Energy

Expert: Oil Prices Will Double In 2016, And OPEC Will End Up ‘A Nonentity’

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Andrew Follett Energy and Science Reporter

Harold Hamm, the CEO of the energy firm Continental Resources, said Wednesday he believes the price of oil will double to $60 by the end of 2016. Meanwhile, many other oil producers are currently bracing for the price to drop to $20 a barrel.

“We’re heading toward a short supply situation unfortunately,” he said in a Wednesday interview with the Wall Street Journal. “That’s going to get very concerning in the latter part of the year.” A short supply situation would naturally lead to increased prices.

Hamm, best known for using hydraulic fracturing to develop large shale oil reserves, believes that American and world oil companies will decrease production until the market recovers. Hamm also believes that the Organization of Petroleum Exporting Countries (OPEC) will soon be “almost a nonentity” as the organization is losing its ability to dictate the price of oil.

Other oil producers believe that OPEC will continue producing as much oil as possible for political reasons and to grab a larger share of the market. When American oil production modestly fell in late 2015, prices remained relatively constant.

Hydraulic fracturing, or fracking, allowed America to surpass Russia early in 2015 as the world’s largest and fastest-growing producer of oil. American oil production increased 75 percent over the last seven years.

The price of oil has fallen more than 70 percent since the summer of 2014 due the surge in oil production from American fracking and weak demand in developing countries.

The low price of oil has dropped gasoline prices down to lows that would have been unthinkable a few years ago. U.S. consumers spent $370 billion on gasoline in 2014, meaning that the price drop is equivalent to an extra $102 billion in the pockets of consumers. American households likely saved $700 to $750 at the pump in 2015, according to analysis by the Energy Information Administration.

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