Two stories, in particular, are making notably rounds on the energy beat coming out of Thanksgiving.
One has to do with ongoing pessimism about oil prices, while another said despite warnings of doom and gloom in the oil industry, a buzz of oil field workers fill the gas stations and trailer parks of the Permian Basin – a sign that industry jobs are aplenty out in the oil fields.
Matt Smith, lead oil analyst at Kpler, was also seeing some breaking news having to do with one of Texas oil’s biggest energy competitors. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: OPEC met yesterday, I gather, and some big decisions with some implications for Texas. Tell us what they said.
Matt Smith: Well, the the first piece was that it was pausing its production increases for Q1 of next year, which it wasn’t too surprising really, just given that we are seeing a surplus in the market appearing right now.
But what was unexpected was they announced that they’re going to be doing a study basically to determine the maximum oil production capacity of every country there. And so the reason for that is because there’s a lot of opaqueness surrounding that, right? Certain countries will say, “Oh, we have so much spare capacity here” when they may not necessarily have it.
So by doing this measure, that’s going to bring transparency to the market – stability as well, but it also may be bullish as well, because we’ve been expecting or assuming that certain countries have a lot of dry powder on the sidelines that they can bring to market in terms of that production, when in reality this study may show that that isn’t the case.
Just one other piece though: The company that they have picked to do this is actually Dallas-based. It’s a consultant called DeGolyer and MacNaughton Corp. So interestingly, there’s that tie again between OPEC and the U.S. here.
Well let me ask you, what does it mean if you’re gonna pause your production in your OPEC? What does that mean if you’re in Texas’ oil industry? Do you see a connection between what OPEC’s decided to do here and all that activity in the Permian I was referencing earlier?
We could view it as bullish, right? Because if OPEC is going to be hitting pause on their production increases, they’re essentially going to support higher prices. But the reality is that production is strong elsewhere in the world. And so they’re concerned here about an oversupply and that begins with Texas, right?
So on Friday we had a report from the EIA, the Energy Information Administration in the U.S. here. They showed that September’s production in the U.S. of oil was 13.84 million barrels a day. That is a record.
And so you’ve got a lot of supply coming to market outside of OPEC, and so they’re just trying to manage the situation here.
Trying to manage the price situation, I think we should probably underscore, right?
Yes, very true.
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Well, what does that mean for prices at the pump? If you’re an everyday Texan, you’re not involved directly in the oil industry and you’re hearing about this. But what does it all add up to?
Well, with oil prices around $60, that translates to about $3 a gallon on the national average. For Texas, it’s just below $2.60 a gallon.
You can obviously get that lower, as well, sort of West Texas there. I had a friend over the weekend send me a picture getting $2.11 for his gas there.
So yeah, there’s always that kind of seesaw, right, of lower prices are bad for production in theory, but it’s great for the consumer.
Seemed like a very busy Thanksgiving weekend on the roads, too. Folks taking advantage of those lower prices.
It really was actually, yeah. So AAA projected that it was at a record. There was like 73 million people traveling by car over the weekend. That’s up 1.3 million people compared to last year.
So lower prices, encouraging people to get on the roads there.
Matt, as we come around the corner at the end of 2025, how are you feeling about the way things have gone this year in the oil industry and what we’re looking at for 2026?
It’s been a very challenging year, but as we’ve seen, the U.S. producer is extremely resilient and that’s reflected through in that record production.
Though we may see a weaker start to next year, which is obviously good for prices at the pump, the reality is that the longer-term picture here is of higher oil prices as we head towards the end of the decade. So that’s positive for U.S. producers.
