There鈥檚 been too much oil on the market since well before the coronavirus outbreak. But a recent agreement to cut production won鈥檛 be enough to prevent states in the Mountain West from taking a big hit.
The deal among major oil-producing countries is being eclipsed by plummeting demand due to the COVID-19 crisis. The International Energy Agency estimates in a published this week that demand has dropped by 29 million barrels a day to a level last seen in 1995, creating a historic glut. The world's top oil producers to reduce daily production by about 10 million barrels.
Current prices 鈥� around $20 a barrel, an 鈥� are about half of what鈥檚 needed to make a profit in the Mountain West's oil patches. The crash is already reverberating throughout the region as drillers and while states warn of .
Rob Godby, an energy economist with the University of Wyoming, suspects the pain could last a long time.
鈥淲e may see wells shut in, and you know once that happens, it鈥檚 not certain that when markets come back, that producers will too," he said.
Many oil companies carried going into the crisis, Godby said, so even if they survive it they鈥檒l be hard-pressed to find much capital to rebuild amid a national recession.
Nationally, New Mexico third and Colorado ranked fifth in oil production in 2019, according to the U.S. Energy Information Administration.
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