SAFE Releases Latest Energy Security Fact Pack

Today, SAFE released its fourth quarter update to the Energy Security Fact Pack, a powerful repository of the most recent trends affecting American energy security and the global oil market today. This update examines current oil market dynamics and the effect lower oil prices are having on industry valuation and capital expenditures, in addition to U.S. rig counts and oil production. Global oil prices continued to fall in Q4, ending the year at $55 per barrel (bbl) (Brent), less than half their mid-June highs. Notably, and despite dissension from some members, OPEC’s November 27 meeting saw the cartel maintain production levels. Although prices have since declined below $50/bbl (in mid-January), and the death of King Abdullah of Saudi Arabia briefly generated speculation that the kingdom’s oil policy might shift, the commitment appears robust. Oil price volatility (49% annualized monthly in December vs. 16% January to June) has returned to levels not seen since 2008/9. Lower prices, however, helped U.S. consumers reduce spending on petroleum fuels by 9% quarter-over-quarter (q-o-q) in Q4. This quarter’s Fact Pack puts 2014’s record price decline in perspective, comparing it against historical crashes (nearly all occurring during periods of crisis in the global economy). Major oil companies have worked to weather the historic crash, though dropping prices and their impacts on future capital expenditures and production is reflected in the dropping public valuations of several companies. Continental Resources, which has invested heavily in U.S. shale production, has seen its value slide 19.9 percent since oil prices peaked in June 2014. SAFE surveyed over two dozen oil industry experts to produce this quarter’s Barrels at Risk Map, illustrating the risk of disrupted oil production in major producing countries for 2015. In particular, six countries, including the United States, have seen production threatened by the current low price environment. In the case of major exporter Venezuela, low prices have aggravated an already unstable political environment. The fourth quarter Energy Security Fact Pack also includes new data and analysis on the factors poised to reduce U.S. oil dependence, such as increased fuel economy and electric vehicle adoption. Despite relatively low gasoline prices, plug-in electric vehicles sales were unchanged from Q4 last year, supported by the Tesla Model S, Nissan LEAF, Chevrolet Volt, and BMW’s new i3. For a more detailed look at global oil market dynamics, U.S. energy security, and alternative vehicle technologies, download the Fact Pack in its entirety on SAFE’s website.