This leads to the next problem facing oil corporations at the end of the year. How will they evaluate their assets and performance of this year to reorganize for success in the next year? These entities will see major haircuts to their size and power going into 2016, a year that will no doubt feature another bout for market share by the looming Saudis. Because companies evaluate their current reserves using a spot price based on the past year, those assets will see major devaluations even if they've seen no change from the previous year. For example, an untouched pocket of crude oil discovered in 2014 would have been valued at an average price of about $80 a barrel in 2015, but because WTI and Brent prices have plunged this year, those assets will now be priced around $50 a barrel. Thus, all of the implied wealth that was created when prices were supported by OPEC will disappear. At first, this sounds like a good thing as share prices may see a reduction in swelling that occurred during the energy boom caused by high oil prices. But then we have to remember that hundreds of millions, if not billions, of investor dollars have been invested on this conjectured wealth and could be lost like the popping of a mini-bubble in this sector. That not only heaps tons of bearish sentiment onto the energy market, but it eventually spills into other sectors that may be sensitive to the weakness. Low oil prices have also been blamed for a dramatic drop in inflation that has hurt wages and earnings across the country but failing to spark consumer spending. The economic dynamics just mentioned definitely do not line up and are causing major debates in the monetary and fiscal stages in how to fix it. The Federal Reserve will continue its goals of increasing the Federal Funds rate which has been linked to better overall commodity performance by intermarket analysis. At the same time, a drop in investment spending in the energy sector threatens the surging shale production that has caused such a glut.
So that moves us into the extraction statistics. For 2015, both American and OPEC producers increased their production with domestic oil and gas companies only beginning to pull back in the latter part of the year. During a December meeting, Saudi Arabia and Iran lead the member countries' output to new highs that was augmented by the relaxation of a 30 million barrel a day quota. In the same month, Iranian production increased 119,000 barrels to help total OPEC production jump 18,000 barrels. U.S. output remains steady at 9.18 million barrel a day for the month, barely down from the 9.5 million barrel a day peak. Various International Energy Agency reports have estimated an 800,000 barrel a day decrease in the coming year, but many analysts have already underestimated the power of cutting costs. Look at analysts this year. Rigzone cited a Reuter's survey that averaged 31 projections for the 2015 year. That result is almost $20 over the current price at $57.95 a barrel.