Forty seven cents per gallon. At a gas station in Michigan on Sunday January 17, consumers flocked to fill up their tanks on the cheap during a price war between local gas stations.
In the last 18 months, the national average for gasoline fell from $3.58 a gallon to $1.89 and the international price of crude oil dropped from about $100 a barrel in 2014 to about $30 a barrel today.
Williams Endowed Professor and Chairman as well as McDougall School of Petroleum Engineering professor Dr. Mohan Kelkar explained why many PE professors believe this strange occurance is no cause for alarm.
“The petroleum industry is cyclical,” explained Dr. Kelkar. The decline in fuel prices we are seeing now is part of the normal cycle of the petroleum industry. In fact, today’s prices are still higher than they were in 1998 or 2007.
In addition, Dr. Kelkar suggested that common concerns about the eventual depletion of the world’s oil supply are not as urgent as many organizations have encouraged consumers to believe. Although there is a finite amount of fossil fuel on earth, Dr. Kelkar said that “the stone age did not end because we ran out of stone, and the fossil fuel age won’t end because we run out of fossil fuels.”
In order to illustrate the world’s supply of fossil fuels, Dr. Kelkar described an energy triangle like the one seen here.
The triangle depicts how technology is making it possible to refine previously unusable forms of oil so we can access large reserves of low quality oil. Due to the ever improving technologies, although we use nine and a half billion barrels per day, we have only used one-third of the earth’s supply of crude oil.
The other associated problems with the oil industry are how it will affect the University of Tulsa’s enrollment in the petroleum engineering program.
Bloomberg Business reported that the petroleum engineering degree is “a path to the unemployment office.”
Dr. Kelkar responded by pointing out that enrollment has increased across the US for the last several years so if the unemployment rate is increasing it is most likely due to the increase in the amount of petroleum engineers.
This situation makes the job market more competitive. Approximately 90-95 percent of PE students who graduated in 2014-2015 year had jobs waiting for them after graduation. Yet so far in the 2015-2016 year only about 25 percent of students have jobs. The percentage will likely increase as the academic year nears completion.
Dr. Kelkar mentioned the industry doesn’t have enough mentors, and has more demand for older experienced workers, but the job situation normally changes from year to year and oil companies, “will continue to hire young people.”
Dr. Kelkar assured that 2016-2017 freshman will most likely have no problem finding jobs after graduation, and furthermore, “it’s not like you are learning something so specific that you cannot apply it to other industries.”