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Is the U.S. in danger of oversupply?

The oil and gas industry, like many other industries in the United States, is a fine balance between production and overproduction. The risk of oversupply can affect the stability of many oil producers in California as well as across the country. With the importation of oil and gas from other countries, it is critical to keep an eye on local oil companies and how this can affect their ability to survive. 

Although the market is expected to be volatile in price and production, experts are seeing a trend that local U.S. producers will be able to overcome any challenges this may bring. A contract between the U.S., the Organization of the Petroleum Exporting Countries and Russia says that limited supplies will be sent to the U.S. from these foreign regions. This will give local industries a better chance to control prices and will reduce the threat of oversupply in the U.S. 

The demand for oil will also help to control the industries threat of oversupply. Oil and gas usage in the U.S. increased by 2.5% in 2018 from what was used in 2017. This rise was attributed to an increase in the need for jet fuel and diesel trucks used to transport goods throughout the country. These are signs of a growing economy. With an increase in demand and a limited overseas supply of oil and gas, it is expected that U.S. will survive short-term issues and come out on top. 

This information is intended to educate and should not be taken as legal advice.

 

 

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