7 Oil Industry Predictions That Will Shape the Future
To help you identify new threats and opportunities in the oil industry, here are our oil industry predictions. Consider how your business can grow from leveraging these trends in the year ahead.
1. U.S. Oil Production and Exports Forecast to Continue Growing
If you had asked anybody ten or twenty years ago, they would not have believed it. Yet, the U.S. has increased its energy production and exports thanks to new discoveries, investment and improved technology. Increasing U.S. production may reduce the influence of OPEC on world oil prices.
To make that growth happen, the U.S. oil industry will need more workers.
2. U.S. Oil Jobs Expected to Boom in coming years
Despite the boom and bust nature of the industry, the oil industry remains a top employer. The reason is clear. According to Goldman Sachs, a large investment bank, oil and gas jobs pay 85% more than the U.S. average. Even better, the bank has forecast tens of thousands of new jobs to be posted in the industry.
What specific job roles are slated to grow? Look for job postings for petroleum pump operators, well pumpers, roustabouts, petroleum engineers and rotary drill operators. If you already have experience in the industry, this could be the year you get that promotion or new job you’ve had your eye on. For employers, recruitment is going to be more challenging as well.
3. OPEC and Russia Will Continue to Cooperate on Oil Matters
Outside of the U.S. market, the growing cooperation between Russia and OPEC is a factor to watch. Historically, Russia and OPEC countries have not seen eye to eye on oil. That started to change after the 2014 oil price slump. As U.S. production continues to expand, expect Russia and OPEC to continue their loose alliance on oil.
Will the U.S. become part of those oil discussions? Don’t hold your breath.
4. A Banner Year for Oil Stocks?
Investors are starting to come back to Big Oil in a big way. Why are investors interested in the sector? Major oil companies are being disciplined about managing their expenses, especially exploration costs. Further, major oil companies have changed their staffing and infrastructure so they can succeed despite oil price challenges.
Major oil companies are only part of the story. Remember to take a look at the other companies that benefit from oil growth. For example, some oil pipeline companies are known to be reliable dividend stocks.
5. Digital Transformation Starts to Benefit the Oil Industry
In the oil industry, every small improvement adds up when you are managing multi-billion dollar facilities. You can expect to see greater adoption of digital technologies. For example, some companies are using Internet of Things sensors and software to improve asset maintenance. This will mean less unplanned equipment downtime and higher overall efficiency.
Beyond the oil production site, digital technology may have other benefits for oil. Artificial intelligence has a role to play in identifying better oil sites and other process improvements. Large firms such as General Electric and IBM have brought some of these technologies to the market already.
6. Natural Gas Will Continue to Rise in Prominence
Almost every major report on oil trends also discusses natural gas. Why? Many analysts expect gas consumption to rise around the world. The rising popularity of gas may cut into the oil market in the long term.
How can oil companies address the long-term potential of natural gas? Consider increasing your natural gas investments over time. After all, Deloitte sees natural gas as the fuel of the future. It causes relatively less pollution than oil and production costs are falling.
7. Increase in Oil Merger & Acquisition Activity in 2018?
With the recovering price of oil, merger and acquisition activity in the oil industry may stage a comeback. Some signs of this activity can be detected in the major oil industry companies.
However, there is also more significant investment interest in oil coming from private equity. If major industry players significantly expand through M&A, it may change the entire industry.
Charting Your Path Forward
How do you make sense of all these predictions and trends in your business? We suggest prioritizing the trends you can control. With rare exceptions, you cannot influence the price of oil. Likewise, attempting to influence political and regulatory decisions in the industry is a challenge. So what can you do?
You can choose the technologies and software you bring to your company. Upgrading your facilities with better sensors is one option. Collecting better data from the front line using mobile technology is an even easier option.
Mobile forms are an easy way to start making the transition to digital. Try them free.