Despite relatively low mortgage rates, housing prices remained relatively level from January 2017 through December 2019 as strong demand was met by high levels of home listings. Housing prices began to surge in 2020 as home inventory (active listings) plummeted. Between the second and fourth quarters of 2020, housing prices rose over 11%. Although mortgage rates began a significant rise in early 2022 as the Federal Reserve began the upward trek for interest rates, housing prices continued to climb as home inventory remained low. Finally, in early 2023, home prices fell as home inventories rose and mortgage rates continued upward. Part of the reason that the Federal Reserve began increasing interest rates in 2022 was to stabilize the housing market by lowering demand through higher financing costs. While tax credits for homebuyers and incentives for home builders could improve the housing market, that would require bipartisan Congressional legislation – not likely in the current political environment. Oil Production and Gas Prices The volatility of gas and energy prices has played a significant role in global and U.S. inflation. Oil production, and total energy production, have reached record levels in the United States this decade. In 2023, oil production rose to its highest level ever in the United States. According to the U.S. Energy Information Administration , when all sources of energy are considered, including petroleum, natural gas, renewable energy, coal and nuclear power, total annual energy production has exceeded total annual energy consumption since 2019. In addition, since 2019, the United States has been a net exporter of energy, and since 2020 the United States has been a net exporter of petroleum products. The chart below shows U.S. monthly production of crude oil from January 2017 through December 2023. Oil production in the years 2017 through 2019 continued the trend that began with the economic recovery following the financial crisis of 2008. U.S. oil production increased as economic growth returned. Between 2009 and 2019, U.S. oil production increased each year. For the decade, U.S. oil production more than doubled, growing from 5.4 million barrels per day in January 2010 to nearly 13 million barrels per day in December 2019. However, in early 2020, U.S. oil production decreased by approximately 25%, from 12.8 million barrels per day in January to only 9.7 million barrels per day in May. Why? The market price of oil drastically dropped from approximately $65 per barrel in December 2019 to nearly $25 per barrel in April 2020 as the demand for oil decreased due to the economic shock caused by COVID. When oil prices tank then oil profits decline, and there is much less incentive for oil production. In 2020, the oil industry had one of its worst years ever as oil prices sank, with many companies reporting losses for the year including ExxonMobil and Shell.
U.S. Field Production of Crude Oil (Thousand Barrels per Day) (Source: U.S. Energy Information Administration)
Year
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
2017 8,874 9,094 9,164 9,101 9,185 9,110 9,246 9,250 9,516 9,668 10,085 9,983 2018 10,000 10,262 10,466 10,499 10,434 10,640 10,896 11,391 11,443 11,508 11,885 11,944 2019 11,871 11,652 11,911 12,145 12,153 12,216 11,896 12,479 12,584 12,805 13,000 12,980 2020 12,850 12,844 12,795 11,911 9,714 10,446 11,004 10,579 10,926 10,456 11,196 11,172 2021 11,137 9,916 11,351 11,318 11,390 11,366 11,392 11,276 10,921 11,564 11,782 11,678 2022 11,480 11,258 11,806 11,770 11,734 11,800 11,834 11,985 12,325 12,378 12,376 12,138 2023 12,568 12,532 12,770 12,650 12,694 12,894 12,925 13,041 13,247 13,219 13,319 13,315
Central Wisconsin Report - Spring 2024
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