The Permian Basin, known within the oil and gas industry as The Permian, is among the most important oil-producing regions in the world. Located in West Texas and southeastern New Mexico, The Permian is the epicenter of many of the technological advances made in recent years, as well as future prospects, in the exploration, drilling and production of oil and natural gas. In addition, drilling and production in The Permian and the necessary support industries generate business activity not only in the region, but across the state and the nation. In fact, The Permian’s economic and technology revolution is of global significance, making it the most cost effective region in the world for oil production.*
However, the United States has been held hostage for years by other oil producing countries who keep their pricing per barrel low strictly to wreck the market and choke the independent oil producers in the The Permian. In addition, several refineries here in the United States only process and sell oil from Saudi Arabia, with their oil tankers lined up to flood the American market with their foreign product.
With the current uncertainty regarding the COVID-19 outbreak which began in February 2020, the demand for oil worldwide has plummeted with travel reaching historic lows. And the U.S. oil economy has suffered as a result. At that time, the Odessa Development Corporation, located in Odessa, Texas, commissioned The Perryman Group to study the impact of the current pricing war on oil and the effects of the COVID pandemic on West Texas and southern New Mexico.
According to their report, “while the current situation is devastating, it is temporary.” The fundamental economic forces that were driving oil production to record levels through the beginning of this year have been paused, but they remain in place. Unlike previous severe downturns in the price of oil, there is nothing to suggest that the overall level of future global production will be compromised.*
The true victims of this “perfect storm” of foreign oil price wars and the worldwide COVID pandemic are American oil and gas workers, particularly independent producers in the Permian Basin. When Americans buy foreign oil they are taking jobs away from the hardworking men and women of the American oil industry. And all this at a time when U.S. energy independence remains within reach.
When the price of oil and gas returns to normal, pre-COVID prices, experts agree that The Permian will be the first region to rebound and flourish.** The Permian’s hardworking oil industry men and women will once again be in great demand, with a future of projected long-term economic growth.