Mar 11, 2015 4 min read

Stepping leisurely to his left, mic in hand, Jorge Pinon paused, grinned and inquired: “How many of you like lower gasoline prices?”

The response was staggering.

“Two or three of you,” he said, laughing harder. “I’m not sure everyone is telling the truth.”

The Burnett Center audience of 50 apparently knew where this retired oil executive was heading, and some were reluctant to admit the appeal of a cheaper tank of gas. Lower pump prices are caused by lower crude oil prices, which leads to oversupply, a likely production reduction potential that indicates economic woes for producers and distributors.

Pinon was at Washington & Jefferson College Tuesday night, discussing “Geopolitics of Oil: A Hemisphere Perspective” in the penultimate session of the W&J Energy Lecture Series this academic year.

Strolling non stop across the front of Yost Auditorium as he spoke, Pinon walked the walk and talked the talk for 90 minutes. He is a native Cuban who used to work for Shell and was a top executive with Transworld Oil USA, Amoco and BP. Today, he is director of the Latin America and Caribbean Program at the University of Texas’ Center for International Energy and Environmental Policy.

He advocates energy security globally, sticking a needle in nations’ quest to be energy independent. “There is no such thing as energy independence.”

A barrel of crude oil, once priced at more than $100, dropped about 50 percent since last summer. It sank to $38 a few weeks ago. Though the price rose since, it still was about $48 Wednesday.

“The drop in price is due to overproduction, but it’s also because a lot of barrels are stored,” Pinon said. “I don’t think the bottom has happened yet, either.

“There is too much oil floating around, and the only way to stop it right now is an increase in demand.”

U.S. production, of course, ramped up dramatically in recent years courtesy of fracking in the Bakken and other shale formations. National reserves, Pinon added, “are way up, which means imports are down.”

Referring to Saudi Arabia as “the 800-pound gorilla” in this scenario, Pinon said that oil-rich nation is “the only one with the capacity to cut production and the only one with the capacity to withstand a $50 drop (in price). If the Saudis say they’ll cut back production, you will see the price of oil pick up $15 to $20 a barrel.”

Pinon said $65 to $75 per barrel would be a more viable price, supported by a frame in his accompanying PowerPoint presentation. It read: “Most unconventional and deep-water resource development projects require a $65-$75/barrel threshold.”

He doesn’t anticipate that happening soon.

“My prediction,” Pinon said, “is that over the next 18 months, oil will be $45 to $50 a barrel. Something has to happen for things to rebound over the next three years.”

The Keystone Pipeline is a flash point among many people, but not with Tuesday’s W&J speaker.

“It is coming, it is going to happen and it is heavy with Canadian crude,” Pinon said. “It is two-thirds built. A key issue environmentally is Canadian tar sands, which has high environmental costs.

“A key to the Keystone Pipeline is it’s becoming of strategic value to this country as far as energy security.”

This was not the Energy Series finale, as reported previously. After two postponements in February, Sarah O. Ladislaw will lecture on “Energy Trends in North America” at 7 p.m. April 8 in Burnett Center. She is director and senior fellow of the Center for Strategic and International Studies’ Energy and National Security Program.

The event will be free and open to the public.