Soaring Texas and US production will result in the US becoming the number one crude oil producer in the near future, possibly in 2018 with Texas providing about 40% of the total US production.
Last year, the U.S. pumped out more than 10 million barrels a day for the first time since the early 1970s, boosted by a rapid ramp-up in shale-oil output. US production has continued to rise this year: It reached 10.2 million barrels a day in January and is forecast to top 11 million by the end of 2018, according to the U.S. Energy Information Administration.
Due to new technologies for drilling in shale formations, the increase in Texas oil production since 2010 has been dramatic and continues to grow. Texas Oil and gas production increased for the sixth quarter in a row.
According to the Federal Reserve Bank of Dallas average prices to profitably drill a new well for the Permian Basin rose to $50 per barrel this year from $48 last year.
With the average price of crude oil ranging between $60 and $65, Texas oil producers have strong incentives to drill and produce more.
The bottom line: Texas remains a strong energy driven state. While Texas did not suffer as strong of a downturn with the drop in the price of oil after 2014 as it would have in the past with a similar drop in price, the economy has greatly benefited from the growth in oil production. With a projected oil price in the $60+ range for the rest of the year, the Texas energy sector will continue to boost the overall Texas economy. The risks of a drop in price from supply exceeding demand are offset by continued efforts from OPEC/Russia to limit production levels past 2018 and increasing concerns over the collapse of production from Venezuela.