SAN ANTONIO—It’s not pleasant to think about, but the current price levels for West Texas Intermediate (WTI) crude may be mirroring the decline curve that natural gas markets have been experiencing for the last five years.

“It’s a realistic question to ask: will crude prices post-2014 largely mirror gas markets post-2008. Have we set ourselves up and been the victim of the industry’s success that we can meet current demand without too much difficulty and a ramp up in activity?” Karr Ingham, petroleum economist with the Texas Alliance of Energy Producers, said on Oct. 26 at Hart Energy’s first Midstream Texas conference.

If this is the case then prices don’t have a need to be much higher than they are currently and certainly not where they were last year. Unfortunately that appears to be how the market is responding as Ingham noted that WTI prices have fallen 59% from an average of $101.68 per barrel (/bbl) in June 2014 to an average of $41.91/bbl in September 2015.

So far, decreased activity since November 2014 hasn’t helped a price recovery. Part of the reason is that improved efficiencies have improved production, with volumes dropping only recently.

Ingham said that crude production in Texas was 18% higher in the first-half of 2015 compared to the same time last year. For the nation, it was 13% higher in the first-half of this year and storage levels were up nearly 10% in October compared to last year. One of the more troubling signs for U.S. producers is that production out of OPEC nations is also outpacing quotas even before the sanctions against Iran are lifted, as they are expected to be shortly.

In a down price environment, the Texas economy could face larger challenges than other parts of the country as the upstream segment makes up 10-12% of the state’s total economy with the industry contributing 25% of all state taxes collected. In 2014, E&Ps paid oil production taxes of $3.8 billion, or 3.7% of the state’s revenue, according to the Texas Comptroller of Public Accounts. The industry also pays local taxes and royalties.

In an October report, the comptroller said oil production tax revenue had fallen nearly 26% compared to the same time in 2014.

Despite these negatives, there is a larger economic benefit to lower prices, according to Ingham. “These markets exist to serve consumers, not producers. It’s hard to argue that consumers are not being served well by current events,” he said.

Though Ingham did allow for the possibility that crude prices could experience another $10-20/bbl gain in the next year, he stated it was also as likely for prices to stay in their current range. There is a positive to be found from such a low price environment though as sustained lower prices in the hydrocarbon markets could lead to growth in the domestic petrochemical and manufacturing industries, which would bring economic advantages to Texas and the country overall.