West Texas crude oil is selling on the world markets today at just under $64 a barrel, the highest price in more than two and a half years, and that is sending a wave of excitement and investment through the Texas oil patch, News Radio 1200 WOAI's Morgan Montalvo reports.
Karr Ingram, a prominent Texas oil economist, says there is movement in the Permian Basin and the Eagle Ford, where many rigs and drilling projects have been mothballed during the last three years of low oil prices.
"The higher prices are bringing those wells on line too now, so production is going up," he said.
Several factors are cited for the rise in oil prices over the past two weeks, which is beginning to show up in higher gasoline prices as well.
One is expected increases in demand worldwide, especially in developing countries, which is driven by lower prices. In everything from the new popularity of SUV's in the United States to the turn of China back to oil after focusing largely on natural gas and alternative fuels is being driven by the lower gasoline and oil prices over the past several years.
There is also concern that oil production in Venezuela, the country with the largest proven reserves on earth, is now at essentially zero due to that country's mismanagement and lack of effective governance.
But the main concern of many traders is the fact that the lower prices over the last three years has led to a lack of investment in oil production fields worldwide. Several major oil firms announced major reductions in research and development spending in 2016, when oil prices fell below $30 a barrel, and now that those prices are rebounding, the companies find themselves unable to ramp up production.
There is also the long implemented plan by OPEC to reduce production to drive up prices, which now appears to have the full participation of nations like Iraq and Libya, which had argued they should be exempt from the cuts to make money to make up for war damage.
Ingram says the Texas oil patch is rebounding despite that lack of investment. He says most of the employment growth has been among 18 oilfield services companies, which are the firms that are most vulnerable to price fluctuations.
"So this is a huge boon to those guys, this is a great outcome, and it allows them to do better, invest more, and hire more people."
Ingram says oilfield services firms have added 30,000 new employees in Texas in the past 12 months. He and other experts say the challenge is not high prices, its to see prices stay high for a long enough period to affect corporate decisions.
He says if that happens this year, the Eagle Ford could begin to see a lot of wells that were capped during the price crash of 2015 returned to production.
One oil industry official told the World Economic Forum in Davos today, according to CNBC, that he expects prices to top out at $80 a barrel this year.