the world’s largest oil exporter (Wilpert, 2003). With the well drill in the country it attracted many major oil producers that wanted a piece of anything they could get. The Royal Dutch Shell and Rockefeller’s Standard Oil became the main producers of the oil and maintained a high status. Everything was going great for the company, “ between 1920 and 1935 oil share’s exports went up from 1.9% to 91.2%”(Wilpert, 2003), but not everything goes according to plan. The country had a dramatic impact towards its economy that many recall, “The Dutch Disease.” “The utmost important magnitude of the Dutch Disease was that agricultural production declined to almost nothing and the country fell behind in industrializing, relative to other Latin American countries” (Wilpert, 2003). Thus, Venezuela had passed a reform oil policy that was the Hydrocarbons Act, which was from the oil revenues based on the income of the mines (Wilpert, 2003), bringing the state’s income to stability.

In addition to the US peak oil situation, the US Oil Drilling and Gas Extraction Industry faces heavy foreign market competition. In 2011, the US ranked 3rd in oil production, behind Saudi Arabia and Russia (Energy, 2012). Saudi Arabia’s OPEC governor expects Saudi output to rise steadily beyond 2030 with a 1.5 million barrel per day spare production capacity then (Energy, 2012). Russia holds the world’s largest

Canada’s oil reserves consist of oil contained in the oil sands deposits of Alberta and in other non-oil sands deposits. Most of Canada’s oil reserves – both oil sands and non-oil sands – are found in the Western Canadian Sedimentary Basin, which underlies parts of British Columbia, Alberta, Saskatchewan, Manitoba and the Northwest Territories (2)

The largest world supplier oil company is Saudi Aramco. It is the most profitable company on the earth. Since it is the most powerful oil company, it has a great impact on the world economy. As a result, a strong international relationship was built with the Kingdom of Saudi Arabia. In addition, the strong developing of international relationship with other industrial countries resulted in massive contributions to the politics, economy, and many different aspects. In 1933, Saudi government bestowed oil concession to California Arabian Standard Oil Company (Chevron). The main factor for this grant was to explore the oil in the eastern region of the Kingdom of Saudi Arabia. After discovering a huge amount of oil, part of the

According to officials the operating line for the pipeline has been shut down. Aera Energy is the company that the oil belongs to, which is owned by Shell and ExxonMobil. Crimson Pipeline owns the pipeline.

If you live in our neighborhood, you 've got to look at Argentina. It 's going through a major crisis today, but it is the second largest market in South America.1 — Francisco Gros, CEO, Petrobras

The oil-rich Bolivarian Republic of Venezuela, located on the northern coast of South America, was for many decades considered among the wealthiest nations in the entire continent. While having the largest proven oil reserves in the world has often proved a tremendous boon for Venezuela, the very black gold that has been the cause of its success has also proven to repeatedly be its kryptonite. Over half of the nation’s Gross Domestic Product stems from petroleum exports – which equates to approximately 95% of total exports. It is really not too hard to imagine what drastic consequences shifts in global oil prices could have on the economy.

The world’s largest producer of crude oil is Russia producing more than 5.3 million barrels per day (Barden 2017). The history of Russia’s oil industry started in the 16th