After crude oil prices took a tumble in October 2018, they have begun to creep upward – a trend that is likely to continue through 2019, albeit slowly, according to Chris Lafakis, a director at Moody’s Analytics. “If the economic outlook holds up and we don’t enter a global recession, then I think it’s likely that [higher] oil prices could return,” he said. Lafakis said it could take until the second quarter or perhaps mid-year before crude begins to pick up.
While fear of an economic downturn could greatly impact the price of oil, Lafakis said Moody’s does not predict a recession at this time.
In California, the oil and gas industry remains a major economic contributor. According to the Los Angeles Economic Development Corporation’s most recent report, the industry employed some 368,000 workers in 2018, generated $148 billion in total economic activity and paid $26.4 billion in state and local tax revenue.
“We create a vital economic foundation for California in all of the communities where we operate,” Catherine Reheis-Boyd, president of the Western States Petroleum Association (WSPA), told the Business Journal.
Last year, the California government mandated that 50% of its electricity be powered by renewable resources by 2025, and called for a path toward 100% zero-carbon electricity by 2045. As these deadlines approach, Reheis-Boyd said that WSPA’s member companies are concerned about the potential impact on daily life for its workers and all Californians that use petroleum products. She added that the industry hopes to work with Gov. Gavin Newsom to find a practical energy mix that supports the mutual goals of business growth and environmental stewardship. “You really do need to balance environment and economy as you put these policies in place if you really want to have a sustainable energy future,” she said.
Marlene Motyka, U.S. global renewable energy leader for Deloitte, predicted that the U.S. renewable energy sector will continue to grow in 2019. According to the U.S. Energy Information Administration, output from utility-scale wind and solar increased to 8% of total U.S. electricity generation through the third quarter of 2018. In her outlook for the new year, Motyka pointed to three trends that would contribute to the ongoing development of electricity generation from renewable energy sources in the U.S. in 2019: emerging government policies that support alternate energies, expanding investor interest in the sector and technological innovation.
Leader at L.A. Basin Operations, California Resources Corporation
The 2019 outlook for the oil and gas industry in Long Beach is strong. Crude prices have tracked with overall market volatility of late, but recent oil prices are above those of the past several years. The world-class Wilmington field will continue to support jobs and drive significant local investment while fueling the California economy through local energy production and jobs.
2018 was a record year for oil production in the United States as it became the world’s largest oil producing country. At the same time California increased its dependence on foreign energy imports. California currently imports over 70% of its crude oil and nearly all its natural gas – over half of the net energy imports into the United States. Most of the oil Californians consume arrives via ocean-going supertanker from foreign nations that do not apply California’s safety, labor, environmental or human rights standards. Given the volatility of OPEC as well as the social, economic and environmental footprint of foreign production, it is essential that local production continues to ensure the state can meet its robust demand for energy and the many products derived from petroleum.
California has the resources, infrastructure and people to safely increase local production. In an ever-changing and uncertain world, increasing our local supply is the most sustainable way to ensure all Californians have access to affordable and reliable energy and tax revenues.
Gary R. Heminger
Chairman & CEO, Marathon Petroleum Corporation
Predicting how the oil and gas industry will perform is difficult, but by focusing on the fundamentals, we can often see the outlines of what the future may hold. The industry has used advanced technologies to achieve strong growth in crude oil and natural gas production, which has spurred the construction of pipelines, terminals, and processing facilities to move our nation’s vast energy supplies to where they are needed most. This will continue in 2019.
The U.S. refining industry is the most sophisticated in the world, and the most cost-efficient; we have access to low-cost natural gas (which fuels many of the processes in our refineries), as well as price-advantaged crude oil. These factors enable us to provide affordable, reliable fuels to U.S. markets, as well as help meet demand in Latin America, Europe and elsewhere. In fact, the U.S. is the largest exporter of refined products in the world. U.S. natural gas is also increasingly meeting demand overseas as well as on our shores.
We are committed to doing our work safely, with the smallest possible environmental footprint, while making the communities where we operate better places to live and work. Americans can be proud that their oil and gas industry has a growing role in helping to fuel the world’s prosperity.
President & Contractor, Solar Source
We are expecting above average growth and increased demand to complete renewable energy projects in 2019, largely due to the Federal Income Tax Credit (ITC) of 30% stepping down after this year. In 2020 the Federal ITC will be 26% and then 22% in 2021. The ITC will eventually end up at 10% for commercial projects in subsequent years.
The Federal ITC was originally established by the Energy Policy Act of 2005. It has been a successful tax policy that effectively increased the return on investment to the system owner while creating the economies of scale the renewable industry desperately needed to drive hardware prices down over the last 13 years. Beyond these benefits, the Federal ITC has helped the solar industry create a $17 billion investment in the American economy, creating over 250,000 jobs across the country. As of 2018, solar energy in the United States offsets more then 76 million metric tons of CO2 emissions each year. This is equivalent to removing 16.2 million vehicles from our roads.
This year will certainly be a year of growth stimulated by the dwindling Federal ITC. We encourage businesses and homeowners considering investing in renewable energy to plan early in the year, as the second half of 2019 will be exponentially more impacted as we near the installation completion deadline of December 31, 2019 for the full 30% ITC.