How oil prices rise and fall is one of the many ways to determine the rate of economic growth. Oil prices are mainly determined by demand and supply forces in the market. The rate at which a country is producing oil will determine how the prices will be, and thus, the impact on the economy.

Various analysts have different views on what we should expect the oil prices to look like in 2017. There are those that expect prices to rise, and then, there are those that foresee a decline in prices. Whatever the case, the economy will be affected as well as the rate at which drilling activities will be carried out.

What’s the forecast for prices in 2017?

The consumption rate of natural gas in 2015 was 74.7 billion cubic feet (BCF) per day. In 2016, it was 75.1 (BCF) per day. In 2017, the rate is expected to be 75.4 (BCF) per day, according to a report given by The EIA (U.S. Energy Information Administration). The high consumption rate expected in 2017 is due to high commercial, as well as residential, use of oil during the winter season.

According to Bank of America analysts, there have been consistent low oil prices in the U.S. This has led to demand growth over the past years. When there is a gap between supply and demand, prices tend to go up, and therefore prices are expected to be on the rise this year.

Additionally, the recent decision made by OPEC to reduce oil production will definitely push prices up. However, if the OPEC members, as well as non-members, refuse to adhere to the dialing back on production law, the pressure on pricing should be expected.

U.S. drillers are expected to react to the high prices by drilling more oil in an attempt to increase supply, which, in return, may reduce prices. And with the increase of drilling, maritime accident attorneys are likely to be impacted in 2017 as chances of  drilling accidents will increase

What is the expected Rig Count in the year 2017?

The movement to reduce oil production by OPEC, with an attempt to boost oil prices, is a great enforcement to the U.S. rig count in the year 2017, according to Platts RigData. The rig count is expected to grow by 27% in 2017. With these forecasts, the following is expected:

The fact that the production volumes per well will be less only means that more wells need to be drilled. Platts RigData says that more than 11,000 wells are expected to be drilled in the year 2017. This is an increase in number of wells compared to the year 2016, which was 8,900 wells in total.

How local maritime lawyers can be of use to workers drilling or third parties

With the increase in number of wells, more people are likely to be employed to help in drilling. These will, therefore, increase employment levels, hence improving the standards of living. With all these employees working out in the field, the employees should at least have insurance coverage that can be used in case of an accident. This is where maritime lawyers come in.

While drilling, oil may spill into the water causing human and environmental harm in the sea. Harm may also be done to sailors especially if oil tanks being transported leak oil into the sea.

As for sailors who get into accidents either transporting oil or gas tanks, the Jones Act should be their way of getting compensation. The employers of sailors should be able to compensate sailors when an accident occurs during work. Nevertheless, the Jones Actis able to protect Americans injured at sea and therefore, sailors should familiarize themselves with such laws.

Forecast on the effect of increasing wells or drilling

There are those of others who are bearish in nature, while there are those who are bulls. As for the bulls, the factors below are the key determinants of oil prices in 2017:

Bearish people, on the other hand, believe that oil prices will decrease once wells are increased. The main drivers for most bearish beliefs include:

With all these facts, there is a likelihood of supply imbalance all through the year, despite increased spending.

What to look out for as you invest in the oil sector in 2017

So many factors indicate an increase in oil prices as well as rig count in the year 2017. However, competition from other producing countries can cause a major drift in demand. This means that demand may increase or decrease but in most cases, it is likely to go down due to stiff competition. When this happens, prices will definitely go down.

Another thing to look out for is natural disasters that are completely unexpected. Such disasters may lead to oil depletion and thus low supply. Anything like a terrorist attack on oil hubs can also cause a major impact on demand and supply of oil.

With all these facts, it is good that you make an informed decision before investing your money based on forecasts.

How will oil prices and rig count affect the US economy?

In the year 2015, prices of oil were quite low. This impacted the US economy in various ways. Some of these ways included:

2015 was a year when oil prices declined. As we said earlier, prices are determined by two forces namely demand and supply. In the year 2015, demand was low whereas, supply was very high. In order to determine how forces of demand and supply affect prices, a model showing a correlation of oil prices with other financial variables is used.

Using that model, the World Economic Forum was able to know that demand for oil toward the end of 2016 was declining at a high rate. With the same model, the prices in 2017 are likely to be high.

Let’s look at how this increase in prices will affect the economy. Some of the implications include:

Most people use oil in one way or another. When prices increase, it only means that they spend more on oil and less on buying household items. It is not only households that are affected by the high oil prices, businesses also suffer a great deal. This is because most of their goods are transported or shipped from one place to another by cars or vessels that use oil. This makes production costs very high which, in turn, makes all the prices to hike.

Increase in prices leads to inflation. Oil prices affect all prices of goods made with crude oil, and it affects the cost of transportation, production and heating. With all the prices hiking, the value of a dollar declines and, thus, one may have a lot of dollars but just manage to buy very few items.

With oil prices rising, the cost of production also increases. The demand and supply of goods get affected in the long run. For instance, supply of goods will reduce since the cost of production is very high, whereas demand reduces because people prefer to save their money for future days or for more basic things.

Decrease in demand and supply means that the level of consumption is also decreasing and, thus, low economic growth.

When oil prices increase, people tend to use their money just on basic things. This is because, despite the prices rising, the salaries or wages remain the same yet the cost of living has increased. When fewer people go on vacations or to restaurants for leisure activities, then the economy is no longer growing. A country can, therefore, be said to be undergoing a recession period.

Since the rate of unemployment is very high, the government is forced to spend a lot of money on unemployment benefits. On top of that, taxes reduce since few people are working and for those working, the salaries are too small to generate enough income in the form of taxes for the government. In the end, the government ends up spending more than it receives, and this may cause the country to take loans from other countries and thus debts increase.

With all these facts in mind, investors need to invest wisely in oil companies, and citizens need to prepare for what is expected to happen in the year 2017. As for employees working in the sea or those drilling wells, it is recommended that you familiarize yourself with maritime laws just to be on the safe side in case of any accidents or oil explosions.

For more information on maritime lawyers or the Jones Act, please read more from the Maintenance and Cure Company, and also visit our contact us page today. We care about your problems, and you can be assured of getting the best services from us.

Source

https://ourfiniteworld.com/2013/01/17/ten-reasons-why-high-oil-prices-are-a-problem/

http://marketrealist.com/2017/02/energy-calendar-crude-oil-natural-gas-traders-february-13-17/

http://fueloilnews.com/2016/10/21/forecast-rig-count-to-grow-by-nearly-a-third-in-2017/

http://www.zerohedge.com/news/2015-01-07/oil-prices-rig-count-and-economic-im