The Iranian Nuclear Deal and its Impact on the Texas Economy

Writen by ChristinaLawson (@lawson_blossom9)

Illustration, doc. youtube.com

IRAN NUCLEAR DEAL

There will be more than just leaves falling in the month of September, discussions of gas prices potentially falling are on the horizon. Now that the Iran Nuclear deal has come to a halt it seems the oil and gas industry will have the American people rejoicing in their vehicles.

After 20 long months of negotiating, a landmark deal has been reached on Iran’s nuclear program; an agreement between the United States and the International community.  This deal will prevent Iran from obtaining nuclear weapons.

Standing outside the White House Tuesday morning, President Barak Obama states:

"Today after two years of negotiation the United States together with the international community has achieved something that decades of animosity has not: a comprehensive long-term deal with Iran that will prevent it from obtaining a nuclear weapon.”  

Iranian President Hassan Rouhani also gave praise to this new deal.

"Negotiators have reached a good agreement and I announce to our people that our prayers have come true," Rouhani said

While both parties are satisfied by this agreement, we would like to get a few questions out of the way:

• What exactly are we getting out of this deal?
• When can U.S. drivers see a decline in gas prices?
•  What does this mean for big players in the oil and gas industry?

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So let’s make a deal:

Selling this deal to the American public could not be an easy task for President Barak Obama. However, like any president before him talks about the Middle East and nuclear weapons have been a major issue and concern.  While the U.S. continues to fight for peace the plan would hopefully ease the American people.  With that being said, let’s break down what we will exactly see in this deal.

1. The deal reduces the number of Iranian centrifuges by two-thirds. It places bans on enrichment at key facilities, and limits uranium research and development to the Natanz facility.
2. The deal caps uranium enrichment at 3.67 percent and limits the stockpile to 300 kg, all for 15 years.
3. Iran will be required to ship spent fuel out of the country forever, as well as allow inspectors from the IAEA inspectors certain access in perpetuity. Heightened inspections, including tracking uranium mining and monitoring the production and storage of centrifuges, will last for up to 20 years.
4. The U.S. estimates that the new measures take Iran from being able to assemble its first bomb within 2-3 months, to at least one year from now.

While I will give you a minute to digest all of that, it’s probably a perfect time to segue into our next question. As the hard tax-paying workers that we are, it’s only fair to ask what we would get out of this deal.

September:

With this new deal upon us, will we see changes in the oil and gas industry or for that matter at the pump? Rest easy friends, it seems the magic word floating around the mouths of economist is “September”. Now I don’t know about you guys but the only thing that comes to mind when September is spoken of is that old Earth, Wind and Fire song, you know… (Do you remember the 21st night of September? Love was changing the mind of pretenders, while chasing the clouds away.) While it seems President Obama is trying to change those minds of pretenders, September is looking mighty promising for the American public.

Drivers can look forward to $2 gas. Yep that is right! So look out drivers; we could be seeing big savings in the near future. Tom Kloza, chief oil analyst with the Oil Price Information Service stated,

"Once we get past Labor Day, we should see gas falling by 10 to 15 cents a month. By December a lot of places are going to see gasoline at $2 or less."

So Christmas vacation could see a more drivers on the road this year traveling for longer distances.

Bigger is better:

Since gas prices will be falling what would this potential mean for the big boys in the oil and gas industry? Companies like WB Supply, Aschere Energy, and Hill Country Staffing will possibly see a fluctuation in business causing them to shift their focus to other energy areas or reduce the size of their workforce.

Iran has the fourth biggest oil reserves in the world and with the sanctions being lifted those will see more activity. In 2016 Iran will add even more oil to the markets as it improves its oil industry's infrastructure, which has suffered under the sanctions.

Although the deal has just begun, we’re already seeing near-term impacts on the US Economy and on the Oil and Gas sector.