The world is currently in the throes of a vicious oil price war. The benchmark West Texas Intermediate (WTI) futures for December delivery fell $1.59, or two per cent, to settle at $77.19 per barrel on Tuesday, November 4, amid ongoing concerns among market participants of a potential price war between Saudi Arabia and US oil producers.
WTI crude has now fallen to a three-year low as the Kingdom announced price cuts towards exporting US customers, signaling intentions to regain market share after a reportedly significant fall in the country's exports to the United States.Analysts have suggested that the rapid growth in US shale production may not be economically sustainable if crude prices fall below $75 per barrel.
However, this should not unduly worry us in this country. We are not a oil economy, but rather a natural gas economy.In fact our hydrocarbon revenue is derived in the following split, 85 per cent natural gas and 15 per cent oil.
The benchmark Henry Hub futures for December delivery rose 8.3 cents, or 2.1 per cent, to close at $4.129 per million British thermal units (mmBtu) on Tuesday, the highest settlement since September 29, after predictions for cold weather in the US extended from November 9 through November 18 boosted potential heating demand. Natural gas prices have now advanced for the sixth straight day after markets began to price in concerns of below-normal temperatures at the start of heating demand season in the US.
This is extremely good news for us as our 2015 budget is predicated on a gas price of US$2.75 per mmBtu.We as a society need to be cognisant of this fact about how our energy revenues are derived.We should not allow ourselves to be hoodwinked by the scaremongers out there.Confidence is the mainstay of any economy and we should do well to maintain ours at a high level when there is no reason to feel otherwise.
Ricardo Jimenez,
Diego Martin